Right..?

You would think that your insurance covers the cost to rebuild your house if a covered hazard destroyed it. But more and more, the most unfortunate among us are discovering that’s not the case. Ask yourself: are you confident you have enough coverage?

Nobody likes rising prices. But with recent spikes in inflation, stagnation of real wages, and a war on the horizon, they’ve never been more volatile. But the one thing that’s definitely not getting any cheaper? Building a house. Currently, it’s never been more expensive to repair or rebuild. The quote you received ten years ago simply doesn’t apply anymore.

There are three significant trends causing reconstruction costs to climb. First and foremost: the cost of material has climbed significantly, which, in turn, inflates the cost of construction labor. These two numbers are strongly correlated, and both rose by more than 16% in FY 2021, alone.

“But what does this have to do with my homeowners’ insurance policy?”

You’ve probably noticed that your premiums climb over time. This can happen for many reasons, like having recently filed a claim, or a change to pricing models in your state. But one of the major factors considered in those premium pricing models is projected reconstruction cost. Or, how much the insurance company loses, on average, when they’re required to rebuild a destroyed home.

When you purchase a policy, you agree to a certain amount of Dwelling Coverage. In general, you want this number to match what it would cost to reconstruct the home. If a tornado destroys your $500,000 home, and you had $500,000 in dwelling coverage, and the rebuild only cost $450,000: you’re good. In this case, insurance pays for everything.

But if materials and labor each increased in price by 16% in one year? Suddenly, the rebuild quote is around $580,000. But that’s not the insurance company’s fault. If you want your home to look the way it did before: you’re paying that extra $80,000 out-of-pocket.

But what lead to the rise in labor and material cost? At the risk of oversimplifying, here’s why the current reconstruction cost for your home may be higher than it was a few years ago:

Changes to the Labor Market:

Construction workers are finally making a better living in 2022. Combined hourly retail labor rates increased 4.1% from July 2020 to July 2021 – greater than the 3.8% increase recorded in the previous fiscal year. It’s not a bad thing that laborers are commanding higher wages. Historically, retail construction is one of the worst-paying industries in the world. They work hard and deserve every penny they make! But it does have a “pass the buck” effect on rebuild costs. The owner isn’t about to pay their workers more. You are.

Changes to the Supply Chain:

The materials used to rebuild homes are also getting more expensive. Lumber, in particular – the raw timber that forms the framework and interiors of most homes – has become almost unaffordable. It’s already heavy, bulky, hard to transport, and difficult to extract from nature. This, coupled with a doubling of tariffs on Canadian lumber and an unusually-strong wildfire season, led to an increase in softwood prices of more than 112%. 

These changes have persisted into 2022, leading experts to believe that the price increase of wood is no longer transitory, but a permanent fixture of the post-pandemic world.

Tariffs & Trade Wars:

A tariff is a fluctuating tax on imports or exports, typically between two countries. In 2018, the United States government began imposing new, higher tariffs on steel, aluminum, and lumber from several countries – China, in particular – to discourage currency flow. And now, a new round of sanctions has been imposed on Russia for instigating the Ukrainian war. Since they’re one of the world’s biggest oil exporters, this threatens to drive energy prices through the roof, further increasing the cost of construction.

Tariffs and sanctions invariably cause price volatility, punishing the nation in question. They often lead to shipping and processing delays at ports and create bureaucratic nightmares for construction companies.

Across the board, the construction process has become more expensive. And every extra penny owed is passed down to you, the consumer. So what do we do? It’s unlikely, to say the least, that reconstruction costs suddenly revert to what they were in the before-time. How would you know if the reconstruction cost for your own property has increased?

The short answer is to review your policies yearly. In the post-pandemic world, you should check in frequently, compare policies, and request new quotes for reconstruction costs.

Is it an unfair burden on the consumer?

You bet.

Does it matter to the insurance companies?

Not in the least.

