How Consumers Should Be Choosing Homeowners Insurance

Finding the best homeowners insurance company that fits your needs can be challenging, even if you’ve gone through the process before. There are so many elements to take into consideration while shopping around, and consumers should keep these tips in mind when choosing their homeowners insurance.

Identify The Type of Policy You Need

Know that not all insurance policies are created equal. While many homeowners opt for the basic form (HO-2) or special form (HO-3), the type of dwelling you have purchased also plays into the policy as well; older homes, mobile homes, condos and townhouses are all considered and need different types of policies. Here’s how it’s broken down:

• HO-2: Only covers damage that’s caused by an event listed within the policy.
• HO-3: General homeowners insurance policy that safeguards against perils except for specific acts named within the plan.
• HO-5: Premium homeowners insurance policy that protects recently erected structures and safeguards against perils except for specific acts named within the policy.
• HO-6: A Homeowners insurance policy for condos as well as liability and personal property.
• HO-7: Insurance that is generally the same as HO-3, but for mobile homes.
• HO-8: Premium policy for older homes. Similar to the HO-2 policy.

For reference, damages covered in HO-2 insurance are generally the same for all companies:

• Fire
• Lightning
• Wind
• Hail
• Snow and Sleet
• Damage caused by the weight of ice
• Smoke
• Falling objects
• Riot or civil commotion
• Vandalism
• Theft
• Damage caused by vehicles or aircraft
• Damage caused by "accidental" bursting or overflowing from plumbing, heating, or AC systems

Getting To Know Your Location

After you’ve identified the type of coverage that works for you and your dwelling, you’ll also need to assess fine print or exclusions in your policy due to your area. Standard home insurance will not cover natural disasters like floods and earthquakes. So, if you live in an area that has these types of risks, you may have to pay more for additional coverage. Identifying the best homeowners insurance in your state is important as not all insurance companies write in each state.

Choosing The Cost and Level of Coverage

While many factors come into play to determine the cost of your coverage, one you need to think about is deductibles. This is the amount you pay upfront if an accident occurs and you file a claim. For example, if you choose to bump your deductible from $500 to $1000, you can save more on your premium. Just be sure you can easily pay the set deductible amount before your insurance kicks in! 





The next thing you’ll have to consider is the two levels of coverage. One is the replacement cost, which will pay the full cost of replacing your home or property up to a certain amount, or the actual cash value which gives you the cost of the item or dwelling. Note that this will depreciate over time. Most tend to go with replacement cost, and it is generally the one available within average insurance policies.

Research Ratings & Reviews

While it sounds like something that’s a no brainer, many shopping around for homeowners insurance do not take the time to actually sit down and research the companies. Clearsurance has crowdsourced ratings and reviews of companies so you can learn from the experiences other homeowners have had. For instance, you could identify Amica as a company you’re interested in and then read Amica insurance reviews from consumers to see what the company does well and what it doesn’t do well.

Don’t Be Shy To Ask About Discounts

Going with the cheapest plan shouldn’t be how you find ways to save. Don’t be shy to ask about discounts you can receive if you go with certain insurance companies and know that many offer some sort of savings on the following:

• Bundling (insuring your home and auto through the same company)
• Burglar alarms
• Dead-bolt locks
• Smoke detectors
• High-tech sprinklers that alert first responders

Once you feel confident in your choice, and you’re sure the insurance reviews and ratings reflect the homeowners company that is right for you - it’s time to make your decision. Making a choice with these educated steps will surely help you in the future when seeking other types of insurance!

Budgeting for Seniors: 4 Common Post-Retirement Expenses

Calculating the costs of retirement isn't always as straightforward as it seems. Certainly you will want to determine your monthly medical costs, mortgage or rent costs, food budget, transportation costs, and more. But there are also several unexpected costs that can come up during retirement. 

Since most people live on a fixed income during this time of their lives, the unexpected costs can eat away at your nest egg. As a result, it is vital to be prepared for the expenses of life as a retiree. Here are four common post-retirement expenses.

Home Repairs

As a retiree, it's possible you may have lived in your home for your entire adult life. After a while, homes can suffer and deteriorate because of inclement weather, accidents, and general wear and tear. 

