Be On The Lookout For Fraudulent Auto Warranties

 

 

Purchasing an auto warranty is a risk if you don’t know the rules and regulations of the warranty. It is wise for vehicle owners to think about hiring a professional car consultant who can help them through the sometimes-tricky process of buying an auto warranty. Buying an auto warranty without assistance poses a greater risk of purchasing a fraudulent warranty.

A fraudulent auto warranty is generally a warranty that offers a great variety of features and prices so well that it just too good to actually be true. However, the seller that is claiming that they provide this auto warranty won’t actually provide all of the services they are offering to the consumer. In the used car market, fraudulent warranties are common. This makes it important for consumers who are looking to buy used car warranties to be careful throughout the purchasing process.

Due to the circulation of fraudulent auto warranties, the US administration made a law that protects consumers that is called the used car warranty law. This law is also well known as the lemon law.

Share or Bookmark this post…

3 Things To Be Aware Of About Your Auto Warranty

Any car owner can have peace of mind when taking the car to the shop for repairs and maintenance when the car is covered by an auto warranty. Auto warranties cover the cost of repairs and maintenance on the car. Here are three things to be aware of about your auto warranty:

1. Thoroughly read through the warranty so that you are completely knowledgeable about how long the coverage lasts and what parts of the car are covered by it.

2. Know where the auto warranty is coming from. Is it coming from an aftermarket auto warranty company or a manufacturer? It is important know exactly who is handling your policy.

3. Know the terms of your warranty and make sure that you perform all required maintenance on your car. Auto warranties only remain valid if you get specific work done to your car. In addition, keep a record of all repairs and maintenance performed on your car in the event that you need to take care of a claim.

Auto warranties put your mind at ease when you bring it to the shop to have work done. If you want to get the most out of your auto warranty, it is essential to be knowledgeable about all of its details.

Share or Bookmark this post…

June Wedding? Give Your Spouse a Gift of Peace of Mind with Term Life Insurance

Summer bride or groom? Term life insurance makes the perfect wedding gift!

On June 11, my husband and I celebrated our sixteenth wedding anniversary. Yep, I was a “June bride,” and as you might guess, I do a fair share of reminiscing whenever June rolls around each year. I pull our wedding and honeymoon photo albums off the shelf, and we page through the memories. We recall the joys and the struggles of just starting out as a married couple. We think back to where we started and how far we’ve come in taking charge of our future.

Term Life Insurance: The Gift of Peace of Mind

In hindsight, one thing I wish we did earlier in our marriage is to explore life insurance options. As a newlywed, you want to look out for the well-being and financial security of your spouse, right? Term life insurance is one way you can do that. Term life, like whole life insurance, offers a way to help ensure the love of your life can live comfortably if the unthinkable happens to you.

According to the 2014 Insurance Barometer Study by Life Happens and LIMRA, about one-half of Americans say they would feel the financial impact of the loss of the primary wage earner in their household within six months of their passing. One-third of those surveyed believe they’d feel the impact within just one month!

Term life provides a death benefit (a payout) to your beneficiary (your spouse) if you die while your policy’s term (the length of your policy) is in effect. You can choose the term length; the most common term periods are 10, 15, 20, 25, and 30 years. The shorter the term, the lower the premium, and you can renew policies before they expire if you want to extend them.

The death benefit from your term life policy can help your spouse make ends meet by providing funds to cover expenses such as:

  • Rent or mortgage
  • Car loan, gasoline, and automobile maintenance and repair
  • Utilities
  • Health care
  • Your funeral expenses

That peace of mind would be a rather meaningful gift to your beloved, don’t you think?

An Affordable Show of Affection

Naturally, you might be hesitant to look into life insurance because of the cost. You’re not alone; 80% of people surveyed in the Barometer study overestimated the cost of life insurance.

Life insurance, particularly term life insurance, is far more affordable than most people think. With term life, you can get especially low premiums when you’re young and healthy—so applying when you’re “just married” could work in your favor. I wish my husband and I would have thought of that when we said our “I dos” back in 1999!

Whether you’re getting married (or have recently married) in June or any one of the eleven other months, I hope you’ll give securing your financial future some thought. A good start would be to find out how much a term life policy might cost you by using an online life insurance needs calculator and getting a confidential, no-obligation quote online.

Share or Bookmark this post…

Fixing the Life Insurance Marketplace

The life insurance market is characterized not only by an absence of reliable price information but also by the presence of deceptive price information...the deceptive sales practices found in the life insurance industry constitute a national scandal.” So testified Professor Joseph Belth, an expert on the life insurance industry, before Congress in 1973. Can this statement, from more than 40 years ago, still be as true today?  And is it possible for such deplorable industry practices to be occurring without being in the spotlight of public attention?

