MONEY Insurance

Study Shows Taxpayers Subsidize Rich People’s Ocean Views

Flood Insurance Cheap Rich Towns
Tim Laman—Getty Images/National Geographic RF Edgartown, Martha's Vineyard, Massachusetts

Research on flood insurance in Massachusetts shows wealthy towns pay disproportionately low premiums.

Rich residents of coastal areas may have yet another financial advantage over poorer neighbors, according to new research from the University of Massachusetts Dartmouth.

The study finds that homeowners in more affluent Massachusetts towns tend to pay hundreds of dollars less in flood insurance premiums than those in poorer communities—despite similar levels of storm and flood risk.

The taxpayer-subsidized National Flood Insurance Program does not use income to determine eligibility, and for a host of potential reasons wealthier people end up paying disproportionately less for protection, says study author Chad McGuire.

“Those with more expensive properties receive more of a subsidy,” McGuire says.

For example, in the more blue-collar town of Fairhaven, residents pay an average premium of about $820 per $100,000 in property value, compared with $400 for residents of Edgartown on Martha’s Vineyard, widely known as a summer playground for the wealthy.

The study did not determine precise reasons for the disparity, but several factors may be at play. For one, McGuire says, many expensive older homes may have grandfathered status and be eligible for lower premiums because they were built before the current flood maps were drawn. Additionally, richer towns might be more likely to be able to afford the modifications—such as building seawalls and elevating houses on stilts—that lower risk and therefore premiums.

But those factors don’t entirely explain the study findings, says McGuire, and the way NFIP community ratings translate into federal dollars allocated is not fully transparent.

As a result of the relatively low cost of insurance, wealthy homeowners are incentivized to keep rebuilding along coastal areas—and hundreds of thousands of federal dollars can be used to repair flood damage to the same expensive vacation homes, over and over again.

“The government shouldn’t be incentivizing risky behavior,” McGuire says.

Federal Emergency Management Agency is reviewing the study results, a spokesperson told the Boston Globe.

McGuire says he and his coauthors plan to look at flood insurance data for other coastal states next.

MONEY real estate

Atlantic Hurricane Season Could Bring High Costs

Prepare your home and finances for a disaster.

Atlantic hurricane season runs from June 1 through November 30. While the 2015 season is expected to bring ‘below average’ activity according to NOAA, that still means six to 11 named storms. Homeowners in geographic areas susceptible to hurricanes should be prepared with homeowners’ and flood insurance. For more information about hurricane-proofing your finances, check out It’s Hurricane Season: 5 Ways to Disaster-Proof Your Finances.

MONEY Insurance

Am I Insured If I Take an Uber?

150529_EM_RidesharingInsurance
Justin Sullivan—Getty Images A Lyft customer gets into a car in San Francisco, California.

Answer: It's complicated.

Drivers for ride-sharing services such as Uber and Lyft are under increased attack from insurance companies. However, there is less publicity regarding ride-sharing passengers and their insurance coverage. Are they covered during ride-sharing, and if so, by whom? The answer is not always clear.

Both Lyft and Uber have $1 million of liability coverage along with $1 million of uninsured/underinsured motorist coverage, in case passengers in a ride-sharing vehicle are injured by another motorist with insufficient coverage. According to Lyft’s website, this coverage applies from the time the rider accepts a ride request until the time the ride is officially ended in the app (presumably, after the passenger has exited the vehicle).

It would seem that for most cases, the policy of the ride-sharing company will cover your costs — but it’s not obvious whether you will have to go through other insurance paths first. Theoretically, damages could be covered by the ride-sharing company’s liability if your driver was at fault, a third-party’s insurance company if they were at fault instead of the driver, or your own personal auto insurance company. Insurance is state-regulated, and as Lyft’s website notes, “…coverage may be modified to comply with local regulations and state laws.”

Both Uber and Lyft make it clear on their terms and conditions pages that passengers assume risk in using their services. Experts think the disclaimers alone are not likely to shield Uber and Lyft from liability when push comes to shove, especially if the ride-share driver is clearly at fault.

What happens if a third-party driver is involved or causes the accident? If fault is in question, it’s not obvious with whom a harmed passenger should be filing a claim. There’s no guarantee that third-party coverage is sufficient, or whether ride-sharing services can force you to go through the third party’s insurance if the fault is still in question.

The Insurance Information Institute published a recent ride-share Q&A sheet stating that passenger’s personal auto policies would probably not apply since they are not underwritten to take on that risk. Others in the insurance industry have stated that passengers may be covered by their own insurance policies up to their personal injury protection (PIP) limits depending on their state’s regulations. However, unless you somehow caused the accident as a passenger, your insurance should only be the claim of last resort.

