Wealth Happens One Day At A Time - Excerpt

Black Enterprise, Sept, 2000 by Brooke M. Stephens

* Flight insurance. If you take 10 to 12 flights a year and buy this out of fear, a better use of money would be an additional term insurance policy. Flight insurance is overpriced coverage.

* Hospital indemnity insurance. The insurer promises to pay $100 a day while you're in the hospital, but with today's HMO coverage you probably won't be hospitalized more than three to five days.

* Credit card insurance. This protects the bank's interest, not yours. The overall cost of this is very expensive. Carry enough life insurance and let your family decide when and how they want to manage your remaining debts.

SHOPPING AROUND FOR LIFE INSURANCE

Before you begin calling agents and brokers to get coverage, spend some time doing a bit of homework and collecting some free information to learn how to get the most inexpensive coverage available. Several national insurance quote services are available and will charge you nothing for their services. All you have to do is phone the company and give it your vitals: name, address, age, gender, and how much life insurance coverage you think you'll need. Within three to four days you'll get a package in the mail that will give you the breakdown on different insurance companies in your area that can provide reasonably priced term insurance for you. The best part of this deal is that no salesperson will call you!

YOUR INSURANCE COMPANY'S HEALTH

Don't let low premiums be the basis for choosing an insurance company, especially in the health and life insurance area. With the payment problems of Oxford Health Coverage and the demise of companies like Mutual Benefit Life and Executive Life, your first concern should be whether they can deliver on what they promise. Check out your company's financial health by looking at the ratings reports from four sources:

* A.M. Best, www.ambest.com, or use the Best's Review in the library.

* Duff & Phelps, 312-368-3657.

* Moody's Investor's Services, 212-553-0377.

* Standard and Poor's, 212-208-1527.

HONEST ANSWERS ABOUT BUYING INSURANCE

You can get quick simple answers to all your questions about every aspect of life, health, disability, and homeowners insurance at the National Insurance Helpline. This free service is maintained by the Insurance Information Institute at 800-942-4242 during normal business hours. Another source of straight answers is: National Insurance Consumer Organization (NICO), 121 North Payne Street, Alexandria, VA 22314; 703-549-8050.

HOW MUCH LIFE INSURANCE DO YOU NEED?

Industry pundits tell you to buy from five to eight times your current income, but that formula doesn't work for everyone. The average policy sale is $100,000, which isn't nearly enough for a young family with a mortgage, children, and credit card bills. Think about it. After burial expenses of about $5,000, $95,000 would barely replace your income in the family for three years. Is that enough to take care of mortgage payments, a car note, the normal cost of bringing up your children, their medical and dental bills, and future tuition payments? Definitely not. The average family breadwinner needs at least $500,000 in life insurance protection to replace his or her paycheck for at least 10 years. In the event of a sudden demise, this money should be moved into some income producing investments that would provide at least $40,000 to $50,000 a year. Take a look at your total savings, retirement plan, private insurance, and group life coverage available through your employer, to determine how many years' income could be replaced by those total assets. Each person's needs are as different as his or her fingerprints. The real answer depends on three items in your financial profile: