Top positive review
16 people found this helpful
highly practical guide
on June 16, 2010
Insurance is a notoriously boring, even painful, subject; one of life's burdens towards which we only begrudgingly direct our attention. There are several explanations one could put forth as to why, some relating to disreputable practices ( pushy salesmen, unethical denial of claims, etc ) others pertaining to the mind-numbing details contained in lengthy contractual boiler-plate which most folks regrettably ( if understandably ) gloss over prior to committing their signatures. In no small part, human psychology plays a role, finding it distasteful to shell out for services that provide no immediate, tangible benefit ( "I paid all this money and all I got was this lousy policy" ) or to contemplate the various accidents and incidents to which we are all too vulnerable. And yet, for all the loathing associated with the subject, a strong case can be made for insurance as the foundation of financial security, a benefit to both individuals and society- its importance is only magnified by the disdain with which it is treated. In fact, purely as a matter of prudence, insurance should be considered as the foundation upon which a family may erect other household "programs" ( ie, emergency fund, long-term investment, living wills ).
Jack Hungelmann's "Insurance for Dummies" rectifies this situation of malign neglect with 300+ pages of highly practical, jargon-free information for each of six specific categories of insurance:
1) auto insurance
2) home insurance
3) umbrella (liability) insurance
4) health insurance
5) disability insurance
6) life insurance
A functional ( if not dictionary ) definition of insurance is "management of risk". Bearing this in mind, Mr. Hungelmann goes through what he calls the ARRT of risk management: Avoid, Reduce, Retain, Transfer. It is evident that the aforementioned principles involve more than mere procurement of policies: while chance always plays a role, it is in fact the choices people make in life ( how and where they conduct themselves ) that often have the greatest impact on the amount of risk to which they are exposed. Hungelmann makes this point in the course of providing numerous detailed explanations and tips, many of which this reviewer considers to be of an immediately actionable character.
If you're like me, you just "inherited" insurance contacts from relatives and let the "family broker" set you up with an auto policy straight out of high school. More than likely, that broker set you up with a low deductible ( i.e., the amount you pay for repairs in a claim ) in order to save you money. As the years went by you just kept renewing your policy, never adjusting the deductible. Everything's fine, right? Well, "Insurance for Dummies" points out that in all likelihood your liability limit is woefully inadequate ( especially considering the litigious nature of our society ) but could be raised to safer level with a cost offset by simultaneously raising your deductible. Did your broker tell you this? Mine never did, and the realization that "professionals" weren't always providing me with useful information was the necessary goad towards a modicum of self-education ( on insurance and other topics ).
Vis a vis litigation, Mr. Hungelmann demonstrates just how cheap it is to buy an umbrella (excess liability) policy, describing it as "flat-out the best value in the insurance business". For a nominal amount of money, you increase the amount of skin your insurance company has in the game and in essence, provide an incentive for them to either settle or vigorously defend you ( up to your umbrella amount ) on their own dime.
A thorny and expensive thicket, life insurance is a matter of vital importance for married couples ( especially those with children ). "Insurance for Dummies" surveys the various pros and cons, enabling one to be conversant in the language of the industry when discussing a prospective policy with an agent. In the course of negotiation, and granting the obvious level of asymmetric knowledge between parties, it does make a tremendous difference knowing some of the tricks of the trade. While the author generally comes down on the side of term life as being of greatest benefit to most couples, he doesn't ( as is often the case ) savage the alternative of permanent ( cash value or "whole" ) life when circumstantially applicable ( high net worth, maxed out retirement contributions, etc. )
Finally, Mr. Hungelmann considers the woefully neglected matter of long term disability insurance. In his own words ( page 271 ):
"You have to deal with five possible causes of a major financial loss through insurance: lawsuits, destruction of home and personal property, major medical bills, premature death with dependents, and long-term disability. Most consumers, in their insurance programs, carry protection for the first four threats. But many consumers don't protect themselves from long-term loss of income from illness or injury unless their employer provides the insurance. Yet a person is three times more likely to become disabled for six months or more than to die prior to age 65."
"Insurance for Dummies" has proven to be one of the most useful tools my wife and I have found in laying the groundwork for a reasonable amount of insurance; a truly useful "hedge" against risk. Recommended in the highest possible terms.