So, it may feel like a victimless crime to “get creative” with your insurance paperwork. It’s estimated that 35 million Americans have lied to their insurance company at one point in their life. Almost one in three have lied on their auto insurance, and another 22% regularly lie to health insurers. It’s entirely understandable, though. Insurance fraud wouldn’t be so prevalent if people didn’t consistently get away with it. And people wouldn’t get away with it so often if insurance companies weren’t already overwhelmed by fraud cases.

And what about the insurance companies? They cry and moan about the cost of fraud – but the reality is: they can afford it. They know they don’t have to catch everyone to make their bottom line. Fraud is anticipated. It actually happens, and is reliably predicted every year. It’s already been priced into their models. “Fraud rose by 11% last year? Better hike the premiums, otherwise C-suite won’t get their ninth-straight year of record-breaking bonus checks.”

It’s hard to have sympathy for anyone here… But the point is, insurance companies aren’t the victim. You are. You always are.

When a fraudster gets a payout, that’s less money the company has to pay out your legitimate claim. And if you decide to defraud your insurer, count on never sleeping well again. Lying on a claim or application is like having a loaded gun permanently aimed at your foot. The statute of limitations for fraud prosecution usually extends six to ten years after the crime was committed. So if, at any point during that time, you get caught? You’re absolutely screwed. Like, “life is now permanently harder for you” screwed.

For one: depending on the severity of the fraud attempt, your premium could triple in size. That is, if they even let you keep the policy after what happened. If the “fraud” could be construed as an “honest mistake” – say, your assistant did the paperwork and testified their negligence – you might get to keep the original policy at a higher rate.

But if your actions fit the classic “steal and conceal” definition of fraud? You’re going to court, and you’re going to lose. For the rest of your life, you’ll struggle to find an insurer who’ll touch you with a thirty-foot pole.

Insurance fraudsters never seem to realize the irony. There’s nobody better at detecting and punishing fraud than the very people they’re trying to rip off. It’s just that, long ago, insurance companies realized fraud was inevitable, impossible to prevent. So, it became a simple matter of calculation: To stay in business, don’t spend dollars recovering dimes.

And that’s the only reason anyone gets away with it. If you do – you’ve taken a risk so severe, beaten odds so slim: you almost deserve the money.

Unfortunately, most people who attempt insurance fraud have zero experience in either, uh, “industry.” False insurance claims are often a fraudster’s debut; poorly-concealed, transparently amateurish attempts to snag a payout. They’re almost always shocked when they get caught. Many of these criminal debutants ultimately aren’t even charged with fraud because their attempt to conceal the illegal activity was so unsophisticated – any reasonable person could’ve noticed, and the legal definition of fraud doesn’t apply.

But even if you’re not officially charged with fraud, the company has hard evidence showing you tried it once. Statistically, you’re very likely to try it again. And they’re all too happy to share that information with other insurers, effectively branding you for life. In a world where certain forms of insurance, like auto and homeowners, are mandatory: that can make for a disastrously expensive existence.

Getting caught for insurance fraud invariably means enormous financial penalties, jail time, likely, depending on your state of residence, and the impossibility of you ever finding insurance again.

Don’t even think about it.

Legally: an insurance lapse is any period of time when a registered vehicle does not have at least the state-required minimum insurance coverage. It can result from not paying your premiums, not renewing a policy once it’s ended, or getting dropped by your insurer after causing too many accidents or incurring too many tickets.

Mistakes happen, but you must avoid lapses in your car insurance at all costs. If you drive without car insurance, you’ll invariably be caught and penalized in a variety of ways. No matter who your insurance provider is, how the lapse happened, or whether it was intentional or accidental – insurance companies take it as a sign that you’re lousy clientele. Moreover, driving without insurance can lead to fines, tickets, license suspension, and even jail time for repeat offenders.

Maybe you’re currently wondering if it’s worth it to risk a lapse in coverage. Perhaps you’ve already lapsed, or there’s an existing coverage gap in your insurance history. But no matter what your financial situation is: it’s better to keep or downgrade existing coverage than to cancel altogether. The money you’d save in the short term pales in comparison to the inevitable future increase of your premium. Insurance companies share databases, and they will catch on if you go without coverage. Even if you don’t drive the car during that lapse, the financial consequences remain equally disastrous.