Some clarity may be provided by an unfortunate test case near Sacramento, where 24-year old Lyft passenger Shane Holland was killed in November 2014 in an accident on Interstate 80. As of this writing, it isn’t clear how fault will be assigned and who will pay for the collective damages. PropertyCasualty360° reports that Lyft’s policy is expected to cover the accident regardless of fault.

There is another odd case from September 2014 working through the court system in San Francisco regarding an Uber driver that got into a heated argument with passengers and ended up attacking one of them with a claw hammer. Do the liabilities intended for car accidents cover attacks by a driver? That remains to be seen.

Ride-sharing rules on insurance coverage are still being hammered out on state and local levels, as are the legality and licensing requirements. Given their popularity, it seems like ride-sharing services are here to stay, and it’s important for you to check the current rules before using them. By the time you read this article, the rules where you live (or at your travel destination) may have changed.

Check with both sides of the argument — the ride-share company and the appropriate state insurance commission. Certainly, it’s an annoyance, but it may save you many thousands of dollars if you’re involved in a ride-sharing accident. Without local clarification, you could end up in legal and insurance limbo.

More From MoneyTips:

MONEY

It’s Hurricane Season: 5 Ways to Disaster-Proof Your Finances

Ravaged ocean front cottage in Ocean Beach, New Jersey
Douglas Ljungkvist from OCEAN BEACH (Kehrer Verlag, 2014) 2012's Hurricane Sandy left many families' homes—and finances—a wreck.

Storms are coming! Make sure the damage doesn't blow through your savings.

The National Oceanic and Atmospheric Association has come out with its 2015 Atlantic hurricane forecast, and while the number of predicted named storms is below the historical average, it only takes one to wreak havoc on your home—and your finances. Though we can’t stop the rain, we can provide you with some guidance to help you weather the storm.

Here’s how to safeguard your finances against a hurricane, flood, or any unexpected natural disaster:

1. Review your insurance coverage

Sure, it’s unglamorous to learn the nuances of your homeowners insurance policy—but diligence pays off. If you don’t understand your policy, a natural disaster could leave you with thousands of dollars in costs for damages you thought were covered.

For one thing, you should be aware that standard homeowners insurance won’t cover flood damage—and historically, most natural disasters in the U.S. have involved flooding, according to the Insurance Information Institute (III).

Homeowners in high-risk zones will be required by their mortgage lender to get a separate flood policy. But if you live near any body of water, you should think about getting coverage. Generally, people get basic policies through the National Flood Insurance Program, which covers up to $250,000 in dwelling and $100,000 in contents. If you’re in a high-risk area, also consider “excess” flood insurance, sold by only a few insurers. (Be aware that it typically takes 30 days after purchase for any coverage to kick in.)

As for your vanilla homeowner’s policy, the wording on how it covers your belongings could leave you holding a big bill. So take a look at whether it uses the phrase “actual cash value coverage” (which means it will cover the cost of your possessions minus depreciation) and more robust “replacement cost coverage” (which will cover the cost of replacing your possessions today). Replacement cost insurance costs 10% more on average, but offers more complete coverage for your belongings.

2. Make payments automatic.

In the stressful aftermath of a disaster, you don’t want to be chasing paychecks that were mailed to your home or finding out that you forgot to pay a certain bill. So if you haven’t already set your paychecks on direct deposit or your major bills to auto-pay online, do so now.

3. Safeguard important documents

In case you need to evacuate your home, you should have important personal and financial records collected in one place so that you can grab them on the run. “People who have to evacuate their houses often can’t get back in for several days,” says Robbie Berg, a hurricane specialist at the National Hurricane Center. “You need to make sure you have important information on hand.”

Key documents include your Social Security card, home deeds, medical insurance cards and stock and bond certificates. You may also want to save images of these documents in the cloud—password protected, of course—so that you can access them from anywhere. Or simply scan onto a flash drive, but keep the originals in a bank safe-deposit box, which is built to withstand with the elements.

4. Take an inventory of your stuff

If you end up needing to file an insurance claim for lost possessions after a disaster, having an inventory of the contents of your home—and particularly of expensive items like electronics, jewelry, and furniture—will make the process much smoother. “You don’t want to wait until a disaster hits to think about a home inventory,” says Loretta Worters, vice president of the III. “People are so devastated emotionally from something like a hurricane—going through and trying to figure out all the things you had is an added nightmare.”

Make your inventory as specific and comprehensive as possible—include the serial number on your television, for instance, and any receipts you have for high-ticket items. In addition to a written list, include photographs or video footage of your possessions. Install the free app from the III called Know Your Stuff, available for iPhone and Android devices, which helps you catalog your belongings.

5. Have backup cash

You should have an emergency fund saved up in a bank account—the general guideline is three to six months’ living expenses—for exactly this type of situation. If you’re forced to rent a car after yours is damaged, for example, you’ll be able to draw on this money instead of racking up charges on your credit cards.

