Highlights of today's show:
- Is freezing your credit report right for you?
- How freezing your credit can help protect against identity theft
- The downsides of freezing your credit
- Should I take the stability of a company into account when choosing a term life policy?
- What happens when your life insurance company goes into receivership
Identity theft is one of the worst financial events one can go through. When your identity is stolen you aren't responsible for any of the charges made in your name. However you are going to spend hours upon hours fighting to clear your name of any wrong doing.
Fortunately there is a way to help lower your odds against identity theft and that is by freezing your credit. Freezing your credit is a process that disables most creditors from pulling a copy of your credit report or your credit score.
On today's show we break down the pros and cons of freezing your credit and discuss whether it is the right thing for you to do. It isn't for everyone but if you are committed to stop borrowing then freezing your credit report might be the way to go. The fees to freeze your credit vary by state and you have to freeze your credit report at each of the following credit bureaus:
In addition we also answer the following question sent in by a listener:
"I have two term policies and I feel as if I'm paying too much. I've seen better quotes elsewhere and I'm wondering how concerned I should be with the company issuing the policy. Should I take the stability of a company into account when choosing a term policy?"
This is a great question. To answer it we first need to discuss what happens if your life insurance company goes belly up. If your life insurance company is under financial distress each state has their own agency with its own rules as to what happens with your policy. The state agency will first try to rehabilitate the company back to financial health. If that doesn't work, good policies are shopped around to other companies. If that doesn't work, each state guarantees a maximum amount to life insurance claims. To check our your state's maximum coverage payout visit The National Organization of Life and Health Insurance Guaranty Associations (NOHLGA.com) website and select your state.
For most states the maximum payout is $300,000. So while you are guaranteed to get at least something if your life insurance company face financial trouble, you are never fully guaranteed. To measure the health of a life insurance company consider looking at Standard and Poor and Moody's Life insurance ratings.
With that being said, if you find a company with a solid rating that has been around for a while and it offers a lower rate than your current term insurance, I say go ahead and switch as long as you wait until the new policy is in place before you cancel your old one. Life insurance companies rarely fail and even if it does happen it is not like you will lose your coverage as your state guarantees at least a $300,000 payout per policy.
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