At the very least: getting caught means an insurance lapse fine of up to $5,000, permanent marks on your driving record, and a permanently-higher future cost of insurance.

Given the severity of these consequences: it’s best practice – and not terribly difficult – to avoid coverage lapses in the first place. Drive safely to avoid the worst-case scenario of being dropped by your insurer altogether. After that, get an insurance rate you know you can maintain. Pay your insurance premiums on time, and consider setting up auto-billing. Remember to renew the policy every year and always carry at least the state minimum required insurance.

But if you do miss a payment or fail to renew the policy: don’t worry. Federal law requires insurance companies to offer a grace period and send multiple written notices about the temporary lapse. Typically lasting between 10 and 30 days, depending on the state and insurance company in question; grace periods are final notice—your last chance to patch things up before getting hit with penalties. If you don’t pay by the end of the grace period, you could lose your policy – leaving you uninsured, lapsed, and disqualified from the low rate you used to enjoy.

If your vehicle is leased or financed, there’s an extra layer, here.

States require liability insurance, at minimum. If you’re involved in a traffic accident, there needs to be some entity that can cover any injuries or damage you caused. However, your vehicle is not itself protected by liability insurance. If the car is financed, the loan holder almost always requires the driver to carry more than the state minimum liability insurance. That typically looks like a bundle of liability, collision, and comprehensive coverage riders. But if you allow that insurance policy to lapse? Your creditors will likely purchase a new insurance policy for you, at a much higher rate. Or worse, repossess your car altogether.

If your lapse was brief and understandable – due to a missed payment, lost mail, or incomplete renewal – speak with an agent before accepting the consequences. Your auto insurer might be willing to reinstate the original policy once you pay in full. They’ll likely charge a one-time lapse fee, but the rate could remain the same, and that’s what truly matters.

However, if your lapse was longer than a few weeks – it’s going to be permanently harder to get reinsured. Check your policy details, stay on top of payments, and don’t cancel your auto insurance for short-term savings!

There were so many additional deaths attributable to COVID-19 that the average mortality age declined by a full 1.5 years. You read that right: the pandemic figuratively took more than a year off our lives. Life expectancy at birth – a projected statistic for the total population – fell from 78.8 years in 2019 to 77.3 in 2020.

The financial fallout of the pandemic, coupled with the mentally-paralyzing notion that we could die much sooner than expected, has led to a drastic increase in the popularity of life insurance. The 2021 Insurance Barometer Study, conducted by Life Happens and LIMRA financial services institute, reported some interesting numbers supporting this conclusion:

1.) 59% of people who don’t own life insurance now say they need it

2.) More than 30% of eligible consumers say they’re considering life insurance for the first time as a direct result of the pandemic

3.) Premiums are rising – a sign of sea change in the market. Increasing in some cases by as much as 20% from quarter-to-quarter.

4.) 42% of Americans would experience life-altering financial hardship within six months if a partner or primary earner were to die.

5.) 13% of eligible consumers purchased life insurance for the first time in 2020.

Life insurance customers are also getting younger. That same survey by LIMRA showed that 48% of Millennials said they planned to purchase life insurance coverage in the next year. Only time will tell if that projection is accurate – but it’s not entirely farfetched! Millennials had it especially rough during the pandemic.

For one, young workers faced higher unemployment rates throughout the pandemic. In many cases, this forced Millennials to purchase expensive supplemental insurance to make up for lost employer-sponsored policies. They were also the demographic most likely to have minor children at the onset of the pandemic, and the demographic with the highest amount of outstanding debt per capita. On top of that, serious behavioral differences emerged between different ethnicities. The consumers most likely to purchase life insurance in 2021 were of Hispanic descent, followed closely by Black Americans. This tracks, given the consistently-higher unemployment rates faced by minority Americans during 2020-21. In other words: while Millennials were statistically less likely to die from the virus itself, they stood to lose the most if they did. And minority Millennials were in an even more precarious position.

