1. The windshield of my car broke spontaneously without any collision when I was traveling. Who will foot the bill for replacement and whether it was covered under my comprehensive insurance?

When your car was comprehensively covered, all the bills including the replacement of windshield will be footed by the insurance company. But make sure to see all the finer prints before signing the documents and check what is the real meaning of “comprehensive policy cover”?

2. I heard that I will be charged a higher auto insurance premium if I file frequent claims. Is it correct?

Sure. You will definitely be charged a higher auto insurance premium if you are involved in frequent accidents (because of your fault) resulting in frequent claims. The insurance company is bound to think that the chances of yourself getting involved in accidents is more and hence will formulate a higher premium. However, the modalities of calculation of the increased premium differs from different companies and the nature of policy like auto insurance, home insurance, health insurance etc. Among these, the auto insurance is a sensitive one and any prior accidental history will bound to increase the subsequent premium.

3. I drive a borrowed or rented car occasionally but I don’t have auto insurance cover. Am I safe?

Auto insurance companies have their own non-owner’s policy especially focused on those who drive other people’s cars occasionally. The value of this policy varies among different states and may be up to $600 depending on your track record, the state where you live etc. The advantage of non-owner’s policy is it includes medical payments and liability.  But they generally don’t cover collision and towing charges and are not comprehensive in nature. Hence, the claim you can make out the non-owner’s policy is limited.

4. Have I to repair my damaged vehicle (car) at a shop specified by my insurance company or shall I have the liberty to choose my own body shop?

In most of the states, the insurance companies specify the body shop where you are supposed to carryout the repair work and in most cases, it may not be up to your satisfaction. It is the duty of the shop to do the repair properly and if not, you can approach the insurance company or specified agent.

5. How can I find out a good insurance company for my new vehicle? Are there any tips?

There are many insurance companies spread around all the states. It is your duty to find out the right kind of insurance from the right company. Many companies offer cheap quotes depending on your requirement and you can compare the different quotes and zero in on the best one. Many insurance companies are represented by agents who can explain about different products available. But it is advisable to by pass the agent to deal directly with the company as it will result in some savings.

Never satisfy yourself just by merely looking at the cheap quotes and examine the track record of the company regarding the customer service. Choose the company that files the claim as quickly as possible. Dealing with an insurance company that is a part of your other insurance needs like home, life and property will offer more discount rather than looking for different companies for different needs.

6. My teen aged daughter wants to drive my car but I am not sure whether she comes under the umbrella of auto insurance. Please explain.

The main insured person of the car (or any other vehicle) is often under confusion that he / she alone is under the insurance cover and the other adult family members are not. But the entire family members who possess valid license are authorized to drive the vehicle and make sure about who are all coming under the insurance cover before signing the document. When teens are included for the coverage, the company may tend to increase the premium because of the apparent increase in the risk. Generally all the family members including other dependents living in the permanent address given in the insurance document are eligible for the auto insurance cover.

7. Do I have to insure a second hand car that is just a crap?

Definitely, irrespective of the worth of your car. The damage caused by the crap car is as same as the one caused by an expensive one. In fact, the old cars should be charged more since they are likely to meet with more accidents. Most of the states require the vehicle has to be insured first before it is registered. By this way, the uninsured vehicles are not at all allowed to ply on the streets. Every state has its own minimum mandatory level beyond which you can’t insure your old car. This adequately compensates in the event of an unforeseen accident.

8. Is there is any provision to name a non-relative as the beneficiary of one’s life insurance policy?

It is a common knowledge that a person nominates his / her spouse, offsprings    and relatives as the beneficiary of life insurance but there are provisions to nominate a non-relative as the beneficiary but that non-relative should have an insurable interest with the insured person. Check with the states where you live about the permissibility of nominating a non-relative as the beneficiary.

9. What is No-Fault auto insurance?

Whenever an individual involves with an accident, the concerned auto insurance provider comes forward to pay for the damages irrespective of the reasons for fault up to certain limits and in exchange for this automatic payment, the beneficiary shall forego certain rights to sue the driver at fault. This is a mutual agreement in that the affected one is also protected because he / she is immune from being sued when the fault lies with him / her. Payments for medical relief and damage to the property fall under the no-fault insurance.

10. What shall I do when my insurance company goes insolvent?

This is the worst thing you can ever expect from your insurance company but if it happens, never press the panic button and keep your cool. Not all is lost when your insurance company collapses and chances are that you are still partially covered by the guaranty association funds which will give you some solace. The insurance regulator in your state will step in to clear out the mess by asking some other insurance company to take over but you won’t get all the benefits listed out in the policy. If you are new to insurance, study the financial status of your prospective insurance provider and check its rating from the independent rating agencies. A small home work before taking your policy will be definitely rewarding and give you the much needed peace of mind in the long run.

11. What is the right time to get your life insured?

Though there is no hard and fast rule about the time of insuring your precious life, the golden word says “earlier is the better”. Diverging views are there on the pros and cons of insuring earlier or later in your life. When you insure earlier, you take advantage of low premium and also you are a lot healthier and thereby avoids additional premium for the health cover. Insuring younger means you have the added advantage of extra time in which value of your cash grows for long. Adding guaranteed insurability rider to your policy while insuring at a younger age will facilitate you to get extra cover without having to provide proof of insurability. The proponents of the late entry suggest you to put all the money in some other investments which get you a better return than the one from life cover, but it is not advisable.   

