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Insurance 101: Basics of picking, using a plan

Changes in health care laws mean many people have insurance for the first time. But they're far from the only ones left scratching their heads by the complexities of choosing and using insurance.

Don't leave yourself scrambling when disaster strikes. Study up now to understand your policy, which will be critical to make a smart choice when insurance enrollment comes around.

What are the key components to insurance?

You need to know what your deductible is. That tells you how much health care you have to pay for before insurance starts taking on a significant share.

A high-deductible plan is less expensive but leaves patients on the hook for $5,000, $10,000 and more of their own health care costs in a year before insurance kicks in.

You may have a co-pay, which is typically a fixed amount you pay for a service, such as $25 for a doctor's visit.

Co-insurance is a split payment. Once you meet your deductible, then co-insurance kicks in. You could have a 90-10 split, with the insurance company paying 90 percent of a charge and you paying 10 percent. More often the splits are 80-20 to 60-40, said John Doran of Blue Cross Blue Shield of Montana.

"The higher the deductible, the lower the monthly premium; the higher the co-pay, the lower the monthly premium; the higher the co-insurance, the lower the monthly premium and the higher the maximum, the lower the monthly," Doran said.

The maximum level is the cap on what customers pay in a year.

A health insurance account can help mute the blow of a doctor's bill, especially for those with a high-deductible plan. Check to see if the money rolls over year to year. You put a certain amount in the account every month, and that money is earmarked for health care costs.

"Some plans with a higher premium and co-pay are better for people, and other times a higher deductible and a health savings account is better," Doran said. "There are a lot of choices to find the right plan."



Early money lessons can pay dividends later

Jacob Gold, a certified financial planner in Scottsdale who teaches finance at Arizona State University, notes that many young adults are getting off to a poor financial start, burdened by student loans and credit card debt. We live in a society where everyone seeks instant gratification, he said. Yet a reliance on debt can turn into heavy baggage that must be handled appropriately.

People in this age group need to learn how to live within their means, create positive cash flow and work toward accumulating at least three to six months of living expenses to meet emergencies, he said. They also should be aware of insurance basics, especially if shopping for auto, renters and health policies, and of the power of compound interest as they start investing, which should be differentiated from speculating or gambling.

As they start investing, young adults should build up a working knowledge of the stock market and how asset allocation and diversification fit into that, Gold said. They also should get to know how workplace retirement plans operate and participate in them, especially if offered matching funds. Its also a good time to learn about housing choices -- renting vs. homeownership -- and the responsibilities that come with each.

One advantage that young adults have on their side is time, but other factors work against them. There are fewer pensions today, and Social Security might be much different for future generations, Gold noted. Therefore, the sooner one can start saving for retirement, the better.

Reach Wiles at This email address is being protected from spambots. You need JavaScript enabled to view it. or 602-444-8616.



Crop insurance basics for local farmers

Last week in the Legal Corner, we discussed various aspects of farming that could require legal assistance, such as contracts and agreements. This week, lets discuss additional protection and precautions farmers can undertake to protect their crops and livestock.

In so many cases, farmers are unable to protect their crops and livestock from natural disasters. Unfortunately, there are so many outside forces such as weather that can affect a farmers inventory. Insurance for crops and livestock is one of the most popular ways for farmers to protect their inventory.

Farmers are constantly taking a huge risk with their crops and livestock. Many things can affect their profits and success. Thus, insurance is one of the best ways to manage their risks.

Farmers who choose to purchase insurance are generally covered for most natural disasters. It is very important for farmers to make sure they are purchasing the correct policy for their crops or inventory. There are certain policies that only cover particular crops, and will only pay for losses of those particular crops. Additionally, there are a few mistakes farmers tend to make when it comes to their insurance policies.

Some of the most common mistakes that farmers tend to make when it comes to insurance coverage are under-reporting, over-reporting, failing to report, using the wrong harvesting procedures and destroying uncovered crops without approval.

Farmers should always remember to report the number of acres they planted of the insured crop correctly. If the number of acres used for farming the insured crop or inventory is over-reported or under-reported, this could have a huge impact on the farmers ability to recover damages.

Additionally, farmers should also make sure they report all of the farm serial numbers associated with the insured crops or inventory. If the farm serial numbers are not filed at the appropriate time for the correct crops, this also could have a major impact on the farmers ability to recover damages.

Moreover, it is very important for farmers to review their insurance policies carefully, and ensure that they understand each part. In particular, farmers should make sure they are harvesting their insured crops and inventory using a process or procedure allowed under their policy. If the crops are harvested using a procedure that is not covered by the insurance policy, the farmer may not be allowed to recover any damages.

More importantly, farmers should not destroy the insured crops before reporting the damage to their insurance company. Farmers should make sure that their insurance company has an opportunity to inspect the damaged inventory and only destroy the property once given approval from their insurance company. If the insured crops are destroyed before the farmers insurance company provides the required approval, the farmer will unfortunately be unable to recover any damages.

Also, in cases where farmers have chosen not to purchase insurance, there are certain programs available to assist them with any damages to their crops or inventory. One is the Noninsured Crop Disaster Assistance Program, which is managed by the USDAs Farm Service Agency. This program provides financial assistance to farmers who have crops that cant be insured when those crops are lost or are unable to be planted because of a natural disaster.

Please remember that this information is only meant to inform our readers. This article does not include all of the detailed information related to insurance policies for North Carolina farmers.

If you have any additional questions about your farmland, your farming business in general, how to purchase or understand a farmers insurance policy or how to protect and preserve your farmland or business for your family, please consult an attorney. As always: Be informed. Be prepared.

Bellonora McCallum is an attorney at the McCallum Law Firm, PLLC, in Rockingham. Reach her at 910-730-4064 or visit www.mccallumlawfirm.com.



How 7 P&C insurers got their start

(Photo: Shutterstock.com)

From fires and floods to theft, workplace injuries and auto crashes, individuals and businesses face a variety of potentially catastrophic risks every day. Losses include property damage, injury and even death. By creating tools to manage uncertainty and loss,property and casualty insurers provide crucial personal and professionalprotection.

According to the American Insurance Association, the Pamp;C insurance industry pays out more than $400 billion annually in policy benefits. To meet this demand, there are approximately 2,700 companies providing Pamp;C insurance coverage in the United States. About 2.3 million people are employed by the industry, working for insurance companies, agencies and brokerages.

Property and casualty insurance traces its modern history back to marine insurance in the late Middle Ages. Merchants and bankers became concerned about the safety of shipments dueto piracy, storms, and other perils. Bankers began providing guarantees against loss, while merchants paid the bankers a fee for this protection. (See, Property-Casualty Insurance Basics.)



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