But I’m not presenting these statistics out of a desire to scare anyone.

On the contrary, I encourage you to strike while the iron is hot! If you’re a young person who recently began to consider purchasing life insurance, two straight years of chaos and upheaval in our insurance markets is starting to work in your favor. Sure, premiums are on the rise. But young people also tend to overestimate the costs drastically. In that same LIMRA survey mentioned earlier, participants were asked, Price-Is-Right-style, to guess the average annual cost of a term life insurance policy. A majority of participants overestimated the cost by more than 3x, and 44% of Millennials surveyed thought life insurance would cost them more than $1,000 a year.

Fact: in 2021, the average annual cost of a 20 year, $250,000 term life insurance policy was $160.

And on that note, it’s never been easier to shop around for life insurance! Many companies are temporarily waiving those notorious, invasive, in-person medical exams that typically stand in the way of getting a quote. And with in-person, agent-driven sales falling off a cliff in 2020, insurance companies finally began to adapt to the digital marketplace that Millennials have preferred for years. And, since they comprise such a large portion of their market, you’d be hard-pressed to find an insurer who hasn’t hopped on this bandwagon.

I’ll finish with one final statistic from that LIMRA survey: 39% of all participants surveyed stated they wished they had bought their life insurance at a younger age.

The last few years have taught us, through painful experience, not to take life for granted. If there are people who love you – people who depend on you – ensure their future by getting insured.

Maybe you’re a young driver without a credit card or loan history. Maybe you’ve avoided credit cards because, like me, you’re pathologically afraid of owing money. Or maybe you weren’t scared enough, tanking your credit early in life. Whatever the situation, credit score remains a critical determining factor in how more-traditional insurance companies determine your rate. If you’re thinking about purchasing or financing a car – take a look at your credit score first. A few months of credit rehabilitation could save you thousands of dollars in insurance premiums down the line.

Credit scores – also known as FICO scores – fall between 300 and 850. They’re generated from a large sample of variables to condense your “creditworthiness” down to one metric. Essentially, it shows lenders how reliable you are with money and paying debts. If you have a high score – anything above 750 – you’ve been paying bills in full, on time, for years and years. Lenders feel that they can trust you with access to more credit, and reward you with lower interest rates on any debt you carry.

In this case, a higher score also means access to more and better insurance.

But if you have a low credit score or no credit history, it can make for a difficult existence. Modern society runs on credit. If you want to take a flight, book a hotel room, or make any large purchase, you’ll be asked to supply some type of credit reference. And those 300 points you get for just being alive? They don’t go very far in proving your creditworthiness. It’s not impossible to access credit with a low score. It’s just, until you’re able to improve your credit score, you’ll likely only be offered very high-interest rates on loans. And be prepared to get rejected outright when applying for certain things, like insurance policies or mortgage(s).

But why, exactly, do car insurance companies want to see your credit score? You’re not borrowing money from them, so why do they ask to see it?

They do it to gauge risk.

Study after study has shown that people with lower credit scores are more likely to file a claim, tend to file many claims, and have more expensive claims. Not the case for high-scorers. And statistical insights like that are an insurance company’s bread and butter. By having a mathematical equation with lots of variables, they can determine just how much of a risk you pose to them with a high degree of granularity.

Nearly every insurance company uses this kind of credit-based insurance scoring – in combination with demographic information, driving history, geography, property value, and claim history – to predict, with startling accuracy, the kind of claims you’re likely to file.

Since the price of your premium is tied directly to these insights, it’s almost always worth setting back plans for a few months to focus on building or raising credit before starting down the road of any significant purchase.

We go to the doctor and are told that something – a test, service, or procedure – is absolutely necessary for our health and well-being. We ask the doctor if they’ll take our insurance and get a resounding: “yes – we can do that.” Weeks later, when the bill comes, we discover that the procedure wasn’t covered by insurance, after all.

What happened?