Additionally, you’ll want to have some actual cash on hand, especially if you know a storm is coming. “When power gets cut off, you don’t have access to ATMs to get cash,” says Berg. Research what it might cost if you’re evacuated for a few days in your area, including hotel and gas costs. Keep the money in small bills, since it might be hard to get change.

With any luck, all these tedious preparations will be unnecessary—but as those who’ve been through a super storm can attest, it’s better to be financially safe than sorry.

MONEY Health Care

Now You Can Really Get Free Birth Control Under Obamacare

assortment of birth control pills
Ted Morrison—Getty Images

The Obama administration just tightened the law that says insurance companies must cover all types of contraceptives.

Following recent reports that many women still pay for birth control methods that should be covered by insurers under the Affordable Care Act, the government just released a new document clarifying and tightening the law.

“Insurance companies have been breaking the law and today the Obama administration underscored that it will not tolerate these violations,” Gretchen Borchelt, National Women’s Law Center vice president for health and reproductive rights, said in a statement. “It is past time for insurers to adhere to the law and stop telling women that their chosen method isn’t covered or that they must pay for it.”

Whereas previous government FAQs about Obamacare were not as clear about the types of birth control covered under the law, the new guidance includes an explicit list—printed below—of all the contraceptive methods insurers must cover.

Until now many women, including one MONEY staffer, have found that insurers have been able to skirt the law by lumping together certain categories of contraceptives and charging expensive co-pays on all but a small number of methods. Since the previous language was vague, insurance companies have been able to deny coverage of brand name contraceptives—even when an equivalent generic is not available.

In particular, the new rules are especially good news for those who use IUDs, patches, and vaginal rings, since those are the birth control methods that women have had the most trouble getting covered, according to a recent study by the NWLC.

If your insurer is still making you pay out of pocket for your preferred method of birth control—and a generic substitute is not available to or appropriate for you because of, say, side effects—you should fight back by first talking to your doctor, who could advocate for you to your insurer.

This should be especially effective since the rules make it clear that doctors get the final say over whether a particular birth control method is medically necessary.

According to the new statement: “If an individual’s attending provider recommends a particular service or FDA-approved item based on … medical necessity … the plan or issuer must cover that service or item without cost sharing. The plan or issuer must defer to the determination of the attending provider. Medical necessity may include considerations such as severity of side effects, differences in permanence and reversibility of contraceptives, and ability to adhere to the appropriate use of the item or service.”

If that doesn’t work, consider resources like the National Women’s Law Center: Its website has templates for appeal letters and a free hotline (866-745-5487) you can use to get further help.

Here is the list of contraceptive methods that are now fully covered. Insurers must cover at least one type of birth control in each of these 18 categories:

(1) sterilization surgery for women
(2) surgical sterilization implant for women
(3) implantable rod
(4) IUD copper
(5) IUD with progestin
(6) shot/injection
(7) oral contraceptives (combined pill)
(8) oral contraceptives (progestin only)
(9) oral contraceptives extended/continuous use
(10) patch
(11) vaginal contraceptive ring
(12) diaphragm
(13) sponge
(14) cervical cap
(15) female condom
(16) spermicide
(17) emergency contraception (Plan B/Plan B One Step/Next Choice)
(18) emergency contraception (Ella)

The new government statement also clarifies that insurers must cover preventive services for transgender people when such services are medically appropriate, anesthesia services during preventive colonoscopies, and preventive screening for mutations in the BRCA-1 or BRCA-2 gene.

MONEY Insurance

6 Ways You’re Overpaying for Insurance

Kristina Lindberg—Getty Images

Yes, you can be too cautious. When the costs far outweigh the benefits, it's time to drop extra coverage.

If you really want to be safe, you could buy insurance for just about everything in your life. You can insure your car, home, life, possessions, and can even buy insurance to cover your funeral costs. But with all of that money going out the door, you might not have enough left over to enjoy those things you’re insuring.

Sometimes, the costs of insurance outweigh the benefits, and the money spent on premiums could be better spent elsewhere. Here are six times when it’s worth considering dropping insurance coverage.

1. Collision Coverage

Collision coverage protects your car if it’s damaged or suffers a total loss in an accident that you’re at-fault for. If you’re still paying off or leasing a car, your lender may require such coverage until you own the car outright.

But because vehicle values depreciate every year, the insurer will only pay up to the actual cash value of your car after you’ve paid the deductible. A vehicle’s condition is also factored, so knowing every year your car’s actual cash value — or Blue Book value — can help you determine if you should drop collision coverage.

One rule of thumb is to skip collision coverage if the vehicle’s cash value drops below $4,000. The cost of insurance for a low value car could cost more than the total vehicle repair and replacement costs in an accident.

Another rule is that if collision insurance costs more than 10% of the value of the car, then it’s worthwhile to drop it and put that savings aside for a new car. For example, if collision coverage costs $200 a year on a car valued at $2,000, it’s worth keeping the premium for yourself.

