In my mail recently, I received a colorful postcard from State Farm, the agency which insures my car, house, and several rental properties. I was “sorting” it directly into the trash when I noticed the word “dividend” peeking up at me.

Dividend. That’s right, my insurance company has declared a dividend for its New Jersey policyholders for the second year in a row. I’m so unused to this that last year I almost tossed out a $240 check they’d sent me for my dividend payment. Once I took another look at it, I called the company to make sure they hadn’t cancelled one of my policies, as I was worried the check might be a refund of monies paid.

It is a refund of sorts, but not due to a cancelled policy, the representative explained. “When we have a year where we profit, our policyholders profit too, since they’re also our owners.”

It was a nice surprise last year, especially since insurance rates in new jersey are so high, and now I’m looking forward to seeing how much I’ll get back this year. An internet search regarding the dividend yielded only 2006 information, so it seems I’ll have to wait for the company’s next correspondence or year-end financials to get more details.

Could it be they’ve avoided posting this among the news releases on their web site so other states don’t get jealous? Apparently the dividend payout is state-specific, so not everyone will be eligible.

Does your insurance company pay dividends?

If you are seeking your own health insurance outside of an employer plan, your weight has a lot to do with the premium you’ll pay as well as your ability to even qualify for insurance. Insurance companies find this to be logical. Overweight individuals account for a higher percentage of health-related costs than they should, all other things being equal.

From the New York Times:

Heavy people do not spend more than normal-size people on food, but their life insurance premiums are two to four times as large. They can expect higher medical expenses, and they tend to make less money and accumulate less wealth in their shortened lifetimes. They can have a harder time being hired, and then a harder time winning plum assignments and promotions…

Complications from obesity, particularly diabetes, which afflicts 21 million Americans, push up the bill: $44,000 for a heart attack, $40,200 for a stroke or $37,000 for end-state kidney disease…

As the cost of group health care increases for corporations, many companies are looking for ways to cut costs. One way to do so is to encourage a healthier lifestyle among employees. In my company, there are a number of programs available to employees who are looking for ways to improve their health. Some companies, in addition to offering employee assistance programs, are beginning to set health insurance premiums, or the percentage of these premiums paid by the employee rather than the employer, by a measure of weight.

The body-mass index (BMI) is one such measure being used to determine how much an employee should pay for their portion of the company’s group insurance plan. The reasoning is simple: overweight individuals cost the company more in health insurance costs. But is this discrimination?

The CBS Evening News with Katie Couric will be running a feature on this issue tomorrow night. This week, the program will focus on obesity in America. The series is called “Forced to Be Fit;” segments to be aired Tuesday through Thursday will take a look at ways people in this country are being encouraged to lose the extra pounds, whether they want to be or not.

Extra Weight, Higher Costs [New York Times]

Auto insurance companies are changing the way the calculate premiums, according to MSN Money. Did you know that some insurers look at your credit report to determine the risk of insuring you? Some states have declared this practice illegal, but the companies claim there is a correlation between a history of late payments and insurance claims.

That means that if you have a clean credit history as well as a clean driving record, you might be able to save some money. I have had the same insurance since 2004, so it may be time for me to shop around again. Now that more companies are using pricing schemes that are more flexible and based more on the individual than the process where drivers are placed into one of a small number groups or tiers, there may be some deals out there.

Earlier this week, I received my updated policy information from Liberty Mutual, the company that provides the insurance for my Honda Civic. I was expecting a significant increase thanks to a minor car accident last October. Here are some details about my coverage, which I haven’t changed since purchasing this car.