It could be that the treatment was medically necessary, but uncovered due to the nature of the procedure, like cosmetic surgery to remove a facial cyst. Or, it could’ve been denied because your insurer deemed the procedure experimental, like the use of Remdisivir for treating SARS-COV-2. Or, you could’ve been out-of-network in some way. Maybe you saw your usual doctor at a different facility, with a separate Tax ID number, which put you out-of-network. Perhaps you were at an in-network hospital, but the on-call doctor was out-of-network.

A wide array of things can go wrong. But, how were we supposed to know? We may have been incapacitated or even unconscious at the time of treatment. We may have made every effort – going in-network to a trusted provider – and still receive surprise bills. What’s going on behind the scenes?

Every single blood test, scan, and surgery – every IV bag and syringe under a hospital’s roof – has a universal, five-digit billing code called a “CPT.” As you’re treated, the codes get added to your chart. The hospital bills those CPT codes, combined with a series of diagnostic codes that describe your medical state, to your insurer. From there, the decision to pay or deny a claim relies on internal policies relating only to those codes – not the actual person. 99% of the time, the decision looks at the combination of CPT and diagnosis code to determine whether or not it’s a covered service.

This means that it’s expected you’ve asked the hospital for the CPT codes associated with your treatment, and then passed the codes on to your insurance company to check if they’re covered, before you even arrive at the ER. A uniquely-insane feature of the United States healthcare system.

Pricing is all over the place, too. If you’re lucky enough to have an insurance plan that only charges copays for everything, you don’t have to worry about so much. You’ve basically won the healthcare lottery. But if you’re like the other 90% of us who can only afford high-deductible plans, the negotiated rate for a given service makes all the difference. Negotiated rates are discount agreements between insurance companies and providers within their network. They’re widespread and pretty much the only reason anybody can afford treatment in America. For example, a PET scan costs around $8500, retail. But if you go to an in-network doctor, at an in-network hospital, you might only have to pay $850 – a 90% cost reduction.

If you need an expensive procedure, like a PET, MRI, or CAT scan, there could be as many as 4-5 in-network facilities in your area. But, the negotiated rate at each facility could run from a few hundred dollars at a small private clinic, to thousands at a large university hospital. You should call your insurance ahead with the CPT code for the test and request that they supply you with the negotiated rates for a few facilities in the area. Most insurers offer this pricing tool now. But again: you have to know how to ask for it.

Just never, EVER expect the doctor’s office to know the details of your plan in advance. On average, they manage something like 3,000 patients across 25 different plans. And the front desk is more than happy to say, “we’ll take your insurance.” But they’re just trying to keep your business.

What they actually mean is: “Sure, we’ll physically take your insurance card and bill them. But are we in your network?  Doesn’t matter as long as we still get paid.”

Having pet insurance could prevent you from having to choose between a best friend’s life and all your money.

What Does Pet Insurance Cover?

A basic pet insurance policy covers the costs of basic diagnostics, like x-rays, blood tests, and annual checkups. It’ll also provide coverage for some essential treatments – but the particular services covered vary from plan to plan. You’ll have to do a bit of research to figure out what policy is best for your pet.

When shopping, first consider any medical expenses your pet already faces. Those expenses are bound to occur, so the plan you pick should cover certain or near-certain events. However, some owners may decide that accident-only coverage is best if their pet is already in good health and money is tight.

Having grown up around dogs, I think the proper “middle-ground” plan for a young pet includes accident coverage and reimbursement for necessary preventative costs. It’s flat-out irresponsible not to spay, neuter, and vaccinate your animals. In some cases, it’s against the law to have a pet that’s unvaccinated against certain deadly transmissible diseases like tapeworm and rabies. And if your pet’s a little older, it’s also important to consider potential additional costs, like medication or physical therapy. Basic accident and illness coverage isn’t really enough for aging animals.

In any case: you’ll want a pet health insurance policy with an open-peril policy rather than named peril. Open peril means pretty much everything is covered unless it’s specifically called out as an exclusion. Pets are way, way too unpredictable to benefit from the strict limits of a named-peril policy.

