LIFE INSURANCE IS IMPORTANT FOR YOUNG FAMILIES, TOO

A 2004 study showed that up to 75% of those that died between 35-years-old to 55-years-old left their significant other without Life insurance coverage that was adequate.¹ This statistic might be attributed to the fact that many don't like to think about an early death, much less the surviving family members being forced out of the home and liquidating all of the personal assets to afford the everyday cost of living.

The possibility of an early death, and the financial hardship that an early death might impose on other family members, is something that should never be ignored. Life insurance is a vital tool to prevent such potential circumstances from becoming a reality. The well-being and monetary needs of the surviving family members should be considered when choosing a type of Life insurance.

How to Choose the Right Life Insurance Coverage

The right decision is most always synonymous with an informed decision. Before you choose any specific policy or option, make sure that you understand what each type of Life insurance policy will cover and cost. Then, and only then, can you make a well-informed decision about what coverage will best suit your specific need and circumstance.

Term and Permanent Life insurance are two common types of Life insurance that you might want to consider. Term Life insurance is essentially a temporary form of Life insurance. It will provide coverage and pay benefits only during a designated or preset time period. On the other hand, Permanent Life insurance will provide coverage during the entire lifetime of the individual. It can also have the benefit of accruing a cash value over time. However, for the coverage to remain valid, premiums must be paid on time. There are benefits and drawbacks to each type of Life insurance; it really depends on the specific needs of the family.

You will also want to consider how much Life insurance will cover the needs of remaining family members. Number of family members, debt, future debt, and ability to afford the various Life insurance premiums will all play a role in how much Life insurance coverage is best.

It can be beneficial to make an outline of what your present monetary obligations and needs are and a prediction of what those needs and obligations will be in 5, 10, 15, 20+ years down the road. By combining this information with your total household income, you can determine the best amount of Life insurance coverage. At the very least, you should make a list of recurring monetary obligations: Mortgage, student loan, vehicle loan, credit card debt, etc. However, including future obligations, such as a child's college tuition, will give you the most accurate estimate on how much Life insurance coverage you should purchase.

Be Prepared

Financial solvency for young families can be ensured with a Life insurance plan. However, even the best laid plan can become dated as life changes. So, part of being prepared also includes periodically reevaluating your Life insurance coverage.

¹ National Association of Insurance and Financial Advisors (NAIFA) 2004

REVIEW YOUR HOMEOWNER'S POLICY REGARDING COVERAGE FOR SPECIAL VEHICLES

Millions of Americans own special vehicles for recreation, personal assistance, property maintenance, and for other purposes. Residents and visitors in snow belt regions use snowmobiles. Golf carts cruise around golf courses and around many residential communities. Individuals with limited mobility use motorized wheelchairs and scooters. All-terrain vehicles and dune buggies are always popular. These vehicles can be expensive to purchase and can become involved in accidents. Individuals who own and use them need insurance protection when something goes wrong. Fortunately, the standard Homeowners insurance policy provides some of the coverage users need.

The Homeowners policy does not cover legal liability resulting from the use of motor vehicles that are registered for use on public roads or property or that the law requires to be registered for use at the place where the accident took place. However, it does provide some coverage for vehicles designed to be used off public roads if either the user does not own them or if the accident occurs on an "insured location," as the policy defines that term. The term includes the place where the person named on the policy (the named insured) resides, other residences he acquires during the policy term, premises he doesn't own and where he temporarily resides, vacant land he owns or rents, land he owns or rents where he is building a residence, and other premises he occasionally rents for non-business use.

Therefore, the Homeowners policy will cover him for liability resulting from the use of:

• A motorized wheelchair at his home and surrounding property
• A dune buggy at a beach house he's renting for a week
• A snowmobile he owns on vacant land he owns
• An ATV he rents while he uses it on someone else's property.

It will not cover him if he takes a vehicle he owns off an insured location.

