One of Britain's biggest insurers is offering massive discounts on vacations to encourage its customers to be healthy.

This announcement from Prudential comes shortly after it emerged that Britain tops as the fattest country in Europe.

If policy holders do healthy things, such as go to the gym, stop smoking or buy fruit and vegetables, they will be eligible for some of the prizes.

There are four levels of membership Bronze, Silver, Gold and Platinum.

After earning 1,000 of so-called Vitality points, policy holders are promoted to Silver, 1,500 to Gold and 2,000 to Platinum.

Points are earned in different ways, such as 10 points for going to the gym or 200 points for stopping smoking.

It was noted that one third of cancers could be avoided due to the lifestyle changes, which mainly address obesity and smoking.

I wish this would catch on over here in the USA.

Labels: health care, insurance

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Yes, this great line from the movie Pollyanna, in which the preacher yelled at the congregation. Well it is true, it does. Are you ready.

Sadly, over 70% of the life insurance policies sold today are cash value policies. A cash value policy is insurance that packages insurance and savings together. Do not invest money in life insurance, since the returns are terrible. An insurance agent will show you some excellent projections, but none of these policies perform as projected.

When you have kids, you need to take out a term-life insurance policy that is 10 times your annual take-home pay. The point is to have enough money to replace the income of the deceased spouse.

This is even true for stay-at-home moms and dads. They provide economic benefits by doing the majority of the cooking, cleaning, shuttling the kids, so do not forget to take out some life insurance on stay-at-home parents.

Here is a great place to view term life insurance comparisons.

Labels: insurance

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Car insurance can be confusing. Should you have just liability or full coverage too?

Insurance is risk management. Buying individual stocks and even mutual funds have some amount of risk. It is the same with dropping collision and comprehensive insurance. You can save money, but you have to consider the risks at hand.

It is a no-brainer to drop full coverage when your deductible is larger than the worth of the car, ie you have a $1000 deductible and the car, if totaled would be worth only $900.

Next, look at payback. Divide the value of the car by the savings in insurance. Lower numbers mean you come out ahead faster if there were a claim that would total the car. You always come out ahead if you never make a claim since your rates increase.

It's all just risk management, and how much risk you are willing to assume?

You have to look at several things:

1. Are you in position to replace your vehicle if it is wrecked and is your fault?
2. What is the vehicle worth versus what it is costing you. Paying $140 a month is pretty steep and that is $1680 a year. If your vehicle is only worth $3000, it would take you less than 2 years without an accident to recoup the cost. If it is $10,000, it would take you 6 years.
3. How much of a decrease in cost would you get by upping your deductible to $1000. Do the cost analysis on that and see if it would be worth it.
4. It pays to shop around your insurance to another company. If anything, it will get your insurance to lower theirs if you have a quote from another company.

I look at this pretty simply. The insurance companies know the stats and they are charging in such a way that they are likely to make money on you. So the only insurance you should have is for things that you cannot come up with the money for.

If you had a $30,000 car, you could not afford to replace it, so you need full coverage. If you have a $2000 car, it would be a bummer to have replace it, but you could.

Labels: insurance, money saving tip

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For many years there has been a belief that healthy practices such as eating whole foods, avoiding processed junk food and exercising more is not only an investment in health but also an investment in the bottom line, both personally and as a society. So, I was interested to come across this article.

Granted, healthy practices do not prevent or cure all disease but I think there is plenty of evidence to show that healthy practices are worthwhile. So, I am continually baffled by the number of sedentary folks who eat mostly unhealthy foods and very few fresh fruits and vegetables.

As you either choose to exercise and/or eat well or choose to not exercise and/or eat poorly, what motivates your choices? Do you consider your financial well-being as you consider your physical well-being? In other words, do you see a relationship between the two?

Gary Taubes recently wrote a very good book called, Good Calories, Bad Calories. If you don't have time to read it, watch his video of a presentation about the book. This is a little over an hour and is worth watching. He exposes the myths about dieting and diseases.