On that note: let’s discuss what isn’t covered in a typical pet insurance policy.

What Isn’t Covered?

It doesn’t matter which pet insurance company you went with or how much coverage you bought. Your pet will never be covered for everything. The most common snafus owners encounter when dealing with pet insurance involve waiting periods, chronic conditions, and pre-existing conditions.

Most pet insurance policies have waiting periods that prevent you from claiming anything until 2-3 weeks have passed. The exact length varies, but insurers use it as an extra layer of fraud protection – preventing owners from making claims right away or making claims for pre-existing illnesses that they were already aware of before purchasing coverage. Many new insurers offer shorter waiting periods of 2-3 days now, but certain conditions like hip dysplasia and cruciate ligament deterioration still retain months-long waiting periods.

Since veterinary records are openly-available: your policy won’t cover conditions that’d already been diagnosed, or that your pet showed symptoms of before those waiting periods ended. So, for example: if your insurance states that they cover diabetes treatment under a basic policy, they’d still only reimburse you if your pet was diagnosed with diabetes after your policy went active.

Final thoughts:

It should go without saying, but pet insurance is for your pet. You can’t use it for human medical care. You can’t even use it for another pet, if you have more than one.

You heard that right: if you share care of your pet with a partner, that basic pet insurance policy will only cover expenses in the policyholders’ name. The insurance company can only share reimbursement with married persons. And that basic policy won’t cover more than one pet, either. You’ll want to make sure you have a separate policy for each pet.

Or, look into your insurers’ options! They’re happy to sell you more coverage, and it’s never been easier to customize a policy. Multi-pet discounts are becoming a popular incentive, and it’s only a small fee to add a second owner to an existing policy.

But under what circumstances, exactly, does renters insurance cover theft?

Renters insurance typically includes three types of coverage: Personal property, liability, and loss-of-use. Personal property covers your belongings; liability covers guests in your home or accidental damage to the neighbors’ property. Loss-of-use covers things like hotel bills and storage costs if your home becomes uninhabitable.

Theft, however, is a unique situation. You’ll have to file a police report before doing anything with your insurance. The details they collect go a long way in determining whether or not a claim will pay out – so be as accurate as possible.

The Liability Clause:

Theft claims mostly depend on the personal liability clause of your policy. Thankfully, in the case of theft, most belongings are covered. Furniture, clothing, jewelry, and electronics are generally covered under the liability clause – up to a coverage limit. The claim does top out at a certain point, though. So it’s essential to have a sense of your belongings’ total market value. And to obtain secondary insurance for high-value items that exceed all, or a significant portion of, the coverage limit.

There are only a few instances when theft isn’t covered by renters insurance. For example: if your bag were stolen on the subway: you’re covered. But if you check your luggage on an airline and the bags are stolen? Renters insurance won’t cover it – because your item was in possession of a third party. In that case, you’d file a claim with travel insurance.

But the worst-case scenario is if your insurer decides that the theft happened due to negligence. Like, if you left your keys in the door… If your insurer thinks you passively allowed it to happen – they’ll probably deny your claim outright. Ignorance is no defense when dealing with a claims adjuster.

Replacement Cost vs. Actual Cash Value:

It’s one of the most common discrepancies between plans. If you have good insurance, they’ll cover the replacement cost of items, minus the deductible. If you have crummy insurance, they’ll only cover the “actual cash value.”

Replacement cost is the market price: the dollar amount this product would cost, new, in-store. Today – not when you bought it. But actual cash value is the replacement cost, minus depreciation.

The difference between them is, roughly, the cost of that item on Amazon vs. eBay.

Special Cases – Asset Theft, Cash, and Family:

Unfortunately, renters insurance doesn’t cover damage or theft involving your vehicle – even when it’s parked on your property. A car can only be insured separately by an auto insurance policy. However, it does cover personal belongings while they’re stored in a vehicle. So if your car gets broken into and you lose your laptop – you’d file a claim for the broken window and stolen stereo through auto insurance, but claim your stolen laptop through renters or homeowners insurance.