The short answers are yes. To this day the life insurance industry too often relies on inadequate product disclosure, misinformation, and fraudulent practices, thereby costing consumers billions of dollars annually. Industry executives have for years acknowledged that no one would buy many of their companies' products if they were appropriately informed.

The free market economic system is built upon informed buyers making educated decisions. Yet so many life insurance industry chieftains who regularly sing the praise of our economic system fail to acknowledge that their businesses haven't satisfied the system’s prerequisites or played by its rules.

Empirical proof of the life insurance market’s dysfunction is readily apparent by examining the very products life insurers and their agents sell. While a select few cash-value life insurance policies can provide excellent competitive value, perhaps 95% of such policies sold provide value no informed consumer would accept. This marketplace’s dearth of information also afflicts tens of millions of policyholders at annual renewal; if properly informed, millions of them currently could readily obtain much better value. Consumers of the industry’s other main products, annuities and long term care insurance, also face enormous disclosure-related problems.

The root of the age-old problem is the inadequate disclosure of information surrounding cash-value policies, such as whole life policies, where the annual cost is not the annual premium. Professor Belth and I have both long recommended disclosure about a policy’s annual costs and rate of return on its cash-values.  

The attached table of an actual insurance policy’s historical performance (see below) shows how this information on a policy’s annual costs and rates of return on its cash-values can be presented on a year-by-year basis and summarized over the duration with average or aggregate measures. Similar cost and rate information can be calculated on any and all prospective new and in-force policies via online consumer-friendly analytical tools. Understanding policies from this framework, and with solid knowledge of the differences between illustrated future values and actual future performance, enables consumers to assess the competitiveness of a policy’s costs and rates. For example, a healthy 40 year-old male can  compare his policy's costs with benchmarks that are available in the marketplace and its rates of return with suitable alternative investments. 

A cash-value life insurance policy’s unique intrinsic economic advantages arise from its Congressionally-granted tax privileges, not its highly touted permanence; after all, a term policy can be converted or exchanged into a policy providing lifelong, permanent coverage. These tax privileges, which are given directly to policyholders, however, are not a basis for which insurers can charge consumers; no one pays thousands of dollars to set-up an individual retirement account (IRA). Consequently, when selling such cash-value policies as whole life agents routinely make assorted misrepresentations. Agents often misleadingly state: 1) that a whole life policyholder pays for a lifetime of costs upfront, and that doing such and owning his/her coverage is better than endlessly renting it; 2) that buying a whole life policy at a younger age locks in a lower level cost for life; and 3) that the annual costs of a whole life policy can actually decline as the insured ages because these policies can pay dividends. These three common agent statements, and myriad variations of such, are deceptive.

Regulations prohibit such misrepresentations, but they have never been enforced. These and other misrepresentations are all designed to distort a cash value policy’s fundamental difference. For agents, the essential difference between whole life and term insurance is the quantum difference in the sales commissions – up to 5-9 times larger on whole life policies than on term policies. No one familiar with the paramount role that compensation incentives tied to the origination of subprime mortgages and the repackaging of such default-inevitable, toxic securities played in creating the Great Recession can doubt the perniciousness of the life insurance industry’s age-old problematic sales practices.

A successful consumer-agent relationship can only be built on trust, so predicating it upon inadequate disclosure is inherently counter-productive to all. While inadequate disclosure appears to be in the insurers’ and agents’ interest, it actually has made consumers so leery of agents that the age-old distribution process is so terribly inefficient and ineffective. Americans’ under-insurance – having woefully less life insurance than needed or appropriate - reaches new records every year. Some insurers’ policy lapse rates raise fundamental questions regarding the products’ suitability that regulators have never examined. And, the facts that the typical life insurance agent sells less than one policy per week and that four out of five new sales recruits fail out of the business within a few years are further proof of this industry's failed business approaches.

Given the nature of the problem, improved disclosure and publicity of such have always been known to be two indispensable parts of the inevitable solution. Contrary to general opinion, however, there is no need to wait to for this industry’s state regulators to act and mandate disclosure. The necessary disclosures, after all, are not proprietary or esoteric. As is shown in the table, life insurance policies, like an automobiles’ horsepower or MPG, can be disclosed, not only by the manufacturer but by anyone with the necessary expertise and this information is now available online.

Without publicity though, this public good of disclosure remains undiscovered. Reform of the life insurance industry has always merely been a battle of wills. Reformers have had to confront industry, an uninterested or uninformed media, regulators not understanding their jobs or unwilling or unable to do them, and/or reformers’ own doubts about ever succeeding. Financial markets can be fixed when appropriate policy disclosure for consumers is heralded and becomes pervasive.