12. Shall I take a separate insurance cover for my child?

Insurance is generally taken to avert the financial hardship that may happen in the event of an unfortunate loss of a bread winner. But in the case of a child, there is no need to go for the insurance cover since there is no income as long as your child is not a model or an actor. If you are very particular about insuring your child’s life, you can go in for a child death benefit rider to your existing life policy and in most cases, it is limited to $10,000 at the maximum. Other options include term policies for children and employers’ group policy that covers dependents. Why not wait till your child grows to an adult so that you can think of a suitable life cover because the difference in premiums for the children and the healthy adults are negligible.

13. Where can I store my life insurance policy documents?

It may be the worst experience for the beneficiary to search for the life insurance records in the event of an unfortunate death of the insured and it would be more painful if the records could not be found. So, it is better to place two copies of the records in two different places so that at least one copy could be located by the beneficiary in a place where they look for the most. A copy of the policy would give all the required vital information to file a claim but if you want to record the split up details about the policy, do remember to include the name of the insurance company, its local address, policy number, date of issue, quantum of death benefit, address of the agent if any, type of policy (term or whole) and location of the original document.

14. I am planning to go out of United States. Will my health insurance pay my medical expenses incurred outside the United States?

It is your responsibility to check with your health insurance company to find out the type of coverage you have when traveling abroad and the extent of coverage limits. Moreover, make sure whether the policy will pay to fly you back home or to another country that has quality medical care. If your health insurance plan provides medical coverage outside the United States, then never forget to carry your insurance policy identity card along with a claim form.

Though most companies will reimburse the “customary and reasonable” hospital costs that you had incurred abroad but very few firms will pay for your medical evacuation back to the U.S. and the expenditure incurred may be upwards of $10,000 depending on your location and the nature of medical care required.  The policy covered under “Medicare” does not provide coverage for hospital or medical costs outside the country. If you feel that your health insurance plan does not provide adequate overseas coverage, you are at liberty to purchase a separate Emergency Medical Assistance and Evacuation policy, another kind of travel insurance.

15. Life insurance is not required for the aged persons. Is it true?

No. In good olden days, when the average life expectancy was about 60 years, people of more than 60 are considered aged and old and at that time, it was considered insuring one’s life involved a greater risk and hence avoided. But as the economy grows coupled with the availability of better medical care facilities, the life expectancy extends beyond 80 in many of the developed countries like US, Canada and western European nations. Hence, the so called older people beyond the age of 55 or 60 now require their life to be insured and so age is not always a factor to shy away from insuring your precious life, especially if the aged ones want income protection for their survivors. It is a common thing nowadays to see older people supporting their children and grand children.

16. What is the cost of dying?

The cost of dying refers to the expenses incurred on funerals, burials and the disposal of one’s body. How much you pay for these expenses is more than likely up to and decided by your survivors. The cost of funerals varies enormously depending on the state where you live and the location of your home in the city. But on an average, the cost of burials lie anywhere between $5,000 and $10,000. However, there is a solace in cremations, which cost considerably less ranging from $2,000 to $5,000. It is the duty of the life insured to make provisions for these funeral costs while determining the amount of life insurance to be purchased.

It is ideal to converse with your spouse if you have one or to your parents if they happen to be your survivors, or at least you can talk to your children if they are old enough, about expenses associated with the funeral. The talk may not be easy to begin with, but it is in your own interest to persuade them to listen to you. The advantage in the life insurance is that charges associated with the funeral are not required to be made directly from your survivors but may be paid directly from the life insurance proceeds.

17. What is viatical settlement?

Viatical settlement is a relatively new concept and benefit offered by life insurance which has a direct bearing on one’s estate planning. This option allows the terminally ill patients to sell their life insurance death benefit to any third party and in turn receive the much needed cash and enjoy it while they are alive. In order to qualify for this benefit, the beneficiary’s doctor must certify about the health status of the individual when the life expectancy is less than two years or six months depending on the case because of the fact that the beneficiary is suffering from terminally ill disease. 

The third party (i.e. the company) purchases the life insurance policy including its cash value, if any for up to sixty percent of its face value. In case, if the disease is at an advanced stage and the beneficiary is likely to have less than six months of lifetime and if the doctor certifies so, the viatical company will purchase the policy for up to eighty percent of its face value. The idea behind this viatical settlement is to help the terminally ill patients to get the cash benefit and use it for the medical treatment when they are alive. However, it is in the interest of the beneficiary to decide whether the proceeds of the viatical settlement shall be used for self or for the survivor.

18. Whether my survivors will get death benefit if I commit suicide within two years of taking the life policy?

The life insurance application has a clause under suicide provision which doesn’t exclude all the benefits if you commit suicide but specifies that if you commit suicide within two years from the policy acceptance date, your beneficiaries are not eligible for all the death benefits. Rather, most of the insurance companies will pay only an amount equal to sum of the premiums paid from the date of start to the date of death by suicide and depriving the beneficiaries of all other benefits.