However, if you don’t have enough money set aside to pay for a major vehicle repair after an accident, then you may want to keep collision coverage.

It’s also worth having in case you are at-fault in an accident. Collision coverage is needed in such simple accidents as you rear-ending someone at a stoplight, running a stoplight and hitting someone, or backing out of your garage and hitting another car. Without it, you’ll have to pay out of your own pocket to repair the other driver’s car.

You also may want to consider where you’re driving before dropping collision insurance. Some areas aren’t as safe as they might seem, according to Auto Insurance Center. Some rural areas are more deadly to drive in than urban areas, the site found.

2. Comprehensive Auto Insurance

This type of auto insurance is usually sold together with collision coverage. Your insurance company may require having both. A comprehensive-only policy may be limited to special circumstances, such as for a classic car that’s rarely driven.

Comprehensive coverage covers you if the car is stolen, vandalized, or is damaged by fire, weather, natural disasters, or acts of God. It also provides coverage if you hit a house in a one-car accident, a deer or other animal runs into your car, you hit a fence, or experience damage in a riot.

Like collision coverage, it could be worthwhile to drop comprehensive coverage if your car isn’t worth much and repairing such damage would be more than the value of the car.

However, comprehensive is usually a small part of an insurance premium, and you may not be able to drop it unless you also drop collision coverage.

3. Rental Reimbursement

Some insurers include rental car reimbursement in their policies. You may need a rental car if your car is damaged in an accident and is at an auto shop for a few days. But if the accident is someone else’s fault, their insurance may pay for your rental car. If you’re at fault, it’s your expense.

Check to see how much you’re paying each month, or year, for this type of insurance, and determine if the costs outweigh what you’d pay yourself for renting a car. Is it worth the chance you’ll need it?

4. Roadside Assistance

The same logic goes with roadside assistance sold with your car insurance. Chances are you rarely use it and that you have it mainly for the peace of mind when you get on the road.

You may already have duplicate coverage by having AAA, OnStar, or some other service, so dropping this insurance coverage is a no-brainer. Or it may be cheaper to call a friend, relative, or even a tow truck when you’re out of gas or need a flat fixed.

5. Term Life Insurance

Having term life insurance is meant for exactly that: a “term” of your life. It’s a common type of insurance to buy when starting a family, so that your spouse and children aren’t left without income if you die during your working life.

But if your children are in college and no longer live at home, or you’re retired, then extending a term policy may not be worthwhile.

6. Insurance Riders

As part of your homeowners insurance, you may have bought riders to cover expensive items that aren’t covered under a normal policy. These can include expensive artwork, jewelry, or heirlooms you’ve inherited.

If you’ve sold such things or donated them to charity and no longer own them, then it’s time to drop these insurance riders.

Having too much insurance is an enviable problem. Whether it’s life insurance or over-insuring a home and its possessions, it’s a good idea to check with your insurance agent each year to determine if you have too much (or not enough) coverage.

More from Wise Bread:

MONEY Travel

9 Things You Should Never Skimp on When Traveling

couple pulling suitcases
Walter Zerla—Getty Images

A few smart splurges can make your trip a lot more fun

Travel should be pleasurable — not stressful. While it’s almost inevitable for something to go awry from time to time, you can avoid most issues with a little foresight and planning. Sometimes all it takes is investing a bit more upfront in order to ensure a better travel experience.

Take a look at these nine things you should never skimp on when traveling.

1. Luggage

I’m not including accommodations or method of travel on this list because I think those two items are relative. Some people like five-star hotels and first-class seating, while others are perfectly fine in hostels and economy class. To each their own.

What we can all agree on, though, is that decent luggage is an important trip component for several reasons, namely because it needs to hold up against all the wear and tear you’ll put it through in your travels. I’m not saying that cheap luggage will fall apart and expensive luggage is bar none, but there is something to be said about brands with a reputation for quality — and that usually comes at a cost.

Personally, I prefer Herschel Supply Co. for my luggage, while my husband likes Tumi. Those aren’t endorsements (I don’t have any affiliation with either of those companies), but rather suggestions to help inform your future purchase if you’re in the market for sturdier luggage.

2. Comfortable Shoes

A lot of people vacation in warmer climates. And why not — there’s an abundance of things to see and do when the weather outside is perfect. But before you head out to explore, make sure you’re wearing comfortable shoes and socks that can handle a day of walking without killing your feet. These should be the real deal — and definitely not right out of the box. You also want to avoid going sockless. I’ve worn both canvas slip-ons without socks and flip-flops on heavy walking days, and both footwear choices resulted in bloody, painful feet.