Renters insurance also covers stolen cash, but only up to a measly $200. But, think about it: if it were that easy to claim more money, why wouldn’t you? It’s stolen – there’s no proof. It makes insurance fraud too easy.

And finally: a renters policy automatically covers anybody related to you by blood, marriage, or adoption. If you live with a partner, you can still get the same protection by adding them to your existing policy as an “additional co-insured” for a small additional fee.

In any case – renters insurance isn’t just a practical choice – it’s a necessary choice. In 2020, property damage and theft made up 97.2% of all claims to insurance companies. One hopes, with insurance, that you never have to use it. But if you do, chances are it’ll be for this.

Maybe you just had your first conversation about the subject with a financial advisor or a savvy parent. Perhaps you just got married, had your first child, or started a business, and you’re waking up to the notion that – if you died unexpectedly – people you love would suffer financial hardship. In any case, if that sounds like you: it’s time to start thinking about life insurance.

But how do you figure out the right policy choices? How do you even go about purchasing a plan? It’s such an uncomfortable conversation to have with a sales agent – necessarily involving hard questions, like: “Is there a will?” or “Do you want to be resuscitated?” and “Who gets the money when you die?”

Yikes.

How to Begin:

Unlike homeowners or car insurance, you don’t have to buy life insurance. You may have a moral obligation, or a logical obligation – but you’re under no legal obligation. It’s important to understand that, since the decision to purchase a policy is entirely your own, you bear full responsibility for the ensuing results.

But essentially, life insurance works like any other insurance policy. You pay a fee in the form of monthly premiums in exchange for an insurer’s legally-binding promise to pay out a lump sum if XYZ event(s) occur.

In the case of life insurance, that payout – called the “death benefit.” It goes to a named beneficiary – a person, or people, of your choosing – who may then use the funds however they see fit. It assists, in particular, with the enormous expenses typically incurred by the successors of a single-provider family. Childcare and housing costs are high enough – but funerals can be as expensive as weddings. An extra infusion of cash can prevent the lives of your loved ones from unraveling even further.

What Type of Policy to Choose?

There are dozens and dozens of different types of life insurance. It’s impossible to break it all that down in one article – and who would sit through that, anyway?

For now, only one distinction matters. The two categories you’re most likely to encounter are Term Life Insurance and Whole Life Insurance.

They couldn’t be more different.

With Term Life Insurance, your coverage (like you) will eventually expire. In this case, it’s a question of weighing the odds. Terms are set at 10, 15, 20, 25, or 30 years. If you pass away during the agreed-upon period and the claim is approved, your beneficiaries receive the lump sum. You choose the payout amount, and the premium is calculated according to how high or low that number is.

Unfortunately, you don’t build any equity or additional cash value with term life policies. Chances are, you’ll still be alive at the end of the policy, and you’ll have to re-apply – likely at a higher rate, since by that point: you’re old.

As a result – term life insurance premiums tend to be up to 15 times cheaper than their big brother: permanent life insurance policies. This discrepancy makes life insurance a unique market, where incentives and risk-behavior are highly polarized.

On the other hand, Whole Life Insurance is a particular type of permanent life insurance. It’s much more expensive, because, well – you’re set for life! And since everybody dies, this kind of coverage essentially guarantees a payout.

Another selling point is that, over time, you build equity in whole life insurance policies. Your contributions are invested, growing additional cash value that policyholders can use while they’re still alive. The equity in life insurance plans has the added benefit of helping with the significant medical expenses so often incurred near the end of life.

But in addition to price, the application process poses another major downside of whole life coverage. It’s one of the longest commitments you make in your life, and just getting approved can be prohibitively expensive. Not to mention, it requires a comprehensive, invasive medical examination to determine your exact status of health and any pre-existing conditions. They’ll also go to great lengths to assess any occupational or lifestyle hazards putting you at increased risk of death. They’ll even pull your driving reports. And all of this happens before you even get the quote.

Thankfully, less-invasive options are emerging on the market now, where quotes can be issued using digital exams and telemedicine, rather than expensive trips to the hospital.

