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Most mortgage lenders require that you purchase coverage before closing or entering into escrow on a property.

Some lenders, however, don’t demand insurance on condominiums. But the condo association may require you to insure the interior of your unit (including your possessions), while the condo association is required by state law to insure the exterior of the building and all common areas.

State insurance laws vary on coverage and limits, so ask an experienced insurance agent in your state about specific laws. It’s wise to get a feel for insurance rates in areas with above-normal incidences of natural disasters, including earthquakes and tornadoes. In some areas, coverage may not be available at affordable rates, if at all, or only through a state fund, which offers only limited coverage.

What’s covered: Types of policies vary

Basic coverage

Includes vandalism, theft, explosions, fire, lightning, wind-storms, hail, window, glass breakage and damage from vehicles, aircraft and smoke.

Broad coverage

Includes damage from ice, snow, sleet or falling objects; bursting or freezing of pipes; heating or air-conditioning systems and appliances; electrical malfunction to electrical systems and appliances; and structural collapse.

Liability coverage

Coverage for a loss sustained inside a condo unit or on a single-family home property -- for example, a guest slipping and falling in a bathtub and someone falling on an icy sidewalk.

Replacement costs insurance

Covers the cost of replacing a structure but not the land. Look for a guarantee of 80 percent of full replacement costs.

Deductible

The amount of loss expenses you must pay before insurance payments kick in.

Actual cash value

Replacement costs minus depreciation.

Flood insurance

Do you live in a flood plain? Then you’d better have insurance. Most federally sponsored home loans require you to obtain flood insurance if you’re purchasing property in a flood plain. Your mortgage lender will receive a flood certification on your property during the application process, and if it’s discovered that your home is ina flood plain, you will need to purchase insurance.

The Federal Emergency Management Agency operates the National Flood Insurance Program, which offers coverage to homeowners in participating communities. FEMA categorizes flood zones according to how likely they are to experience flooding. Areas rated an “A” are at the highest risk, and all mortgage lenders offering a loan in an A flood zone will re- quire the borrower to obtain flood insurance. Locales labeled B, C, D, V and X carry lower risks and the possibility that mandatory insurance may not be needed.

Keep in mind, however, that lower risk doesn’t mean that an area won’t experience severe flooding. Evolving weather patterns can affect areas that historically haven’t had predictable flood patterns; these areas may also lack an extensive flood-control infrastructure. Your home can also flood from backed-up sewer systems that are overwhelmed by severe storms.

Rates for insurance policies vary from $200 to $700 a year, based on your flood-risk level. Policies restrict coverage amounts to $250,000 for structures and $100,000 in personal property.

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Posted 9:57 AM  View Comments


If an accident or illness sidelines you from your job for an extended period of time, how will you pay the bills? Group disability insurance would provide some income, but not all workers have it. And even if you do, would it go far enough?

"Less than half of consumers are covered by group disability policies at work, either because it's not available or it's optional and they choose not to purchase it," says Steven Weisbart, senior vice president and chief economist for the Insurance Information Institute in New York.

Meanwhile, Ronald Graff, director of individual disability products and planning for MetLife in the Tampa, Fla., area, says a lot of people assume they'd be able to get Social Security disability benefits to cover their expenses if they became disabled. But he says those payments are difficult to qualify for and are typically not very large.

So, you might buy your own private disability policy, particularly if you're self-employed, if your employer doesn't offer the insurance, or if you want more coverage than you can get through work.

Group disability insurance may fall short

"Disability insurance is meant to keep you from financial disaster but not to provide enough income to encourage you to stop working," Weisbart says.

According to Graff, that means you want insurance that would provide at least 50 percent of your usual income in case of long-term disability. A group policy often caps the benefit at 40 percent to 60 percent -- but of your salary, not income. So that benefit can seem skimpy, depending on how much you earn beyond your salary, he adds.

"Workers who receive commissions and bonuses or other compensation should check to see whether their disability insurance covers all of their income or only their base salary," Graff says.

Some group insurance policies also limit the amount of time you can collect benefits. If your policy is capped at 60 months, you could run out of benefits if your injury keeps you out of work longer. "The average disability lasts 32 months, but some disabilities can last a longer time," notes Graff.

Additionally, group disability policies often have a dollar-amount cap on the amount of benefits you can receive annually, such as $10,000 or $20,000, says Brenton Ver Ploeg, a partner with Ver Ploeg and Lumpkin, an insurance law firm in Miami.

"If you're making $100,000 a year, that group benefit isn't going to be very helpful," he says.

Plus, a group policy might be lacking if you're not considered disabled enough.

"Most group disability insurance benefits require someone to be totally disabled and unable to be gainfully employed," Graff says. "Some disability policies also offer a partial benefit if you are working but not to your full capacity because of an illness or injury. This is an important benefit because a lot of disabilities fall into this category."

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The U.S. government could have to run more state health insurance exchanges than expected under President Barack Obama’s healthcare law, if U.S. states pursuing their own marketplaces cannot complete them on time, a senior official said on Thursday.

The Obama administration has given 17 of the 50 states conditional approval to set up online exchanges where working families would purchase private plans at subsidized rates. The remaining 33 states will all have federally run markets, at least in the early years of the coming reform era.

But Gary Cohen, who spearheads exchange implementation for the U.S. Department of Health and Human Services, said some of the approved states face hurdles that could require Washington to step in with federal exchanges before open enrollment starts on Oct. 1.

“I’m absolutely confident that every state will have an exchange that will be functioning and ready,” said Cohen, who declined to elaborate on the number or identity of states that could be in for difficulties.