3. Personal Safety

Because I live in New York City, I’m generally not afraid of new surroundings, seemingly seedy neighborhoods, or people who look like they might be up to no good. I stay vigilant, of course, but I don’t want to let a black cloud of fear follow me wherever I go just because the area doesn’t look like it’s maintained by Ritz-Carlton. There was a time in the Bahamas, however, that this joie de vivre could’ve gotten my friends and me into a sticky situation while traveling down a lonely road from one club to another — a mistake I’ll never make again. Now I loosen the purse strings and spring for a cab to avoid a potentially dangerous situation.

Safety first, people.

4. An Unforgettable Experience

Finally, we’ve gotten to the fun part — activities! I’m an activities-oriented guy, and I like to be out and about experiencing everything I can in the short time I have in a location. The problem, however, is that an unforgettable experience can be costly. Still, it’s not something on which you should skimp — your fond memories of your trip will last much longer than any tchotchke — and there are ways to make it affordable.

Remember when I mentioned earlier that the preference for high-end flight and hotel accommodations are relative? They still are, and personally this is how I justify splurging a bit on a great experience — I choose to stay in modest digs and fly the cheapest way I can, so when I get to my destination I can have all the fun I want without feeling guilty for spending too much money.

5. Travel Insurance

I once went on what was meant to be an unforgettable European vacation that included London, Dublin, and finally, Paris for New Year’s Eve. But thanks to Mother Nature and an incompetent, famously low-priced Irish airline that shall remain nameless, my hopes of ushering in a new year in the City of Lights were dashed. The worst part? I was young and dumb and I didn’t have travel insurance. Hotel, train fares, and airfare all went out the window — along with my usually jovial attitude. Don’t let this happen to you, especially if you’re planning a special-occasion trip. Spend the extra money to protect your investment.

6. Vaccinations

I suspect that pre-travel vaccinations are not only overlooked a lot of the times, but probably actively avoided sometimes due to cost and inconvenience. In that case, let’s play a game of “Would You Rather?”

I’ll go first.

Would you rather pay for pricey vaccinations that will help you avoid common illnesses, or would you rather spend your trip becoming besties with a toilet and visiting the very questionable local hospital?

I win.

Get the proper vaccinations before you depart. If you can’t afford it, don’t go. In some cases, it really could be the difference between life and death.

7. Health Care

Speaking of questionable local hospitals, they’re the very last place you ever want to visit while you’re traveling — even worse than jail. If you’re ill, spring for quality medical care.

Blogger behind Broke Girl Gets Rich, Chelsea Baldwin, just wrapped up a few years in Asia, and soon she’ll embark on an extended stay in South America. As someone who has caught her fair share of stomach bugs while traveling and was subsequently treated at public health facilities, she advises better-quality healthcare as well.

“If the public health care in the country you’re visiting is known for its quality, that’s fine, but otherwise it’s always worth the extra cost to get more attention and better care from a private doctor,” she says. “Most American health insurance companies will cover you for emergency situations overseas, but if you think the cost of visiting a private doctor at your destination could get expensive, there are numerous travel insurance companies you can get plans from to help cover you.”

8. Cell Phone Data

When I travel to destinations outside my wireless provider’s coverage area, I try to stick with the hotel’s free Wi-Fi. If you want to be fully connected — it’s not a bad idea despite the faction of people begging us to unplug every once in a while — there’s a solution that will cost you a few bucks. Still, it’s much cheaper than the fees you may incur from your provider.

“Buying a SIM card upon arrival in a country will cost you little more than $10 to $15 and it’s invaluable for all the times you get lost or you’re unable to communicate with your cab driver,” says Matthew Newton, CEO of Tourism Tiger. “Many small emergencies are solved through the simple asset of a SIM card charged with one gigabyte of data.”

9. Bottled Water

My Wise Bread colleagues and I generally try to steer you clear of buying bottled water, but Dr. Irene S. Levine (who moonlights as a freelance travel writer) makes a good case for bottled water when you’re traveling.

“There is no reason to take a chance,” she says. “Even if tap water is safe to drink, it may have a different mineral composition that is upsetting to your stomach and can potentially ruin your trip. Additionally, don’t try to save money by not drinking enough water. When you’re traveling, it’s easy to get dehydrated either on planes or in hot climates when you’re more active than usual.”

As someone who prefers tap water, I agree that this is a good practice to adopt, especially when traveling outside the United States. To save money and waste, consider buying a few large jugs of distilled water with which you can fill your permanent water bottle, instead of buying many single bottles the whole trip.

More from Wise Bread:

MONEY Health Care

How to Cushion the Costs of Long-Term-Care Insurance

box with styrofoam peanuts
Victoria Snowber—Getty Images

Policies that help pay for nursing care can be costly. Here's what you can do to keep down the price.

A lengthy stay in a nursing home could wipe out your savings—the national average for a shared room in a nursing home is $77,380 a year. Long-term-care insurance can protect you and your family, but the policies are increasingly expensive and not always needed.

