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For over 20 years I have worked personally with Dave Ramsey, his listeners and team members to help them make important and informed decisions about their insurance needs and the most cost effective ways to address them. Through the years I have responded to over 10,000 of Dave’s listeners regarding their insurance questions.

This blog contains many of the most frequent questions and answers since they provide an excellent resource to Dave's specific advice on very specific insurance questions. I hope you find this information to be a valuable resource that you can refer to many times in the future as you progress along your financial path. Click on the category noted which relates to your question so that you can see the posting currently available. If you do not see your question or still have concerns please don't hesitate to use the "Question Widget" noted on this site for further information or call us toll free at (800) 356-4282.

Many people are surprised that the advice from Dave and I doesn’t always involve the purchase of insurance as the only alternative. Insurance is a key component of any family's financial plan but it can also be a drain and a detriment if the wrong plans are purchased. Implementing the plans and approaches that Dave and I recommend, most importantly, the establishment of an emergency fund, will help reduce a families overall insurance costs and allow them to focus their dollars on more important things such as getting out of debt and growing wealth.

− Jeff Zander

Q: What Happens When An Insurance Company Goes Bankrupt and What Happens To My Policy?

2012 November 6
 

Thankfully we have only read about this experience and never had one of the companies we represent go into bankruptcy or insolvency which is the term used in the Insurance industry. If an insurance company goes bankrupt or is otherwise unable to pay its claims there is a safety net in each state known as a Guaranty Fund which works similar to the way the FDIC protects deposits in banks. Each state charges Insurance Companies a tax on their premiums that goes to an insolvency fund that would pay claims up to a certain state limit if the company was capable financially to do so on their own. The company is taken over by the Insurance Department of the State they are domiciled in and goes through a period of rehabilitation. This generally involves the Insurance Department reorganizing the company and in most cases finding a new company to buy the assets of the failing company. If the assets being bought do not generate enough to cover the liabilities of the company, then the Guaranty Fund makes up the difference and, in most cases, the insured person is made whole and their policy or claim protection continues. In the event that no buyer is found, then the company’s assets are liquidated and the Guaranty Fund will provide protection up to the state limit for those with a pending claim or outstanding premium. This is a very rare event and the advantage of term insurance is that you do not have a lot of money “invested” in a failing company such as with a cash value type plan and you could simply apply elsewhere. In short, it is definitely an experience to avoid but having a Term Life plan does minimize some of the complications.

Q: Should I Purchase Additional Term Coverage Outside Of My Employer’s Group Plan?

2012 November 6
 

If your employer is paying the cost of your life insurance plan then it is only to your benefit to accept it. If you have to incur a cost then you certainly should compare it with the cost of the other plans outside of the group. Many times a group plan can be easy to enroll in but the costs are actually more expensive depending on the overall age of the group. Even if your Employer plan has cost benefits, Dave feels that you should have no more than 50% of the coverage you need through your employer group plan. This is because most plans are not portable. Therefore, if you leave employment you will either lose your coverage or have to medically re-qualify at a time when you need the coverage the most. If your plan is convertible, in most cases it means you can take it with you, but have to change to a cash value plan, which Dave is adamantly against and should be avoided unless you cannot qualify for a Term Life plan individually. Additionally, many group plans also have benefit reductions as you get older, usually dropping the benefit coverage when you reach age 60 or older. Though employer group rates may be lower, the pricing of these plans ten to only be guaranteed for two year periods compared tot he level term plans Dave recommends of 15 or 20 years. By visiting our website you can compare rates online or call us toll free at 900-356-4282 for personal assistance.

Q: Should I Buy Life Insurance Instead of Selecting The Survivorship Option On My Retirement Plan?

2012 November 6
 

This approach is typically referred to as Pension Maximization. This is done many times by people who do not want to have the reduction in their monthly benefit that occurs if they select a survivorship benefit or they do not have survivorship benefits as part of their pension. By purchasing a life insurance policy the beneficiary receives the death benefit instead of a continued monthly income which allows the primary retiree to receive the higher income as long as he/she is alive. This approach works quite well as long as you can qualify for a term life policy based on your health and you use the savings generated by not buying a cash value plan to create a savings account in the event that you outlive the term policy.

The primary purpose of the plan is to buy term and invest the difference to create a fund that will replace the life policy when it expires. You really don’t need an amount longer than 20 years since the growth of your savings plan will offset the need for life insurance into the future. You just need to make sure the amount of coverage you initially purchase is enough to generate the lost income you will not receive from the pension if you were to die. The analysis really comes down to the numbers. If there is enough savings to replace the lost income after you buy the term insurance and invest the difference then the strategy works. There are times though because of insurance, based on health issues etc., or the rate of return of the investments that the math doesn’t come out and taking the survivorship option is the best.

