A FEW WEEKS BACK, I discussed some of the challenges with traditional long-term-care (LTC) insurance: In addition to steep and rising premiums, these policies are complex. Many policyholders have to contend with an annual renewal letter that presents a mind-numbing matrix of options.
But there’s more to it than that. Long-term care is also an emotional topic. There’s the expression that personal finance is more personal than it is finance. I’ve been reminded of that over the past few weeks,

LONG-TERM-CARE insurance policies are, in my opinion, both a blessing and a curse. They’re a blessing because they can help cover critical and costly care when a family might have no other financial options.
But they can also feel like a curse. That’s because of what many owners of traditional long-term-care (LTC) insurance refer to as “the letter.” This is the renewal letter that policyholders receive each year. These letters provide a menu of renewal options,

ON FEB. 27, 1992, Stella Liebeck ordered a cup of coffee from a McDonald’s drive-through. Moments later, as she attempted to open the lid, the cup spilled, causing a burn that sent her to the hospital. Her injury was serious but self-inflicted and not life-threatening. Nonetheless, she sued McDonald’s, and a jury awarded her almost $3 million. That award was reduced upon appeal, but this case is often cited as an example of an out-of-control legal system exploited by personal injury lawyers.

IF YOU’VE EVER rented a car, you’ll inevitability have heard the collision damage waiver (CDW) sales pitch. It sounds something like this: “I assume you want us to protect you bumper to bumper on the car, right?”
If you say, “yes, please,” then—for anywhere between $10 and $30 a day—the rental car will be covered for losses due to theft or damage, except for damage to certain portions of the car. Hint: Read the fine print.

TERM INSURANCE is typically the best bet for people who need life insurance, while permanent policies are appropriate for relatively few folks. Yet I keep getting the same question from parents: What about children? Does it make sense to purchase a whole-life policy for a young child?
No doubt influenced by Gerber Life Insurance’s relentless marketing, these parents want to know whether it’s worth locking in insurance pricing early on and whether this is a good way to help their children start saving for retirement.

I WORKED IN the investment department of three different insurance companies. But I never had any interest in buying a whole-life insurance policy. I knew term insurance was the best way to get the maximum death benefit for my premium dollars.
Instead, as a mutual fund manager, I was always more interested in investing in the stock market. (That said, I didn’t invest in the first mutual fund I managed. Why not? I didn’t want to pay the 7% “load”—the upfront sales commission.)
But my attitude toward whole-life insurance changed six years ago.

TERM LIFE INSURANCE is popular not only because it’s a relatively cheap way to protect your family, but also it’s simple: You pay a premium for a chosen “coverage period” and, if you die during that time, your beneficiaries receive the policy’s death benefit.
Yet, despite its reputation for simplicity, term insurance comes with a surprising number of options. On top of that, there are now dozens of insurers offering the product. Yes, if you buy the cheapest 20-year term policy you can find from an insurer that’s rated A or better by AM Best,

I REMEMBER the first time we met. Josh—not his real name—and I went to rival high schools in the Washington, D.C., area. During our senior year, we competed in a track meet. Someone mentioned that we would be going to the same college in the fall, so I went over to introduce myself—a little awkwardly, as he had just annihilated me in a race. A few months later, knowing few people on campus, we were happy to discover that we’d both enrolled in the college’s Army Reserve Officers’ Training Corps (ROTC) program.

FOR MOST PEOPLE, life insurance is purchased to protect their income in the event of an unexpected death. If you’re 35 years old, you potentially have 30 or more years of future earnings that your family would lose if you passed away, so having life insurance during these working years makes sense. But what happens once you reach retirement? Before canceling your policy, it’s important to assess your situation, because keeping the coverage might be the better choice.

NONE OF US WANTS to contemplate our own mortality. But we all need to think about it—including thinking about life insurance.
I was lucky enough to have a long tenure with a large company that provided term insurance at reasonable prices. My employer provided two times our salary in coverage and we had the option to purchase additional coverage equal to eight times salary. I was also able to buy insurance on my wife’s life equal to three times my salary.

TERM LIFE INSURANCE is best for most people: It’s affordable, simple to understand and provides the two or three decades of coverage they need. But that doesn’t mean that permanent “cash value” life insurance is always bad.
The most obvious situation: You actually need insurance permanently. Suppose you’re a business owner and you want to provide money for your family to pay inheritance taxes. By buying life insurance, you’d make sure your family receives a pool of income-tax-free money upon your death,

MY HUSBAND is the consumer every company should fear. In my last post, I detailed his multi-month research that preceded our recent car purchase. This time, he decided to investigate auto insurance.
The Gecko’s promise to save 15% had hit a nerve. A savings of 15% on a $2,500 annual insurance bill for two cars would be worth the effort. But, of course, being the thorough person that he is, my husband had to check out every other insurance company on the planet.

HAVE YOU PROTECTED your paycheck? As I discussed in my article last week, becoming disabled is a serious financial risk—and typically the best way to get coverage is through your employer. What if you don’t have long-term disability insurance through work or if coverage isn’t sufficient? An individual long-term disability policy can fill the gap.
Disability insurance is one of the more complicated products to price, because insurers need to assess two dimensions of risk.

BE HONEST: WHEN was the last time you thought about disability insurance? As co-founder of a website that sells insurance, it’s a topic I think about every day, but I realize most folks have other things on their mind. Yet becoming disabled is one of the biggest financial risks that working people face.
Disability can result from accidents or sickness and can impact people of all ages. According to the Social Security Administration, a 20-year-old entering the workforce has a one-in-four chance of becoming disabled for a year or more before retirement.

IF YOU ASK AN insurance agent how much coverage you should have, the answer invariably is “more.” What if you show too much interest? Next thing you know, you could find yourself the unhappy owner of a high-cost variable annuity.
Consumers, meanwhile, take what might be politely described as a barbell approach. Sometimes, they’re acutely aware of a particular risk and buy more coverage than they need—a frequent occurrence with auto and health insurance.