The decision to buy a policy—something I’m grappling with now—comes down to many factors, including what assets you have to protect, whether or not you want to leave behind an estate, your ability to pay premiums for decades, and your odds of needing care in the first place. But if you end up on the side of buying insurance, you have options to keep down costs.

How to Insure Yourself for Less

Buy just enough coverage to provide a cushion. “We advise insuring for a core amount and planning on using other sources if that runs out,” says Claude Thau, a long-term-care expert at Target Insurance Services in Overland Park, Kans. It’s like the peace of mind you get from having a fixed annuity in retirement. You lock into enough income to cover your housing and utilities, say, and fund travel and entertainment with other savings. Even modest long-term-care insurance will cut down your out-of-pocket costs.

The cushion approach appeals to me. The Department of Health and Human Services projects that the average 65-year-old will need three years of long-term care, but about two-thirds of that time will be spent at home, with the rest in either a nursing home or assisted-living facility.

I’m leaning toward insuring for that level of coverage, knowing that if my wife or I need more care, we have sufficient assets to pay our way. That would come out of our financial legacy. But so would excess premium payments over 30 years for coverage we didn’t need. I’m comfortable with that tradeoff.

Keep long-term affordability in mind. These policies have been around for decades, but only in the past five years have buyers filed claims in big numbers—exposing an underwriting disaster. MetLife, Unum, and Prudential are among dozens of insurers that have quit the long-term-care business. Others, including industry leader Genworth, have absorbed huge losses and won state approval to boost premiums on older policies to stay afloat.

New policies incorporate more realistic assumptions—and prices reflect that. “These policies have gone up so dramatically it makes them hard to recommend,” says Clarissa Hobson, a financial planner in Colorado Springs.

Can you be sure double-digit premium hikes are over? Long-term-care experts say the industry is on firmer actuarial footing. “By far, the worst is behind,” says Michael Kitces, director of research at Pinnacle Advisory Group.

Yet others are skeptical. “The baby boomers aren’t even there yet,” says Jane Gross, author of A Bittersweet Season: Caring for Our Aging Parents—and Ourselves. “What’s going to happen when boomers start making claims?” Gross, 67, bought a policy in her fifties and began to regret it soon after.

Think hard about how much you need. When you shop for a policy, the variables include the daily benefit (often $100 to $200), how much the benefit goes up for inflation (3% or 5%), how long payments last, from a few years to no cap, and the so-called elimination period, or how long before insurance kicks in.

A 90- to 100-day elimination period is virtually standard (92% of policies). You can adjust the daily benefit to save, but since nursing-home costs vary widely, first check local prices to get a sense of what you might face.

Inflation protection is an important lever. For years experts recommended policies with benefits that grow 5% a year to keep pace with medical inflation, and to be safe most still do. But that option costs about two-thirds more than a 3% adjustment.

Going with 3% may be fine, says David Wolf, a long-term-care insurance planner in Spokane. The cost of in-home care and assisted living is rising less than 2% a year, he says. Nursing-home rates are going up 5% a year, but stays are shorter than they once were.

Note that while premiums are tax-deductible, the write-off is capped based on age ($1,430 in 2015 for ages 51 to 60). And they are deductible only to the extent that they, along with other medical expenses, exceed 10% of your income (7.5% if you’re 65 or older).

Money

Buy a little flexibility. Three years is the most popular benefit period. As a couple, odds are only one of you might spend more time in a nursing home. A shared benefit can help you insure against that financial catastrophe.

Rather than five years of coverage each, you buy 10 years to be split as needed—five and five, say, or two and eight. A 60-year-old couple can expect to pay about 15% more for a shared policy with six years of total benefits than for a joint policy with three years of benefits each, says Wolf, but in exchange you have a better shot at covering a single long stay in a facility.

Don’t wait too long to shop. The average age of a buyer is now 57, down from 67 a dozen years ago, and it’s easy to see why. Premiums go up modestly before age 55. The curve steepens after that, with the sharp turn at 65, when prices begin to rise about 8% a year, says Jesse Slome, director of the American Association for Long-Term Care.

What’s more, you are fast approaching an age when your health can lead to higher premiums, if it does not render you ineligible altogether. “By 65, almost everybody has some kind of medical condition,” Slome says. Once you reach your sixties, the average denial rate jumps from 17% to 25%.

Gather multiple quotes. For the same coverage, the highest-cost policies can cost twice as much as the cheapest ones, Slome says. Go with a broker who sells coverage from at least five insurers and specializes in the field. Search for an agent at aaltci.org.

Know what it takes to collect. Stalling and claims denials sometimes command frightful headlines, but just 1% of denials are without merit, the federal government reports. Still, make sure you know exactly when your claim will qualify. One common hang-up is home care. Especially with an old plan, your policy might require a licensed home health aide when all you need is less-skilled (and less costly) help with simple chores.

