What am I talking about?

I’ve spoke to business owners and farm owners alike. Here’s one thing I’ve found that a lot of them have in common; Buy/Sell agreements.

When there is more than one owner to a business or farm, usually there is an agreement stating that one owner will buy the other owners family out if the other partner dies. It sounds great on the surface. The problem with most of these agreements is that there is no money in the partnership to actually do it.

Consider this; If a business doesn’t have enough cash to pay off the family, what good is the agreement? The surviving owner now has some tough choices.

1. Go into business with the deceased owner’s hiers.

2. Sell enough assets of the business or farm to pay the other family off. (in the case of farms, this could be the very equipment used to run the farm

3. Take out a loan to pay the other family off. ( The bank may not loan it or the owner may not be able to make the payments)

4. Talk the other family into taking payments.

You can see why some very good, long standing businesses simply disappear.

Another very good option would be for the partners to have life insurance on one another. This would be a simple way for the surviving partner to keep the business in tact and pay off the family of the deceased.

This also works great for the children of a business owner. Some children help run the business and some have other careers. When the parents die, there are a number of opinions about what to do with the business. The children who have been running it usually want it to continue. The children who have other careers aren’t usually as concerned about the survival of the business as they are about “getting their share” of this asset. Life insurance purchased on the business owners, while they are still healthy, can keep the business, or farm, running and satisfy the rest of the family too.

This is one of my favorite parts of my business. It helps so many people.

If you or someone you know could use a plan like this, please give me a call at(231) 744-9099 or start by checking out www.muskegonlifeinsurance.com

Most of us know the main reason for buying homeowners insurance is to have our homes rebuilt in case of a major catastrophie.  What I’ve learned is that many people don’t understand the importance of the Medical Payments to Other or the Personal Liability parts of their policy.

Medical Payments to Others covers small medical bills of a guest who is injured on your property. It covers on an “Excess” basis. That means that if your guest has health insurance it would pay first. This coverage is usually only $1000.  I would suggest raising it to $3-$5000. I want to be sure that if there’s an ambulance involved that there’s still enough money left to take care of the small things like stitches or setting a broken bone without having to besued or paying the bill out of my pocket.

Your Personal Liability helps pay the cost of your defense if you were to be sued. It also pays for things medical bills in access of what the Medical Payments to others covers

I had an attorney explain it this way; when you get sued, you have to disclose all of your assets. You not only have to disclose it to the judge and your attorney, but to their attorney as well. That’s right, they know about your 401(k), your investments, your CDs, Life Insurance, rental properties etc..

The best thing to do is to make sure that your Personal Liability limit is set well above your net worth (everything you own minus everything you owe)

We’ll talk more about this in person if you like. Jst give me a call at (231) 744-9099 or just start by checking out www.muskegoninsuranceagent.com

What do you understand about your Homeowners Insurance?

I was conducting an annual review with a client today.  As I started going over her existing coverage with her it was clear to me she was confused.

The basics on your Homeowners Insurance are these six things:

A. Dwelling – If you could take the roof off your house and shake out the contents, the things that would stay in the house like the flooring, the cupboards, the plumbing etc.. would be covered by this section. Things like flooding, business persuits, farming and some others require special coverage.  They can be added with an endorsement or a separate policy.

B. Other Structures – Non farm and non business structures like detached garages and sheds. These are normally covered at 10% of the dwelling amount unless you request a higher amount.

C. Contents – This is what would have fallen out under “A”. Basically your furniture, clothing, electronics, guns etc.. You do need to check the amounts of coverage on guns, jewelry and silver. Typically your policy will cover about $2500.00 in these areas unless you ask for a higher amount.

D. Loss of use – This covers a place for you to stay in the event your home isn’t safe to live in due to a covered loss, like fire or smoke damage.

E. Personal Liability – This coverage is to protect you in the event you are sued by a guest of yours for an injury. They pay for the cost of your defense. Keep in mind that when you are sued, you have to disclose all your assets to everyone involved. You should have your liability limit above your net worth.

F. Medical Payments to Others – Pays for small injuries to help avoid lawsuits.

Please schedule a review with your agent as soon as possible. If they don’t conduct or offer annual reviews, I suggest you find one who does.

Hope this helps.

Feel free to contact me at (231) 744-9099 or visit my website at : muskegonhomeownersinsurance.com