“The type of exchange may be different,” he told reporters. “(But) there will be an exchange of one kind or another in every state.”

Obama’s Patient Protection and Affordable Care Act requires Washington to provide an exchange in any state that cannot or will not set up their own.

The exchange initiative is expected to insure 26 million Americans, many of whom currently have no coverage, according to the nonpartisan Congressional Budget Office. A planned expansion of the Medicaid program for the poor is likely to cover another 12 million people.

Both the exchanges and the Medicaid expansion are due to begin providing coverage on Jan. 1, 2014.

Republicans and other healthcare reform critics have warned of potential problems for states, saying the administration has been slow to release rules governing implementation.

Many states also held off on implementation in 2012 until after the law survived a U.S. Supreme Court ruling in June and last November’s Republican presidential election challenge to Obama’s re-election.

Cohen said the main hurdles for states are development of information technology systems for applicant enrollment eligibility and continued legal and political challenges from reform opponents.

“The biggest challenges are for states that started later. Obviously, they have less time,” he said.

New Mexico and Idaho, two of the few Republican-led states to move toward establishing their own marketplace, are still awaiting final approval from their respective legislatures.

But even in Connecticut, one of the first states to embrace the healthcare exchange model, media reports have described implementation problems linked to vague or changing federal guidance.

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You may need life insurance after getting married or having a child, but do you need it from the day you're born? Advocates of juvenile life insurance say "yes" and hail the policies as financial planning essentials, while critics argue they're a waste of money.

Just like grown-up life insurance, two types of policies are available for kids: juvenile term insurance, which provides coverage until age 23 or 25 and offers the family a death benefit to cover unexpected funeral expenses for the child; and juvenile permanent insurance, which includes both a death benefit and a savings reserve that builds "cash value" as the child ages. Here's what a family needs to know.

Child death benefit pros and cons

Companies offering juvenile term life insurance talk about how the policies can provide a family with "peace of mind" by offering financial assistance -- namely, a death benefit -- "if the worst were to happen" to the child.

Juvenile term policies are sold on the idea that the death benefit is not designed to replace income, as it would be for an adult, but instead is geared toward covering burial and funeral costs if a child passes away.

Pros: Funerals are expensive. According to the most recent survey by the National Funeral Directors Association, the average cost is about $4,300, and that doesn't even include casket and cemetery expenses.

Cons: Chances are remote that a parent would ever need to pay for a child's funeral. The U.S. Department of Health and Human Services estimates that only 0.03 percent of U.S. children die between the ages of 1 and 4. And then, for children ages 5 through 14, that mortality rate drops by about half.

Since the death of a child is so unlikely, purchasing juvenile life insurance strictly to cover potential funeral costs is "very short-term thinking," says J. Robert Hunter, director of insurance for the Consumer Federation of America, a nonprofit consumer advocacy group based in Washington, D.C.

If families are concerned about covering unexpected funeral costs, Hunter says, they'd be better off creating a college savings fund and pulling from that if needed, rather than purchasing a juvenile life insurance policy.

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Posted 10:30 AM  View Comments


Millions of smokers could be priced out of health insurance because of tobacco penalties in President Barack Obama's health care law, according to experts who are just now teasing out the potential impact of a little-noted provision in the massive legislation.

The Affordable Care Act — "Obamacare" to its detractors — allows health insurers to charge smokers buying individual policies up to 50 percent higher premiums starting next Jan. 1.

For a 55-year-old smoker, the penalty could reach nearly $4,250 a year. A 60-year-old could wind up paying nearly $5,100 on top of premiums.

Younger smokers could be charged lower penalties under rules proposed last fall by the Obama administration. But older smokers could face a heavy hit on their household budgets at a time in life when smoking-related illnesses tend to emerge.

Workers covered on the job would be able to avoid tobacco penalties by joining smoking cessation programs, because employer plans operate under different rules. But experts say that option is not guaranteed to smokers trying to purchase coverage individually.

Nearly one of every five U.S. adults smokes. That share is higher among lower-income people, who also are more likely to work in jobs that don't come with health insurance and would therefore depend on the new federal health care law. Smoking increases the risk of developing heart disease, lung problems and cancer, contributing to nearly 450,000 deaths a year.

Insurers won't be allowed to charge more under the overhaul for people who are overweight, or have a health condition like a bad back or a heart that skips beats — but they can charge more if a person smokes.

Starting next Jan. 1, the federal health care law will make it possible for people who can't get coverage now to buy private policies, providing tax credits to keep the premiums affordable. Although the law prohibits insurance companies from turning away the sick, the penalties for smokers could have the same effect in many cases, keeping out potentially costly patients.

"We don't want to create barriers for people to get health care coverage," said California state Assemblyman Richard Pan, who is working on a law in his state that would limit insurers' ability to charge smokers more. The federal law allows states to limit or change the smoking penalty.

"We want people who are smoking to get smoking cessation treatment," added Pan, a pediatrician who represents the Sacramento area.

Obama administration officials declined to be interviewed for this article, but a former consumer protection regulator for the government is raising questions.

"If you are an insurer and there is a group of smokers you don't want in your pool, the ones you really don't want are the ones who have been smoking for 20 or 30 years," said Karen Pollitz, an expert on individual health insurance markets with the nonpartisan Kaiser Family Foundation. "You would have the flexibility to discourage them."

Several provisions in the federal health care law work together to leave older smokers with a bleak set of financial options, said Pollitz, formerly deputy director of the Office of Consumer Support in the federal Health and Human Services Department.

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Posted 10:29 AM  View Comments


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