The Alternatives to Insurance

If you decide against a traditional long-term-care policy—or are turned down—you have other insurance options. None provide as much coverage for care. But they have the advantage of guaranteeing you cash in old age or a legacy for your heirs.

How other policies can help. Hobson likes hybrid life insurance policies, which let you draw on the death benefit to pay for long-term care, or leave it to your heirs if none is needed. But the upfront cost is steep, and the premiums are not tax-deductible.

A deferred annuity is another option. For a single premium now, you lock in guaranteed income for life at age 82 or 85, which can go toward long-term care or anything else. Or if you can afford to self-insure and want to preserve money for your heirs, you can buy a whole life policy with a death benefit equal to your assets.

The bottom line (for one). I’ll probably end up in a shared policy with six or eight years of care. My wife is younger than I am. She may be able to help me if that time comes. So I will need less coverage, leaving her with more, assuming she outlives me. And by then she can sell the house if need be.

But I’m not quite sold on this either. If I invest at 8% the $7,500 a year I would spend on reasonably complete coverage, I could amass $343,214 in 20 years. That would be taxable and amount to less than half the benefit I’d enjoy with a long-term-care policy. But it would be mine no matter what. What I am sure of: I will keep weighing the options until we’re settled on a plan. I won’t leave either our care as we get older or our kids’ inheritance to fate.

Previous: Do I Really Need a Long-Term Insurance Plan?

MONEY Health Care

Do You Really Need a Long-Term Care Plan?

Shout

Doing the math on long-term care insurance is no easy chore. Here's how to navigate this high-stakes decision.

Millions of boomers are wondering how to prepare for the possibility of needing costly care some day. Count me as one of them. At age 58, I am in the sweet spot for buying long-term care insurance—assuming I want it at all. After weeks of research, I still haven’t decided. But I have sorted out the moving parts.

What I’ve found is that the rising cost of both care and the insurance that pays for it is only one piece of the puzzle. New types of insurance give me more options to mull over. And recent research calls into question how common lengthy nursing-home stays really are, leaving me to think harder about the odds of needing coverage.

What’s more, I have to be concerned about the health of an industry that I would need to rely on for the next three decades. Insurers badly miscalculated how many policyholders would make claims, leading to a mass exodus of big players from the business in recent years.

The upshot: drastic price hikes from the insurers who remain. A typical long-term-care policy written 10 years ago has seen annual premiums rise about 70%, says Michael Kitces, director of research at Pinnacle Advisory Group. Even so, those old policies are cheaper by half than what a person nearing 70 has to pay for the same coverage today.

That’s because the insurers that have stayed in the business have jacked up the price of new policies. Those premiums rose an average of 8.6% last year alone, reports the American Association for Long-Term Care Insurance. For some, the price hikes are even worse. Today, for example, a healthy 55-year-old man would pay $2,075 a year for comprehensive single coverage—up 17% from last year.

All in all, the answer to the question Do you need long-term-care insurance? is a personal one—and far from easy. Here’s how to think through the decision.

The Promise of Insurance

Long-term care is something you hope you never need. Or at least you hope that when and if you aren’t entirely self-sufficient, your spouse or another family member can pitch in. But when you need more of a hand with daily activities than a lay helper can provide, or around-the-clock or more expert medical care becomes a must, you’ll have to pay for a professional.

The national average for a shared room in a nursing home is $77,380 a year, according to the Genworth 2014 Cost of Care Survey, but the tab can go much higher—$120,000 is typical in Massachusetts, for example. Even assisted living, where you get just some one-on-one help and basic medical care, averages $42,000 a year.

Medicare covers 100 days in a nursing home if you are recovering from an illness or injury and showing improvement, but it offers no help at assisted living or in your home. Medicaid picks up the tab for a nursing home and some in-home help only after you have all but exhausted your savings (in some states, the program helps with assisted living too).

Enter long-term-care insurance, which reimburses you for at least a portion of the cost of a nursing home, assisted-living facility, adult day care, or in-home help. To qualify for benefits, you must be unable to perform two of these six day-to-day activities—bathing, dressing, moving from bed to chair, using the toilet, eating, and maintaining continence—and a medical pro must expect your disability to last at least 90 days.

How to Decide If You’re a Candidate

You may figure you’ll roll the dice and fund your care out of savings. In fact, sales of long-term-care policies fell by 24% in 2014 and are down 65% from 2004 levels, reports LIMRA, an insurance industry trade group. Just 13% of people 65 and older have a policy, according to estimates by Anthony Webb, a senior economist at the Center for Retirement Research at Boston College. Here’s how to make the call.