Labels: insurance, money saving tip

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If you have reached Dave Ramsey's step number 4, contribute 15% of your pre-tax income to retirement, you may want to consider this information.

I came across this paper about mutual fund performance and the potential effects on your retirement.

Insurance companies are becoming more full-service oriented by offering banking and mutual funds services. It seems that mutual funds offered by insurance companies generally tend to underperform other investment fund families, by about 1.5% per year. This may not seem like much at first, but on a $10,000 investment, that could be a difference of $19,000 over 20 years.

The reasoning behind the underperformance is that insurance companies are naturally conservative in their risk taking, respecting the spirit and the letter of various regulations that can impede them from investing more aggressively. Investors in insurance companies' poorly performing funds also tend to pay little attention to them, giving the fund managers little incentive to actively try to keep their business.

Labels: Dave Ramsey, insurance, mutual fund

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The other day a friend of mine stopped in and asked me about USAA insurance. He qualifies to join and was thinking about it since having a bad experience with GEICO. Read on to see what happened.

My friend Jerry, wanted to get his van, that would not start, towed to be repaired. Well after an initial call to GEICO to take advantage of the towing feature that he was paying to receive for several years, he was left waiting at home wondering if anyone was going to show to tow. In the end, he had to call back and was told that GEICO could not get anyone to tow and just left him hanging there.

Jerry ended up getting someone local to tow his van without any difficulty. Sorry GEICO, with a little effort on your part, you could have kept a customer.

Labels: customer service, GEICO, insurance

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Are you one of those persons that has managed somehow to get the hang of it? I came across this list by A. B. Jacobs the other day. See if you recognize yourself in most of the twenty-five following scenarios, then you can confidently answer "yes" to that question.

1. Your credit card bill is paid in full each month with never a penny in interest incurred.

2. You understand that the variable annuity in which your neighbor just invested will prove to be a sad mistake.

3. Despite orchestrated furor by the media, you recognize that the $30 it costs to fill your vehicle's gas tank is cheaper in today's dollar that the $15 it cost 20 years ago.

4. You enjoy financial talk shows for their entertainment value while knowing that 95% of what is said is nonsense.

5. The only type of life insurance that you would ever consider purchasing is a term policy.

6. You are not tempted to invest in something because of a hot tip you get from a friend or relative.

7. You have serious doubts that the 3-credit course in basic English composition offered at Elegante University for $900 is any better than a similar course conducted at Midtown Community College for $60.

8. You are sufficiently sophisticated in real estate to know that the worst house in the best neighborhood beats the best house in the worst neighborhood.

9. You owe nothing on the vehicle you drive.

10. You have a pretty good idea by mid-November how much your income tax obligation for the current year will be.

11. When hearing that the S&P 500 Index just hit an all-time high, you are not inclined to call your broker with a buy order.

12. It is beyond your comprehension why anyone not certifiably insane would purchase a timeshare property.

13. Your checking account balance never drops below the minimum limit that triggers a monthly service charge.

14. You are aware that an option to pay your auto insurance premium in two installments, with a modest convenience fee instead of a single payment, probably works out as a loan at about a 25% interest rate.

15. Although you thoroughly enjoy the home in which you live, it is considerably less expensive than you can afford.

16. You know practically nothing about the option market—and intend to keep it that way.

17. You feel instinctively that every dollar you contribute in FICA taxes to the Social Security system is a dollar lost to you forever.

18. Whenever you are negotiating a purchase and qualify to receive a discount, you do not hesitate to ask for it.

19. You entertain no illusions that a financial advisor will provide sound counsel merely because of the Certified Financial Planner (CFP) designation held.

20. You make the maximum possible contribution to your retirement funds.

21. Whether your choice of wristwatch is a Rolex, a fashionable Cartier, a respectable Bulova, or an economy Timex, you recognize that all are battery-operated, with a similar quartz movement, and none fail to keep excellent time.

