Monthly Archives: September 2013

Will my Homeowners Policy cover my child who will be going away to college?

Q: Will my Homeowners Policy cover my child who will be going away to college?

A: MAYBE !!!!!!
You may have SOME automatic property coverage to cover your child’s stuff in their dorm room
You may need to buy additional theft coverage
Be careful of those electronics – your policy may not cover those
Better call your agent right away to be sure you have the proper coverage

Does My Homeowner’s Policy Cover Lawn Workers?

Mowing the lawnDear Sherri, I hired my daughter’s boyfriend to mow the lawn once a week. If he gets hurt while mowing my lawn, do I have liability coverage on my Homeowner’s policy? – Long Island Worrier

Dear Long Island Worrier, As that famous Reggae song says, “Don’t worry, be happy!” because in New York, a part-time worker (Such as this, a babysitter, a person to shovel the snow, etc.) that works in your home less than 40 hours a week and is engaged in casual employment would be covered under your Homeowner’s policy. The only problem I foresee is that when your daughter breaks up with this boyfriend, your lawn is going to suffer. Either way, you should always call your insurance agent so you can be sure you do not need a separate workers compensation policy.

– Sherri

How Much Life Insurance Do I Need?

Q: How much life insurance do I need?

A: To answer this question, you need to examine the 4 main expenses involved in calculating this amount:
• Funeral Costs
• Mortgage Amount
• Education
• Income Replacement
Typically you will need 15-20 times your pre-tax income to cover all 4 expenses like you were still alive.
From here, your agent can help you decide whether to purchase term or universal life insurance to protect your loved ones.

What is the difference between Term Life Insurance and Universal Life Insurance?

Q: What is the difference between Term Life Insurance and Universal Life Insurance?

A: Term Life Insurance is life insurance which provides a level death benefit at a fixed annual premium for a limited period of time. This period of time can be 5 years, 10 years, 15 years or even 30 years. Universal Life Insurance combines the low-cost protection of term insurance with a savings component that is invested in a tax-deferred account. This cash value may be available for a loan to the policyholder in the future.

Will The Fed’s “Disparate Impact” Ruling Threaten The Insurance Industry,Too?

disparate-impactRecently, in February of this year, the US Department of Housing and Urban Development (HUD) published their Disparate Impact Rule as an amendment to the Fair Housing Act.

What is the doctrine of Disparate Impact? It is a practice that can be considered discriminatory and possibly illegal regardless of intent. If such a practice is seen to adversely impact the members of a protected class such as minorities (for example Women or African Americans) it can be seen as having a disparate impact on that class.

Under the new ruling, an individual or a company can be held liable, not just for outright discrimination, but for any practice that is seen as having such an impact regardless of whether there is any evidence the individual or company intended to discriminate! To date, we’ve already seen cases where lenders, real estate brokers, and financial service firms have been sued by the US Dept. of Justice for actions or practices alleged to have a “Disparate Impact Ruling”.

As an aside, please refer to my related article entitled, HUD’s New “Disparate Impact” Ruling Is Bad News For Both Lenders AND Realtors.

This begs the question of how such a ruling might effect the insurance industry. Consider the following scenarios:

• There are circumstances under which pregnant women might find it difficult to obtain life insurance as a result of potential complications during pregnancy and childbirth. Note that women are just one such “protected class” under federal law. Does this mean that pregnant women as individuals, a group, or the Department of Justice on behalf of these women, might bring a “disparate impact” suit against life insurance carriers?

• Life insurance carriers legally and legitimately have the right to “discriminate” between who they will and will not consider for insurance based on age, health issues such as high blood pressure, cholesterol, or a history of certain diseases. What happens if an individual with a family history of Sickle Cell Anemia, for instance, wants to obtain life insurance? This disease is genetic and, therefore, it is inherited and is found most predominantly amongst African Americans and people of African descent. Here again, note that African Americans are considered a “protected class” under federal law. Does this mean that an individual now has the right to sue a life insurance company for charging this “protected class” higher rates?

• Similarly, automobile insurers historically charge young male drivers higher insurance rates based on statistics illustrating their higher susceptibility to accidents based on their inexperience. Here, again, age is a “protected class” under federal law, so does this mean a change in the availability and pricing of auto insurance for all individuals should this be seen to have a “disparate impact” on young drivers? Another rating tool used by auto insurers is garaging location. Certain geographic areas reflect higher theft potential. Should any of these neighborhoods coincidentally reflect a high population of minorities, how might this effect the availability for people living in these areas?

We all agree that intentional and malicious discrimination is vile under any circumstances. However, the examples indicated above illustrate no malicious intent to discriminate based on race, age or sex and, yet, they could conceivably be cited for just such discrimination under the “disparate impact” rule.

Only time will tell whether or not my fears are groundless or whether the continuous stream of federal laws we see today, will have predictable “unforeseen consequences” resulting in adverse effects for the very “classes” the laws were intended to protect in the first place.

Warren Goldberg is President of Mortgage Wealth Advisors, a Certified Mortgage Planning Specialist, and a published author. His interviews include Blog-Talk Radio, Newsday, the Daily News and the Long Island Herald. Since 1992, he’s been sharing his financial knowledge and wealth-building strategies, including how to properly use your mortgage as a financial tool. His clients regularly express their trust and their appreciation by recommending their friends and family members in need of mortgage, real estate and financial guidance
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