Published: Monday, 2 Dec 2013 | 10:09 AM ET
By: Andrew Osterland, Special to CNBC.com
All three financial advisors interviewed say the wild card—and potential budget killer—is health care. According to Ward, a couple over age 65 can expect to spend $600 per month each between contributions to Medicare, any Medicare supplemental plan and out-of-pocket medical costs.
"It's the biggest expense for retirees," he said.
If a health crisis necessitates long-term care, the expenses can be crippling. Long-term care insurance costs approximately $200 per month per person; people should determine whether they want coverage now or will pay for potential costs out of their own pockets should the time come. Wealthy, poor and single people may choose the latter option, but insurance is probably a good idea for the bulk of middle-class married couples.
"We generally recommend long-term care insurance for most people," Edelman said. "It's usually health care that causes a crisis for people in retirement."
—By Andrew Osterland, Special to CNBC.com
There are so many things that should be considered before you purchased insurance.
For example; you already know that every community has building ordinances or zoning laws that affect how houses are built or updated.
But did you know that there are also laws and ordinances that govern how or whether a house can be repaired after a loss?
When you have a loss that damages part of your house, the repairs, in many situations, must be made to the specifications of any regulations that are in effect at the time of the loss.
It doesn’t really matter if everything met code when your house was built. What matters now is the new building code.
Even more important than that, there are regulations that may compel you to tear down the house if the damage is more than 40–50 percent of its value.
You’re probably thinking: “So how does that affect me? Isn’t that what insurance pays for?"
Well…the answer is yes and no at the same time! Insurance pays for the cost to repair or replace the damaged part of the building.
Think of it this way: if the value of your house is $200,000 and you have $100,000 in damage, insurance pays for the damage (minus your deductible, of course).
But now that your house has sustained damage equal to 50 percent of its value, the law kicks in and requires you to tear it down—damaged and undamaged parts—and rebuild the whole thing!
Now, since insurance pays for the damaged part of the building, but even the undamaged part has to be torn down, where does the other $100,000 come from? Well, that’s where Ordinance or Law coverage comes in.
There are very few total losses; partial losses are far more likely. But a partial loss could trigger the enforcement of an ordinance or law that could cause you to have to pay more than the amount of loss covered by your policy.
Additional coverage may be purchased that would help pay for the value of the undamaged part of the house and the increased cost to rebuild according to the new code.
Replacement value doesn’t mean upgrade cost what if this happened to you…A fire causes major destruction to your building.
Because more than 50% was damaged, a local by-law requires the building to be torn down and rebuilt to current building codes.
You’re a responsible person and take the necessary steps to maintain your property. You have replacement cost value on your policy, so you’d be fully covered…right? Not necessarily.
Property insurance policies generally have an “Ordinance or Law” exclusion, which means that the policy covers the building as it exists, but it does not cover the cost to upgrade the building to current building codes and ordinances after a loss.
Therefore, having “replacement cost” coverage for your building does not mean that you have “upgrade cost” coverage, unless you purchase an “Ordinance or Law endorsement” for your property.
Even if a property policy offers some built-in Ordinance or Law protection, often the amount of coverage isn’t sufficient in a major loss.
Building codes and zoning laws affect every piece of property no matter how big or small. These laws are continually changing…requiring new or improved features such as better wiring, handicap access, sprinkler systems and more.
If a loss situation triggers code upgrades, it could be financially devastating unless you have Ordinance or Law coverage.
While some regard this coverage to be important only for older buildings, laws are always changing, and newer buildings can be affected. This is an area of concern for all building owners.
How ordinance and law coverage protects you:
As hurricane season approaches we want to remind you that hurricane preparedness is of the utmost importance. Hurricane Sandy, the second costliest storm in U.S. history causing an estimated $50 billion in damage certainly show how devastating a storm can be and reminds us that we should not be complacent, but be prepared for severe weather events. We urge you to take the time to put together your personal hurricane kit to protect your family and property in the event that a storm impacts us this year.
In addition to preparing for the safety of your family, it is a good time to review your homeowners policy with us to make absolutely certain that you have the coverages you need to protect your property.
Replacement Cost - the differences between the replacement cost of your home and its market value in today's economy is a prevalent topic of discussion. With today's depressed market values, it i even more important that your Homeowners Coverage A limit is insured for 100% of the replacement value of your home.
Deductibles - your homeowners policy has two deductibles, one for 'all other perils' (AP) and one for 'hurricanes' or it may be for all 'wind damage.' Your MPIUA policy will have a higher deductible for any 'wind' damage. But your UPC Insurance policy would have a 'Hurricane' deductible that applies only during a 'named hurricane.' Otherwise, your lower 'all other perils' deductible would be applied.
Flood - we want to remind your that your homeowner's policy does not cover flood. Should a storm occur and your property becomes flooded, in order for you to have coverage you must have a separate flood policy.
The risk of catastrophic loss during hurricane season requires an innovative approach to
property coverage—and a rapid response when losses occur. For over 40 years, Lexington
Insurance Company has helped our brokers and clients prepare for, protect against, and recover
from catastrophic losses. We are the leading U.S.-based surplus lines insurer, and a property
and casualty market leader.
Make sure you’re a step ahead of risk this hurricane season. Watch LexTV for the latest
on hurricane risk and coverage solutions.
Hurricane 2012 Update
Dr. Phil Klotzbach updates his 2012 seasonal hurricane forecast and shares his outlook for the remainder of the season. This episode also introduces Lexington's new Hurricane Infographic which will help streamline the understanding of a hurricane event.
Find The Answers You Need
For Customer Service questions, please call: 800-295-8016
For payment information for all other policies including flood: click here.
To make a one-time electronic payment or enroll in recurring electronic payment processing for your Homeowners or Dwelling Fire policy: click here.
Before you begin, please be sure to have your policy invoice available.
How UPC Insurance Can Help
As your ONE source of protection that bridges the gap between success and security, UPC Insurance offers a selection of customizable products designed to protect both your property and your assets. The list below is merely an outline of our basic products, but with the assistance of your trained neighborhood independent agent for UPC Insurance, you will find the right product and the right options to meet your unique protection needs.
• Homeowner Coverage
Responsive, Stable and Innovative
In good times and bad, you can count on UPC's network of professional agents to deliver excellent service and stay in touch with your needs by recommending the right protection for you and your family.
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