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Frequently Asked Questions

Below are some of our frequently asked questions. If you have any other questions or concerns, please feel free to contact us.

  1. What do I give up by not using an agent to purchase insurance?
  2. Do I need a small business insurance plan?
  3. What if business insurance is too costly for me?
  4. What should I do to keep my business insurance expenditures low?
  5. Do I need workers' compensation business insurance?
  6. What about purchasing life insurance on a spouse and on children?
  7. Should term insurance or cash value life insurance be purchased?
  8. I'm single. Do I need life insurance?
What do I give up by not using an agent to purchase insurance?
The disadvantage of not using an agent to purchase insurance is that the policyholder does not receive as much, or often any, personal service. A licensed agent with whom there is direct contact can be vital when purchasing a product and absolutely necessary when filing a claim. Without an agent to act as your personal advocate during the claims process, you are left to take care of the details on your own. Without an agent you are on your own to absorb the frustration and expense of resolving problems.

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Do I need a small business insurance plan?
Imagine your business facing an unexpected risk like fire, theft, natural disaster or employee injury, and all that without having business insurance coverage. The expenses these circumstances may lead to con potentially drive you out of the business for good. So having a business insurance policy is definitely a must for any business no matter how small it is.

Besides, you are required to have a small business insurance plan by the state law. Some types of business insurance like workers' compensation coverage or property and liability insurance are a must in all of the states, although the amounts of coverage vary from place to place. In some states you should provide a business insurance policy in order to get a business registration.

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What if business insurance is too costly for me?
The statistic shows that about 40 percent of small businesses aren't insured at all, because their owners assume that having a small business insurance policy is too costly for their enterprise. Fact is that not having a business insurance may lead to expenses far beyond annual premiums, putting you at risk of losing your business. Natural disasters, theft, employee injuries – this all may lead to unexpected financial losses, which could be entirely covered by business insurance if you have one. 

There are different business insurance packages offered by insurers to small business owners who run short on cash. For example, business owner's policies (BOPs) provide the necessary coverage for property and casualty risks at a low price. Another way of reducing business insurance costs is raising your deductible. You'll have to pay more to make a claim but you can be sure you are fully covered when something happens.

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What should I do to keep my business insurance expenditures low?
Risk management represents a powerful tool of keeping your business insurance costs under control. By using risk management you determine all the possible risks your business may face and choose whether you want to finance coverage against these risks or not. Large companies use these methods of reducing their expenditures, and your small business could use the same scheme for making sure you don't over or under-buy insurance.

There are four major steps in risk management
  1. Define the potential risks your particular business may face during operation. For example, you're working with hazardous substances or your workers have a high risk of injury.
  2. Outline the potential financial impact each type of risk may deliver to your business and define the probability of each risk type's manifestation.
  3. Determine the possibilities of preventing or controlling the risks, and find possibilities of transferring the risks to third parties.
  4. Review the result of your analysis frequently.

Using risk management methods will actually help reduce the number of claims your business is likely to make. And this will lead to reduction of your insurance coverage rates, which are based on your business' individual claim history. Risk management will also help lower your out-of-pocket expenses for uninsured claims.

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Do I need workers' compensation business insurance?
If your business has employees, regardless of their number, you should carry workers' compensation coverage. Besides, many states require the companies to have such coverage in order to be registered. Although, the amounts of workers' compensation coverage and mechanisms of regulation vary from state to state. So, make sure to consult with your insurance provider on the local legislation regarding workers' compensation business insurance.

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What about purchasing life insurance on a spouse and on children?

In certain circumstances, it may be advisable to purchase life insurance on children; generally, however, such purchases should not be made in lieu of purchasing appropriate amounts of life insurance on the family breadwinner(s). It is of utmost importance that the income earning capacity of the primary breadwinner be fully protected, if possible, through the purchase of the required amount of life insurance before contemplating the purchase of life insurance on children or on a non-wage earning spouse. In a dual-earning household, it is important to protect the income earning capacity of both spouses. Life insurance on a non-wage earning spouse is often recommended for the purpose of paying for household services lost at this individual's death.

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Should term insurance or cash value life insurance be purchased?

Although a difficult question—one whose answer will vary depending on circumstances—several principles should be followed in addressing this issue.

It must first be recognized that in any life insurance purchasing decision, there are at least two basic questions that must be answered:

1.  "How much life insurance should I buy?" and
2.  "What type of life insurance policy should I buy?"

The question contained in (1) involves an "insurance" decision and the question contained in (2) requires a "financial" decision.

The "insurance" question should always be resolved first. For example, the amount of life insurance that you need may be so large that the only way in which this needed amount of insurance can be afforded is through the purchase of term insurance with its lower premium requirements.

If your ability (and willingness) to pay life insurance premiums is such that you can afford the desired amount of life insurance under either type of policy, it is then appropriate to consider the "financial" decision — which type of policy to buy. Important factors affecting the "financial" decision include your income tax bracket, whether the need for life insurance is short-term or long-term (e.g., 20 years or longer), and the rate of return on alternative investments possessing similar risk.

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I'm single. Do I need life insurance?

Single people often think they don't need life insurance, and in many cases, they are right. However, there are many factors that determine your need for life insurance; marital status is just one.

First of all, do you have any dependents? Just because you aren't married doesn't mean you have no financial responsibilities. If you have children, or if you provide support for a parent or grandparent, your death could create a serious financial hardship for these dependents. Life insurance can provide a continued stream of income for your loved ones if you die prematurely. It can also provide peace of mind for you, knowing that they will be taken care of when you're gone.

Do you have a mortgage or other loans that are jointly held with a cosigner? If so, your death would leave the cosigner responsible for the entire debt. You might want to consider purchasing at least enough life insurance to cover these debts in the event of your death. If you have debts for which you alone are responsible, your creditors can make a claim for payment against any assets in your estate.

Are you at risk for any serious medical conditions? If, for example, your family medical history includes certain genetic conditions (diabetes, certain types of cancer, etc.), it may make sense to purchase life insurance while you are young and healthy. Purchasing life insurance after you develop such a condition could be difficult, or even impossible. If you choose to buy insurance for this reason, consider adding a guaranteed insurability rider to your policy. This rider guarantees you the right to purchase additional insurance at specified times, without having to provide proof of insurability.

If you died tomorrow, would you leave enough to cover your funeral expenses? If not, who would be responsible for paying? For many families, even a relatively simple funeral can create a major financial burden. For this reason alone, you might consider purchasing a small life insurance policy, or even a simple burial policy. As an alternative, you could invest the premiums you would spend on such a policy, and make sure your family knows this investment is earmarked for your final expenses, should the need arise.

Even if you determine that you don't need life insurance, make sure your other insurance needs are covered. You may not realize it, but disability insurance is just as important as life insurance. Statistically speaking, you are much more likely to become disabled than to die prematurely. Disability insurance can replace lost income if you are unable to work due to serious illness or injury.

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