Other times, structural incidences can occur without your knowledge such as a pipe bursting, mold infestation, and termite damage and turn into a serious issue. Lawn care, snow removal, and basic home maintenance can also pile up. As you get older, it can become much more difficult to do chores if you have arthritis or persistent pain. 

If you find yourself unwilling or unable to keep up with these tasks, you may want to consider downsizing to a condo, smaller house, or a retirement community to make these maintenance tasks and issues nonexistent or at least less stressful.

Travel

Retirement is a good time to see the world since you have some extra free time on your hands. It's exciting to see the world in your golden years and make new memories with those you love. 




Be sure you know what you’re getting into before committing to anything. If you’d like to see many different places or have a preference for private tours, be sure your budget can accommodate that. Be strict with your vacation budgets and always be on the lookout for deals and steals.

Healthcare

As you get older, the amount of medical expenses often goes up as health issues worsen or surface. Many medical issues are associated with age and require expensive treatments and medications. 

For example, if you fall and injure yourself, recovery is more difficult and takes longer than it did when you were younger. Plus, your bones are much more fragile when you're older, so you have to be more careful. Additionally, you may need things like general skincare help, denture repair, and vision care.

Expenses for Adult Children

Just because your kids grow up and move out doesn’t mean you won’t feel inclined to help them out financially. An adult child may get married and need help with wedding expenses or maybe even need help with purchasing basic necessities for your grandchildren if they’re down on their luck. You will probably want to help as much as you can. Be sure to be smart about your spending and saving.

Post-retirement expenses are common and unique to each senior. Now that you are aware, you can plan your budget and savings for the future you want to have.

Which is the Best Choice to Invest? FD vs Savings Accounts!

Investors prefer risk-free investment schemes that offer maximum return against the money they put in. There are several such schemes available in the Indian financial market.However, fixed deposits and savings accounts are by far the most preferred options amongst them.

FDs are a form of term deposits that allow you to invest a certain amount for a fixed tenor. That amount earns interest over the period,and you receive the accumulated return along with the principal amount when the FD matures.





A savings account is a type of deposit account provided by various financial institutions.You can earn a modest rate of interest against your funds; however, the percentage is significantly low compared to the FD interest rate.

Both fixed deposit and savings account have several features and benefits that might be useful for certain types of investors. You should carefully consider the advantages of both these schemes to determine where to invest in.

Here are some of the features that differentiate between fixed deposits vs savings accounts.

FD vs savings account

• Interest rate – FDs generally offer a higher interest rate than a savings account. Certain financial institutions offer up to 8.75% interest on FDs. And, savings accounts come with up to 4% interest per annum, although this rate varies between different financial organisations and can change according to the amount you deposit.

The higher interest rate of FDs allows you to grow your invested amount much quicker. It is one of the primary reasons why people prefer fixed deposits over a savings account while investing for a longer term.

• Assured return –Fixed deposits are independent of market fluctuations which make them ideal for investors who want a guaranteed return. The rate of interest is decided when you open the scheme and stays fixed throughout the tenor.

Savings accounts offer either fixed or floating interest rates. Floating rate of interest is market dependent and can decrease if the financial market takes a hit or the government decides to reduce the repo rate. It makes savings accounts comparatively more vulnerable to market fluctuations.

• Benefits for senior citizens – Both FDs and savings account offer several add-on benefits for senior citizens. For example, the Fixed Deposit for senior citizens offered by Bajaj Finserv accrues0.35% additional interest rate above the regular amount, increasing the total rate to approximately 9.10%.

Savings accounts generally offer benefits such as higher withdrawal limit and interest rate for senior citizens.However, maintaining a savings account can often be difficult for a retired person.

On the other hand,in an FD, the full investable amount is deposited at a time while opening the account. Hence, it is ideal for senior citizens as they can put in a huge portion of their savings and allow it to accumulate interest over time.

Also, FDs are ideal for someone who wants to invest a sum of money and earn a guaranteed return when the scheme matures. It can significantly increase the investor’s wealth and help him or her achieve financial freedom in a short period.