 

Q: How Does The Suicide/Incontestability Clause Work?

2012 June 8

The Suicide/Incontestability Clause is applicable on every term policy and relates to those individuals that misrepresent or lie on the application about issues that would have caused them to be declined if that information had been properly disclosed.  The two year suicide clause is very simple. If a person commits suicide during the first two years of the policy period, the death benefit will not be paid. The company will simply return the premium that was paid to the insured’s estate and no benefits will be paid.  After 2 years there is no limitations and a death by suicide would be fully covered.

The Incontestability clause also applies during the first two years and allows an insurance company the right to verify the accuracy of the information provided during the application/underwriting process of the policy.  If there were material misrepresentations regarding information that would have caused the company to decline coverage, no death benefit would be paid and all premiums paid would be returned. Once a policy remains in force past the first two year period, the company typically has no recourse and will pay the policy benefits to the beneficiary.

 

Q: Are The Recovery Advocates Licensed Investigators?

2012 May 15
 

While no certification is required to resolve any id theft issue, the Recovery Advocates are CITRMS (Certified Identity Theft Risk Management Specialist) certified through the ICFE (Institute of Consumer Financial Education).  In addition, all Recovery Advocates are required to complete the Identity Theft Victim Assistance Training sponsored by the Department of Justice.

These industry specific certifications enhance awareness of the particular presentations of identity theft, thereby more effectively training the Recovery Advocates in detecting
identity theft and fraud issues and fully assisting their clients from detection to resolution.

Q: How Much Life Insurance Does A Stay At Home Parent Need?

2012 January 23
 

Dave Ramsey recommends that a stay at home parent carry life insurance since they provide important and valuable services in the household such as childcare, housekeeping, food preparation, transportation, etc. If they were to prematurely die then the household would experience an increase in expenses that can be significant. Typically an amount between $250,000 to 400,000 is the range he recommends. You can purchase a 15-20 year guaranteed level term plan that reflects the age of your children. If your children are younger then the longer period and higher amount would apply.  If your children are older and more self-dependent then a shorter term period, which will save you money, can be considered.

Jeff Zander talks Term Life Insurance

2012 January 22
 

Jeff Zander discusses the benefits of Term Life Insurance vs. Cash Value Plans.

Click here to learn more on why Term Life Insurance is better than Cash Value Insurance.

Jeff Zander provides advice on buying insurance

2012 January 10

Insurance is one of those topics that no one likes to talk about but we all need it! Jeff Zander talks about the best approach to shopping and buying insurance such as life insurance, home and auto, health, and disability insurance.

We’re here to help! Please contact us if you have any questions about your insurance needs.

Jeff Zander of Zander Insurance talks about the importance of ID Theft Protection

2012 January 10
by zanderins

Identity Theft is a serious issue that affects millions of people each year and unfortunately there is no way to prevent it from happening. Listen to Jeff Zander talk about ID Theft and what you can do to save time and money by protecting yourself.

And then, visit our FAQ on Identity Theft.

Q: How Much Term Life Insurance Do We Need And What Time Period Should We Buy?

2011 December 16

Dave Ramsey recommends term life insurance when an individual or family has debts that cannot be paid from their current assets and if a wage earner was to die and there is a need to provide an income for those financially reliant upon them. Otherwise he feels there are much smarter things that you could do with your money. Per Dave’s advice, Zander Insurance only offers guaranteed level term life plans. Dave tends to lean toward the 15 or 20 year plans since you can accomplish very significant financial progress over this period so that you greatly reduce and eventually eliminate the need for life insurance.  At younger ages he does feel that considering a 30 year plan is OK since they allow more time and are useful if you are just starting out your family. However, as you get older the cost difference of the 30 year plan increases and does not represent as strong a value.

Additionally, Dave typically recommends that families carry an amount of life insurance equal to 10 times their income.  This level of protection will generally allow for a continuation of the financial lifestyle for the remaining family members and allow debt related issues along with education funding, emergency needs, and final expenses to be addressed. You can consider “laddering” policies and purchase numerous policies with different level term periods to address the different types of debt and savings/earning potential that you have.  The key to be careful of is not to go too short on the level periods overall, such as all on a 10 year plan, since the costs of these plans increase substantially at the end of the level periods.  It is generally advised to buy a slightly longer period, especially if the  premium does not go up that much to create a bit of padding. You can compare rates online at Zander Insurance or call Zander Insurance at 800 -356-4282 for personal assistance.