Start with what you’re worth. The rule of thumb is that you’re a candidate to buy long-term-care insurance if you have between $200,000 and $2 million in assets. With less, you can’t swing the premiums and don’t have enough to protect. Medicaid will cover most of the costs of care after you whittle your savings down to as little as $2,000 if you’re single. With $2 million, you can reasonably plan on paying your own way. But even in that doughnut hole, the answer isn’t always clear.

Understand the true odds. You may have heard figures that make rolling the dice seem like a foolish bet. One frequently cited stat is that 70% of Americans who reach 65 will eventually need some sort of long-term care.

But a recent paper from the Center for Retirement Research paints a less alarming picture. As the graphic below shows, a high number of people will need nursing-home care at or after 65, but only a small portion will remain long enough to run up big bills. Half of men and 39% of women stay less than 90 days, before most long-term-care policies even kick in. The average stay for a man is less than a year; for a woman, a year and a half.

Previous studies had estimated that a long-term-care policy made financial sense for 30% to 40% of 65-year-olds. The CRR pegged that number around 20%. “We’re getting more people going into care for a shorter period of time,” says Webb. “That’s what’s driving down the value of insurance.”

Money

Ask yourself what you’re insuring. At its root, long-term-care insurance is about protecting your estate. A desire to preserve a legacy for their three adult children is why Craig and Jan Klaas, both 60, bought a soup-to-nuts policy. Last year Jan’s mother died after eight years in a facility. Her father had spent two years in a nursing home. “I’ve seen people get wiped out,” says Craig, a financial planner in Rockford, Ill. “I do not want my estate at risk.”

Without coverage, you’ll still get care, funded by savings and Medicaid, if needed. But paying for it could deny your children an inheritance.

See if you even have a choice. Insurers have stepped up medical screening. Overall, 30% to 40% of applicants are turned down for health reasons, says Jesse Slome, director of the American Association for Long-Term Care. Your chances are better when you’re younger. Still, 17% of 50- to 59-year-olds are disqualified, up from 14% in 2009. Common reasons include chronic health problems like diabetes and arthritis, or any condition that can leave you incapacitated. A denial from one insurer, adds Slome, will often lead to automatic denials from others.

Check your family tree. It’s not just your health that counts. Since last year, Genworth has also been considering your parents’ health when you apply for a policy. With early-onset dementia or coronary artery disease in the family, you might not qualify for the best rate.

You should take your family history into consideration too. Half of all claims are triggered by care associated with dementia. On the other hand, says Howard Gleckman, senior fellow at the Urban Institute, a history of cancer may argue for less or no coverage because patients usually have a decent quality of life until just a few months from the end. That’s a cold calculation, but one you shouldn’t ignore.

Next: If you’re ready to explore your options, here’s how to keep down the costs of long-term-care insurance.

MONEY Autos

44,000 Cars Were Stolen Last Year for One Dumb Reason

key in ignition
B. Christopher—Alamy

It's embarrassing, but more people have done it than would like to admit.

Having your car stolen would be a terrible thing to experience, but apparently thousands of Americans aren’t thinking about that because they leave their keys in their vehicles — and then the cars get stolen.

Sure, it may seem like a no-brainer to not leave your keys in an unattended vehicle, but people are increasingly making this mistake, according to an analysis from the National Insurance Crime Bureau. From 2012 through 2014, 126,603 vehicles were stolen with the keys left inside. The actual number of key-in-car thefts is likely higher, because if the theft report didn’t include that detail (perhaps an omission of an embarrassed victim), it’s not included in these figures. While auto theft has declined in the last few years, the percentage of those thefts involving keys left in the vehicle has climbed.

In 2012, 5.4% of cars stolen had the keys in them at the time of theft. That share increased to 6% in 2013 and to 6.7% in 2014 — that’s 44,828 vehicle thefts with the keys inside.

Losing your car is bad enough, but think of what else you might lose. People leave lots of stuff in their cars that can be used by identity thieves, like mail and vehicle registration documents. If someone lifts your car because you left it running when you went to grab a cup of coffee, you might have left your purse, briefcase, wallet or phone behind, too. Not only do you have to deal with the stress of having your car stolen (and who knows what your insurance covers), now you have to worry about someone stealing your identity.

Identity theft can manifest in a variety of ways, all of which can harm your well-being, particularly your financial stability. For example, if someone opens up fraudulent credit accounts in your name, your credit standing will suffer the consequences, which could include a slew of things including credit inquiries, high debt levels and missed loan payments. The sooner you spot fraud, the sooner you can get the information removed from your credit history and repair any damage done. The longer fraud goes on, the more likely you are to deal with limited credit access and higher loan interest rates, as a result of fraudulent information. That’s why it’s so important to regularly monitor your credit, which you can do for free on Credit.com.

Of course, it’s also extremely helpful if you avoid leaving your car unattended with the keys inside. That would save you a lot of trouble.

More from Credit.com

This article originally appeared on Credit.com.

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