How to Set Goals and Start Saving for Your Dream Home

Do you find yourself wishing for a more luxurious home than you now have? If you browse the luxury home listings online and wonder if it would be possible to achieve such a home, you might be surprised how quickly you can build your savings to make it happen.

It will take discipline and diligence to stay on the path toward that dream home, but it’s possible. The first steps forward are to identify your target price ranges and when you want to achieve your goal.

Starting Point

If you already own a home, you may want to learn its approximate value if you plan to use its equity to move up. Bear in mind that real estate markets change in response to supply and demand and home values aren’t always stable.

Use your estimated equity as a springboard for calculating the amount you need. Financial resources include your savings, retirement accounts, or other assets you can liquidate.

Savings

Setting aside a percentage of your monthly income to save the down payment for an upscale home is a sensible move. Take a look at your budget and see where you can trim your expenses or forgo some luxuries until you’ve met your financial goals. Regardless of your home purchase plans, it’s a good idea to have some liquidity you can access quickly should you need it for an unforeseen expense or event. 




You don’t need to keep all your savings in one account. Look for places that give you the highest return over the time period you’ll need to save for a luxury home. Some CDs have a short maturity period and generally provide higher returns than bank savings accounts.

Borrowing from Retirement Accounts

Retirement plans can be a source for the down payment for another home. There are guidelines to follow and penalties if you don’t repay the loan on schedule. But using the retirement funds, especially if your employer makes a contribution, could be an excellent choice to increase your down payment.

Borrowed money from 401ks won’t show up on your credit report or increase your debt-to-income ratio. It’s especially advantageous if you increase your savings to the maximum allowable if your employer contributes matching funds.

Bottom Line

Exercising the discipline and diligence it takes to get into a home you’ve always dreamed from does take an effort. It will pay off once you achieve that home both emotionally and financially. You’ll also be able to use the habits that put you into the home to your advantage for other important purchases.

Tax Implications on a Second Home Loan: A Must Read

With India’s economic growth and so many affordable housing options, you can buy more than one property. Gone are the days when one would save all their money to buy one house and stay there forever. Real estate companies are acquiring land and building apartments that are accessible to all.

You also do not have to invest all your savings to buy another house. With easy home loans and affordable home loan interest rates, even you can buy a second home. Plus, tax benefits on second home loan make this even more attractive. The tax benefits work in India but not in all countries, there is information on the Australian system here.

Tax Benefits on Second Home Loan

The tax applicable to the owner of a second home is variable. The three variations are:

1. One house is on rent.
2. Both houses are on rent.
3. None are on rent.

According to the tax laws, when you are the owner of many properties only one house is considered to be self-occupied. Self-occupied means:

1. The owner stays in the property.
2. The property is not given on rent.
3. You get no income from the property. This is also called ‘deemed rented out’.

You can choose to show any of the properties as self-occupied. It does not have to be the first property you had bought. The others will be considered for rent out options.

If the house is on joint ownership, the rent should be split as per the percentage share of the owners. The income from the rented-out property is considered for the actual income tax calculation. This could be either from one house or both.

Tax on Self-occupied House

Say, you have bought a property that has been fully constructed within five years of your taking the loan. What is the home loan tax benefit available to you? In such a case, up to Rs.2 lakh will be exempted from the actual interest paid. 

But, if you are a senior citizen, then the limit is extended to Rs.3 lakh. If the house was not completed in five years, then the exemption limit is Rs.30,000. You can even avail of an exemption of Rs.50,000 for properties whose loans were below Rs.35 lakh. Companies offer home loans up to Rs.5 crore and top-up loans up to Rs.1.75 crore.



Suppose your first home is not occupied by you or you have rented it out and you are still paying the home loan. Then, the actual principal repaid will be applicable for tax exemption with a cap of Rs.1.5 lakh. You can avail of this exemption even on repayment of the loan amount.

Tax on Second Home

The interest paid on the other properties has an exemption limit of up to Rs.2 lakh. There will be no tax exemption on the principal amount repaid if you have taken a second home loan.

Also, the second home is considered wealth. Thus, an extra 1% tax will be applicable if the price is above Rs.30 lakh.

The income from the rent earned on the second home will be taxable. You can deduct the municipal taxes or the maintenance charges on the house to calculate the final income. A standard 30% deduction on rented income is also allowed. 

