Protecting your assets
- Life is full of risks and uncertainties. That is why people buy insurance that will protect themselves, their families and their property. Of course, the decision to purchase insurance involves weighing the costs and benefits.
- If your home is damaged by fire or a storm, having insurance would help pay for repairs.
- If you become sick, having health insurance will help pay your medical costs.
- Insurance that people elect to buy is private insurance.
There are Social Insurance Programs provided by the government that also protect individuals and their families against hardships and uncertainties such as unemployment, disabilities, retirement, health care, and death of a family’s wage earner.
- Social Insurance is required by state and federal laws, and it is, therefore, mandatory that individuals and businesses (employers) pay for these programs.
How insurance works?
It is important to become informed about insurance types and costs.
- Choosing insurance will require a financial commitment on your part and you want to make sure the costs are affordable.
- You can keep costs low by engaging in behavior that protects against risk. For example, a clean driving record will lower the cost of your car insurance.
Buying insurance is basically a contract that we enter with an insurance company, e.g. Geico, State Farm, Prudential and many others.
- We purchase an insurance policy and pay the insurance company fixed PREMIUMS over time in order to maintain insurance coverage.
- Payments to maintain your insurance policy would be a fixed expense in your budget.
Let’s say you buy auto insurance (mandatory for car owners in many states). Each month you would pay the insurance company a certain amount of money to insure your car and to cover you as a driver.
- If you get into an accident, the insurance company will pay for your loss in that situation. That could mean paying for repairs to your car or someone else’s car. It could mean paying for damaged property.
- Very often, there will be a DEDUCTIBLE associated with your policy, that the insurer will require you to contribute toward the overall cost.
Ultimately, the insurance company wants to make money on your policy. So, they want to collect your premiums and hopefully not have to pay any money out.
- The amount of your premium is based on a determination by the insurance company of how much of a risk you are.
- It is always the case that when an insurance company needs to pay out on your policy, your premiums will likely go up.
Major insurance companies sometimes have millions of policyholders who pay premiums, but only a small percentage might ever receive a payment for a loss.
- This is how they can take in relatively small amounts of money from individual consumers for premiums and yet pay out very large sums if an accident or other hardship occurs.
Protecting who you are
IDENTITY THEFT is a growing problem in the U.S. and worldwide affecting millions of people every year. Thieves can steal critical information about you, like your name, address, telephone number, bank account, or credit card numbers, and—most dangerous—your Social Security number.
- Although individuals probably cannot entirely prevent this theft, risks can be minimized by being vigilant and careful about protecting your personal information, especially when using computers and smartphones.
Steps you can take to protect your identity:
Safeguard your personal records by tearing up or shredding sensitive materials such as credit applications or credit offers, insurance forms, tax information medical statements, bank statements, expired credit cards.
Don’t put personal information online, like your birth date, on a computer home page, personal computer profile, or social media website.
- Never provide personal or financial information unless a website site is secure. (Look for a security symbol such as an unbroken padlock and a Web browser that starts with “https” rather than simply “http.” Right-click the padlock to make sure it’s up to date.)
Carry only the personal information that you need on a regular basis; leave the rest at home in a safe place.
- Never carry around your social security card and give out your number only when absolutely required.
Use different complex passwords and change them regularly.
- Avoid using personal information as a password or number sequences.
Protect your computer:
- Use a firewall and secure browser.
- Don’t download files from strangers.
- Maintain current virus protection.
- Password-protect any personal or financial information.
- Avoid automatic log-in processes (which store your account name and password).
- When you dispose of your computer, delete personal information and completely overwrite the hard drive.
Avoid scams; For example, if you get a supposed IRS email asking for personal or financial information, delete it or send it to the IRS at firstname.lastname@example.org for investigation. The IRS never initiates contact with taxpayers by email, text messages, or social media.
Don’t be fooled by links to what looks like the real IRS website—that too could be a fraud.
If You’re a victim of Identity Theft, visit identitytheft.gov Also, keep an eye on your credit report and respond to any inaccurate information. It’s always a good idea to file your taxes early—as soon as you can—before a scammer does.