22. You find it baffling why anyone would buy a lottery ticket.

23. You cannot remember when you last borrowed money for an unexpected emergency.

24. The newspaper advertisement offering a half-pound silver commemorative medallion from The Perfidious Mint, at the "special advance price of only 139 dollars," forces you to suppress a laugh.

25. You have no confidence in the concept of "Investor Confidence."

Labels: Credit Cards, eddie money, insurance, lottery, mutual fund

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Here's the deal: when I learn something new or get excited about something I feel like I need to tell everyone I meet. So when I stumbled onto Dave Ramsey and started telling people about my new-found who-ha I mostly got the same response, "oh, the get-out-of-debt guy, sure I've heard of him..."

At that stage of the game, that description worked for me. But now, as I've been doing this stuff for a while, I've come to realize that calling him the "get-out-of-debt guy" is just not good enough. Besides being a turn-off to people who think that debt is okay - or to people who don't have debt - so they don't think they need his help, it really just describes one piece of what he does.

Look at his 13-week class, Financial Peace University. Only one of the 13 classes is on debt elimination. Granted, it is the centerpiece of financial peace... But my point is this: He's not the get-out-of-debt guy, he's the personal-finance guy.

Soup-to-nuts personal finance. This is the education we should have all received as a condition of graduating high-school. This is the education you need if you're doing well or if you're not.

We (my wife and I) have about 18 months to go before we're out of debt but the house. But because of what we learned in FPU we've avoided some huge financial set-backs. Two examples I'd like to use here happened in the last couple weeks... but thanks to what we learned a couple years ago, these example will be just examples not catastrophes.

Prior to going through FPU we thought that the ideal way to have any kind of insurance was to pay the LEAST possible to satisfy the bankers and the law. We figured that if a car is paid off - drop everything but what is required. For our home, just get enough to keep the bankers happy and keep our cashflow as high as possible. So, needless to say, those are both the wrong way to do it. After taking the classes, we adjusted our homeowners insurance and our car insurance. AND, even after paying off the cars, we kept full coverage.

Example one:
There was an ice storm a month or so ago and our huge elm in our back yard could not hold up under the weight.


I called our insurance company and they're paying for the tree removal, the damage to the siding and - because the adjuster found hail damage and was able to determine that it was from just a couple months ago, they're replacing our whole roof. Total damages, about $10,000. Out of pocket for me? $2000.

Example 2:
Then, a few days later I woke up early for some reason and left for work at about 6AM. Just a mile or so away from home, at ~60MPH I ran into a deer.


Total damages about $3,000. Out of pocket for me? $250.

Had we not been doing all this Dave Ramsey stuff, this would have been a huge set-back. Our insurance would not have been adequate and we would not have had any idea where the money would have come from to fix everything. Instead, we're paying cash for the car repair out of our emergency fund and we're saving up to pay the $2,000 for the roof repair in the spring when we can get a roofer to do the work.

Thanks Dave!

Labels: Dave Ramsey, emergency fund, financial planning, insurance

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Earlier this year, I came across this article in Kiplingers about going overseas to have surgery. Some of the estimates show that the savings for some procedures can add up to tens of thousands of dollars.

For example, a kidney transplant in the U.S. could cost as much as $65,000. With the overseas option, a patient might pay less than $20,000. Might be worth a try and the hospitals involved with the program are better than their stateside counter parts.

Labels: insurance, medical bills

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With this day and age of data collection, private companies are collecting your personal information. One aspect of this data collection are the loyalty cards that supermarkets and pharmacies offer. In exchange for discounts, your purchases are recorded for marketing purposes. The problem is that these records are now being sold to life and health insurance companies, who will use them to evaluate your rates based on your food and nonprescription drug purchases. So the next time you go to the store to pick up some medication for someone else or buying some artery clogging food, pay without your discount card. Or even better idea, pay cash! Who knows what your credit card companies are doing with your information.

Labels: insurance, money saving tip

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