So, what’s the best advice for choosing a life insurance plan?

To consider the insurance company as a whole.

If you have other, existing forms of insurance that work – look into those companies’ life insurance policies first. You can often receive “bundling” discounts, and the claims process becomes much, much simpler when you’re mailing everything to the same place.

If you’re going with a new firm, though: first independently confirm that the insurer is financially solvent. Read about their customer service, and consider paying more for better. Seek opinions from regular people who use the insurer about how they’ve been treated. Look for red flags, like pushy agents, fearmongering, and upselling.

And remember: seek counsel before you make any serious financial decisions – especially picking a life insurance policy. It’s always good to chat with a trusted financial advisor, lawyer, accountant, or parent before you sign that paperwork. Your life literally depends on it!

They’re also occurring earlier and later in the year. In Boulder, CO: an enormous wildfire punctuated the last days of 2021. No fatalities occurred, but hundreds of homes burnt down. The very next morning, 10 inches of snow fell on the scorched community. Images of the smoldering, snow-covered remnants became, for many, an unsettling and tragic reminder of our ongoing climate emergency. To add insult to injury: 84% of wildfires occurring in the United States are directly caused by humans. Every year, the number of wildfires grows, leaving more and more people vulnerable to the financial, physical, and emotional devastation wrought by climate change.

If you’re a homeowner in a high-risk area like Alaska, California, Oregon, Idaho, or Texas: it’s imperative you know how your insurance coverage can protect your life’s work from going up in smoke.

First off: does homeowners insurance even cover wildfire fire damage?

The answer is a resounding YES. Wildfires are, unfortunately, the most common total-loss event in the United States. As a result, smoke and fire damage coverage is almost always included in the basic HO3 policy. It provides coverage for the following, which might come in handy in the event of a wildfire:

• Dwelling Coverage (or, in non-insurance lingo: your house)
• Auxiliary structures within the property line
• Personal property
• Additional living expenses, in the event your home becomes uninhabitable due to fire or smoke, or mandatory evacuation.

But, in the immortal words of Benjamin Franklin: An ounce of prevention is worth a pound of cure. There are essential, additional steps to protect your home from wildfires.

Clean Your Property:

Fire needs fuel, and it can use nearly anything lying around your property. Needless to say: if there’s fire on the way, immediately get stacks of wood, mulch, coal, and especially propane tanks away from the perimeter of your house. Be extra cautious around pine and juniper trees, as their leaves contain highly flammable oils and resins. If you have those trees on your property, stay on top of ’em.

Fire-Proof the Roof:

The roof is both a first line of defense and the weakest link when it comes to wildfires. It’s the most exposed, therefore, most-vulnerable surface. But if the roof catches fire, the entire house burns in a matter of minutes. If you live in one of the areas mentioned earlier: your roof must be crafted out of fire-resistant material like concrete, metal, stone, or ceramics. Not wood. And if you do have wood features on other areas of the house, coat them with a flame retardant finish. But even chemical fireproofing isn’t a surefire solution. Dead leaves, brush, and debris in the roof and gutters are all fuel for fire; and all it takes is a tiny, falling ember to set it off. A clean roof is a fireproof roof.

Seal It Off: 

Embers are those tiny, red-hot pieces of burning wood that glow at the bottom of a dying fire. They look lifeless compared to a flame, but they actually burn hotter. And since they’re so small, they can even travel on the wind. If they enter your home through a hole, vent, or other openings: it’s almost sure to burn the inside. During Wildfire Season, cover outdoor vents with hardware cloth and seal off doorjambs to prevent embers from entering your home. It’s worth looking into fire-resistant windows, too, as even ambient heat from a nearby wildfire can cause non-tempered glass to crack or burst.

As the size and scope of Wildfire Season expand, so does the importance of fire prevention.

If you live in a wildfire-prone area: be prepared. A thorough understanding of your homeowner’s insurance coverage can provide much-needed peace of mind in the face of looming natural disasters.