When will this information be publicly disseminated, so that everyone knows about it and can use it, thereby initiating the long-overdue repair of the life insurance marketplace? This disclosure-driven transformation will produce the myriad and well-documented benefits of genuine economic competition: consumers will obtain better value; insurers will improve the efficiency of their production processes; and agents will act and be seen as trustworthy professionals. Clearly, the sooner this time comes, the sooner Americans can start saving billions of dollars per year, the better for everyone.

 

Actual Historical Performance of a Whole Life Policy
$250,000 issued 20+ Years ago (in 1989) to a 45 Year Old Male, Best Health
*Annual Premium $5815 Paid All Years
** Notes below provide additional information

Age During Year

Insurance Death Benefit

Cash-Value

Total Annual Costs

Annual Dividend Rate

45

            251,425

  408

            5,444

10.00%

46

            253,954

 5,134

            1,556

10.00%

47

            256,890

10,188

            1,624

9.25%

48

            260,927

 15,823

            1,520

9.25%

49

            265,684

21,955

            1,403

8.50%

50

            271,380

28,709

            1,310

8.50%

51

            278,019

36,119

            1,235

8.50%

52

            285,871

44,344

            1,064

8.50%

53

            295,056

53,487

            998

8.80%

54

            305,332

63,521

            919

8.80%

55

            316,703

74,519

            844

8.80%

56

            328,867

86,417

            907

8.80%

57

            341,858

99,309

            787

8.60%

58

            354,658

112,782

            889

8.20%

59

            366,807

126,628

            1,022

7.70%

60

            378,831

141,112

            1,176

7.50%

61

            391,554

156,699

            1,160

7.50%

62

            404,738

173,322

            1,284

7.50%

63

            418,387

191,040

            1,425

7.50%

64

            429,215

207,946

            1,601

6.50%

 

 

 

Avg. Rate:

8.43%

 

**Insurance Death Benefit shows the amount the policyholder’s beneficiary would receive after his death
Cash-Value is the cash amount the insurer gives to the policyholder if he cancels his contract
Total Annual Costs show the amount expensed from policy premiums (and policy cash values if and when necessary) to pay for sales, claim, administrative, capital charges and any other miscellaneous costs, such as premium taxes.
Annual Dividend Rate is the rate earned by policyholder, net of investment management costs, on policy cash values, that is, values after costs.        

Share or Bookmark this post…

Do Your Research Before Buying An Auto Warranty

When a consumer takes purchasing an auto warranty into consideration, they usually select mainly based on the price. Consumers want to try to get the best deal that they can when buying auto warranties. Price is important to take into consideration, but it is also important to realize there are other factors that should be looked at when choosing the auto warranty to buy as the final purchase.

When conducting research about auto warranties and which one will be the best option for you, make certain that you are going to be buying one that is of a higher quality. Keep these things in mind when doing research:

1. Look at the cost of the auto warranty and be sure that it is affordable. However, make sure that this is not the only deciding factor for what will be your final purchase.

2. Look into the company that you want to buy the warranty from. Ask yourself a couple of very important questions: Is this company reputable? Is it an established company? Is the company visible online? In addition, make sure that the company is both accredited and has high ratings with the Better Business Bureau.

Share or Bookmark this post…

Increase The Trade-In Value Of Your Vehicle With An Extended Auto Warranty

The trade-in value of a vehicle is determined by how desirable it will be in the used car market. A vehicle that is in good shape, has an accident-free history, and hasn’t had multiple owners will have a higher trade-in value. One of the most important factors in the vehicle’s value whether or not it was properly maintained and serviced. If the owner of the vehicle had an extended auto warranty, it was likely serviced and maintained properly and regularly because the owner did not need to fret about the cost of maintenance and repairs.

When appraisers determine a vehicle’s value when it gets traded-in, they take many factors into consideration. They will look at whether or not maintenance was performed on a routine basis and also if and what major repairs were done on the vehicle. Vehicles under warranty generally have less mechanical issues since the owner did not worry about repair costs and got repairs and done right away. This is because the costs were covered by the auto warranty. Dealers want these vehicles to be sold on their lots since they are more reliable and reliability is important to consumers who want to buy a used vehicle.

If you want to ensure that your vehicle maintains a higher trade-in value, maintain it properly and regularly, as well as have necessary repairs performed right away. If you want to avoid any excessive service and repair costs, it is wise to purchase an extended auto warranty for your vehicle.

 

Share or Bookmark this post…