So, the final taxable income on the rented property will be the actual amount received minus the taxes, 30% deduction, and interest paid on it.

If the property is not let out and remains vacant you can consider market rate prevalent for calculating the income.

Summing Up

Sometimes, the second home may actually impact your return on investment. This happens if the interest rates are high and the property prices have increased. Thus, you need to be smart to know when to invest money. So, keep an eye on property prices and avail of the best home loan interest rate.

A Guide to Start Investing

Every wealth management advisor will start with one very basic principle: you need to save money--and the earlier, the better. We don’t think it’s necessary to convince you of the wisdom in that.

Here’s the problem: for most of us, investing is much harder than it sounds. There are already too many demands on our money: student loans, rent, car repairs, and groceries, just to name a few. Buying a new alternator before you go on that road trip is a much higher priority than saving up for retirement.

When you’re living on a shoestring budget, how can you invest without making major sacrifices in your life?

Well, here are some ways that you can start investing NOW - not when your car is paid off, not when you’ve finally gotten around to setting a budget, not when retirement gets close enough to scare you straight. You can put these principles into action without feeling like you’re living like a pauper.

Making Short-Term Investments

Sometimes we have expendable cash for a little while, but we’re anticipating big costs in the future, so locking away that cash into a long-term investment account feels crazy. However, there’s a better option than letting it sit in a savings account with a return of 1% or less: short-term investments! 

When it comes to short-term investments, it’s better to focus on low-risk options, since there’s not as much time for the investment to self-correct. However, even low-risk, low-return investments will do you a lot more good than a savings account. 




Talk to your investment broker about short-term investment options, or check out some easy online investment software or apps (like Acorn, Robinhood, and Betterment) that will let you play with short-term projects.

Setting Up Automatic Deposits to Investment Accounts

This is one of the most reliable and time-honored habits of smart investors. Automatic deposits into a retirement account will allow you to invest without feeling the pain of conscious deductions. If you invest before even counting that money as part of your monthly income, it doesn’t have the same pang. 

Use Extra Savings Techniques to Grow Your Investment

We all have a few things that happen throughout the year that just feel like bonus money. Any time you have that boost, consider turning it into investment, instead of an indulgence that will depreciate the moment you buy it.

• Tax returns: We’re in a dangerous place when we start considering tax returns money that’s owed to us, because we never know precisely how much it will be. Consider depositing the whole amount as soon as you get it, or treat yourself to something you really want or need, but turn over any surplus to savings.
• Yearly bonuses at work: If your company does yearly bonuses, think about it as a gift towards your retirement instead of fuel for yet another Holiday impulse-buy.
• Rebates: Some are factored into the price of something we buy, but some rebates come as a surprise.
• Sales: Did you just save 30 bucks on that jacket that you really wanted to buy? What a windfall! But most of us will forget about those savings, or spend them on something we don’t need because we look at it as free money. Put that free money to work instead.
• Resolution savings: Have you ever gone without a certain treat for a certain amount of time, due to Lent, or a health resolution with a friend? When my grandmother wanted to quit smoking, I promised to give up chocolate to support her. Even more than the health bonus that this brought, I realized that I was saving up to $15 a month by cutting an unhealthy habit out of my life. It’s not much, but it does add up! We all need our indulgences, but the next time you make a health resolution, consider the savings in cash. It will keep you motivated because it’s a positive benefit that you can see right away. To keep from rewarding yourself by falling straight back into your favorite treat, put that money towards a rainy day instead.

Bonus: Educate Yourself, Over Time

As you can see, it’s fairly simple to start investing. All you need to do is put your best foot forward to start getting involved. The key, after that, is to continually get better and better at it. 

This comes with continuously educating yourself about what your accounts are doing, and what you can do in the future to improve your portfolio. With time, a clearer understanding of things like fund transfers, cryptocurrency, and common vs preferred stocks will feel like 2nd nature to you.

In Summary!

So, next time your dad guilts you about planning for retirement, or you read an article that makes you feel way behind in money matters, don’t beat yourself up about it. Just put these three methods to work and watch your savings accumulate without feeling the pain.