The policy contains special provisions regarding golf carts. It covers the person's liability for use of a golf cart he owns that is designed to carry at most four people and is not designed to go faster than 25 m.p.h. on level ground. Coverage applies only if the accident occurs at a golfing facility or at a private residential community where golf carts can legally travel on its public roads, subject to the authority of a property owner's association, and where an insured person has a residence. Therefore, an individual has coverage if he strikes a person with his golf cart while driving from one hole to another or if he lives in a gated community and damages a neighbor's deck with his golf cart. He does not have coverage if he takes out a mailbox while driving a golf cart down a public road.

The policy covers certain vehicles if the insured person uses them solely to service his premises. For example, he would have coverage for a riding lawn mower that he uses on his own property, but he will not have coverage for it if he also uses it to cut a neighbor's grass. The policy covers vehicles designed to assist the handicapped, but only while they are being used to assist a handicapped person or while they are parked on an insured location. A healthy 15 year-old who takes a handicapped person?s scooter for a joy ride does not have coverage.

Because coverage for these vehicles is so situation-dependent, people who own them should discuss the best way to insure them with our professional insurance agents. In some cases, policy changes might be available that will improve the coverage for an additional premium. All motorized vehicles carry a risk of accidents, so it is important to have the right insurance protection in place.

AVOID BUSINESS LOSSES WITH D&O INSURANCE

For the last several years, stories of wrongdoing and bad judgment by corporate managers have filled the headlines. Enron, Worldcom, and Countrywide are just some of the companies that became household names because of mistakes or criminal acts their leaders committed. These stories became big news because they were exceptional; the vast majority of companies do not fail in such a spectacular fashion. However, all corporate managers have the potential to make mistakes, and some mistakes can lead to significant losses for the company, its shareholders, employees and vendors. When this happens, having the appropriate insurance coverage can make all the difference between survival and corporate and personal bankruptcy.

Most businesses carry Commercial General Liability insurance (CGL) that covers the business's legal liability for bodily injury, property damage, and personal and advertising injury suffered by others. However, this insurance probably will not cover claims against corporate officers for their errors in running the company. These claims often involve allegations of monetary losses, such as falling stock prices or loss of capital. Although real, these losses do not meet the CGL policy's definition of "property damage," which is physical injury to tangible property, including resulting loss of use, or loss of use of property not physically injured. In these claims, people lose money but their property is intact. Therefore, companies that rely solely on their CGL policies will have no insurance in these cases.

Directors and Officers Liability insurance (D&O) covers a business's legal liability for "wrongful acts" of its directors and officers acting within their capacity for the business. A typical policy defines "wrongful act" as including errors, misstatements, misleading statements, acts, omissions, neglect, or breaches of duty actually or allegedly committed or attempted by an individual in her capacity as a director or officer of the insured business.

Directors and officers are subject to lawsuits from many sources, including the entity they work for, shareholders, employees, government entities, competitors, vendors, and other third parties such as consumer groups or groups that represent segments of the population. Leaders of all types of organizations are vulnerable, though the source of a legal claim will vary by the type of entity. Most claims against public companies come from shareholders, while employees file most of the claims against non-profit organizations and half the claims against private companies. Customers and competitors are also frequent sources of suits against private companies.

D&O insurance covers many types of claims, including:

• A lawsuit by one shareholder against the majority owners, claiming that the company lost money because the majority gave themselves excessive compensation.
• A key employee leaves one company and joins a competitor as a director. His former employer sues him and the competitor, claiming that he violated his contract and used confidential company information with his new employer.
• Shareholders sue a company and its directors and officers, claiming that they misrepresented the quality of a potential new product when they sought funding for its production.
• A shareholder sues the president of a company for failing to promptly notify shareholders of a major pending transaction and for not pursuing litigation against a partner company that did not live up to its agreement.
• A lender sues a company for allegedly failing to repay a loan.
• Members of a private company's board of directors are sued for allegedly using their positions for personal gain.
• The government sues a company for alleged anti-trust activities.

Even though courts dismissed some of these lawsuits, the legal defense costs were still significant; D&O insurance covers these costs. Because all organizations and their leadership are vulnerable to these types of claims, you should work with our professional insurance agents to identify companies that can provide the coverage you need at a reasonable cost. Businesses face many different risks today; consequently, D&O insurance is a necessity.