• Liability, bodily injury: $50,000 each person, $100,000 each accident
• Liability, property damage: $50,000 each accident
• Uninsured motorists, bodily injury: $50,000 each person, $100,000 each accident
• Uninsured motorists, property damage: $50,000 each accident
• Personal injury protection (PIP), medical expense limit: $250,000
• Personal injury protection (PIP), medical expense deductible: $250
• Collision deductible: $500
• Other damage deductible: $500

• Transportation expenses: $30 each day or $900 per accident

  The total annual premium for this coverage is $1,552. This is about $100 more than last year’s premium, less than I expected the increase to be. It’s still a lot of money, but as a New Jersey resident that is to be expected. The last time I shopped around, “discount” insurers like Geico quoted higher premiums for the same coverage.

  I thought about shopping around again, but I don’t think it a slight discount would be worth the effort at this point. All my extra time right now is being spent on finding the right place to live.

Have you recently welcomed your first child into your family? If so, it may be time to get some of your financial documents in order. These are some things you may not have considered before having a baby. This video from SmartMoney TV quickly runs down the basics: which documents are necessary and why.

1. Draft a Will. A will is a legal way to assign a guardian, because the court won’t recognize survivor’s claims. Also, without a will, your estate will be split between your surviving spouse and children by default in many states. Your will can ensure that the money is distributed as you see fit. Here are more reasons to draft a will. Watch out for companies selling overpriced will kits. Here’s an example last will and testament to get you thinking about what to include.

2. Set Up a Trust. Trusts define who is charge of the estate should something happen to both parents. It also can define the age at which point the children would receive money. In the interview within the video, the couple has decided that their children would not receive their inheritance until their mid-thirties. Here are instructions for setting up a trust.

3. Get Term Life Insurance. The financial advisor interviewed in the piece recommends getting five times your annual income in term life insurance. Term life insurance is often recommended over whole life insurance. Whole life insurance is generally an investment vehicle and usually demands high fees. This article from Motley Fool is a good introduction.

4. Check Your Beneficiary Designations. Retirement benefits, 401(k)s, and IRAs are passed on to individuals outside of your will, based on the beneficiary designations you choose, usually when initially setting up your account. I don’t currently have beneficiaries on my retirement accounts. I should take some time to update this. You can change beneficiaries as often as you want, and if you have someone in your life, there’s no point in waiting.

Last week, I started a short series looking at Money Magazine’s 25 rules to grow rich by. I’m breaking down the advice within the article into five separate blog entries here; you can find part one here and part two here. Here are the next five tips, with a bit of my own commentary thrown in when appropriate. Read the rest of this article »

If you’ve been following along, you may know that I was in a minor car accident over the weekend. I visited an auto body shop that my insurance company deals with directly. The damage to the doors and fender will cost at least $2,500 to fix, $500 of which is my deductible. They will need to work on my car for a week, so I’ll need a temporary replacement. Liberty Mutual, my insurance company, offers reimbursement/payment for a rental car up to $30/day.

Assuming 7 days of using the rental car, Liberty Mutual will be covering at least $2,210. The $500 I have to pay is not a problem, I save extra in my “Car Fund” at ING Direct to cover such semi-emergencies. If I had to pay the full amount, I’d have to dip into my true “Emergency Fund,” which is something I’d rather not do.

A few years ago, this accident would have had me in a terrible position, not able to afford the deductible. Thankfully, I started getting myself financially in gear in 2002.

Elsewhere in the blogosphere, Chitown from Windy City Blues was also in a car accident recently, and Jim from Blueprint for Financial Prosperity doesn’t carry collision and comprehensive insurance.

Over the weekend, I received the annual benefits enrollment package from my employer. Last year, the health benefits offered by the company changed significantly to take advantage of Health Savings Accounts and to raise prices. Even after the multiple sessions with Human Resources, there were some of my coworkers who didn’t know the difference between HSAs, PPOs and HMOs.

The publisher of Fred Brock’s new book, Health Care on Less Than You Think: The New York Times Guide to Getting Affordable Coverage, sent me an excerpt from this book, and I’d like to share it. Presumably the book will help the reader make the most out of health insurance options at the lowest cost possible.

The excerpt is a concise glossary of some of the most relevant health insurance terms. Read the rest of this article »