How Much Is Renters Insurance? Average Cost in 2022

The Insurance Information Institute cites that the average cost of renters insurance across the United States is about $179 per year , according to their most recent data. That said, renters insurance premiums can vary widely based on where you live, your claims history, and your chosen coverage limits, among other factors.

Renters insurance policies offer similar coverage to homeowners insurance. The goal is to reimburse you for any losses that you suffer in an emergency. Imagine if you were renting a house and a leak flooded your clothing closet, destroying your entire wardrobe. Or if a burglar broke in while you were out and made off with your laptop and other electronics. These losses would be one level of pain. Not having insurance that could help you afford replacements would only add a whole other level to that!

It’s generally a good idea to purchase a renters insurance policy if you’re renting a home, regardless of whether it’s an apartment or a house. This holds true even if you are renting an apartment in a private home rather than an apartment complex. Your landlord may have homeowners insurance that is designed to reimburse them in the event of say, damage or a robbery. This however generally does not cover your assets in the event of a loss.

Average Cost of Homeowners Insurance by State

We’ve included the average annual renters insurance premiums for each state in the table below. This data is based on the latest figures from the Insurance Information Institute , a nonprofit organization that collects and shares data related to the insurance industry.

State Average annual premium State ranking in terms of cost
Alabama $222.00 5
Alaska $175.00 22
Arizona $175.00 22
Arkansas $211.00 7
California (5) $178.00 21
Colorado $164.00 29
Connecticut $188.00 12
D.C. $157.00 35
Delaware $157.00 35
Florida $185.00 14
Georgia $214.00 6
Hawaii $181.00 19
Idaho $152.00 40
Illinois $166.00 27
Indiana $172.00 24
Iowa $144.00 47
Kansas $172.00 24
Kentucky $166.00 27
Louisiana $234.00 3
Maine $149.00 42
Maryland $161.00 30
Massachusetts $191.00 9
Michigan $185.00 14
Minnesota $140.00 49
Mississippi $252.00 1
Missouri $179.00 20
Montana $147.00 45
Nebraska $149.00 42
Nevada $182.00 18
New Hampshire $148.00 44
New Jersey $160.00 32
New Mexico $186.00 13
New York $189.00 10
North Carolina $158.00 34
North Dakota $126.00 51
Ohio $169.00 26
Oklahoma $236.00 2
Oregon $161.00 30
Pennsylvania $157.00 35
Rhode Island $185.00 14
South Carolina $184.00 17
South Dakota $127.00 50
Tennessee $195.00 8
Texas (6) $225.00 4
Utah $155.00 38
Vermont $153.00 39
Virginia $152.00 40
Washington $160.00 32
West Virginia $189.00 10
Wisconsin $143.00 48
Wyoming $146.00 46
United States $179.00 AVG

Top 5 Most Expensive States for Renters Insurance

According to data from the Insurance Information Institute, the most expensive state for renters insurance in the nation is Mississippi. Renters in the Magnolia State pay an average of $252 per year for renter’s insurance. Let’s look at the top five:

State Average annual premium State ranking by cost
Mississippi $252.00 1
Oklahoma $236.00 2
Louisiana $234.00 3
Texas $225.00 4
Alabama $222.00 5

Mississippi and Alabama are expensive states in terms of renters insurance because of their proximity to the coast. Being right on the Gulf Coast means residents are often vulnerable since hurricanes may first make landfall in these areas. The risk of loss is higher than inland.

Oklahoma, Texas, and Louisiana all lie in the infamous “Tornado Alley,” which is a strip of states, bordered by the Dakotas to the north and Texas to the south, that is historically prone to fiercely damaging tornadoes. Combined, these factors have resulted in higher renters insurance premiums due to each location’s heightened susceptibility to wind and storm damage.

Top 5 Least Expensive States for Renters Insurance

North Dakota is the least expensive state for renters insurance in the United States, according to data gathered by the Insurance Information Institute. North Dakotans pay an average of $126 per year for renters insurance coverage.

State Average annual premium State ranking by cost
North Dakota $126.00 51
South Dakota $127.00 50
Minnesota $140.00 49
Wisconsin $143.00 48
Iowa $144.00 47

In general, renters policies are lower in areas that aren’t subject to extreme weather (like hurricanes and tornadoes) and that have low crime rates.

What Factors Determine Cost of Renters Insurance?

The cost of your renters insurance may be influenced by a multitude of factors, the most prominent being the following:

•   Coverage limits

•   Deductible

•   Claims history

•   Location

•   Pets

•   Added coverage

Understanding these variables can go a long way towards reducing your costs and helping you choose the renters insurance policy that best suits your needs.

Recommended: What Is Renters Insurance and Do I Need It?

Coverage Limits

This is one of the key factors impacting the costs that you can control. Most insurance companies will give you a choice between higher and lower limits on your renter’s insurance policy.

Coverage limits are the maximum amounts an insurer is willing to pay in the event of a covered claim. There are different kinds of coverage (more on that below), and the limits offered usually range from as low as $10,000 in personal property coverage (the items in your home that could be damaged or lost) to as high as $500,000 in liability coverage (this be tapped if someone got injured at your house). Generally speaking, the more insurance coverage you need, the higher your costs.


The deductible is the other major component of your renter’s insurance costs that you can influence. In the event you file a claim, the deductible is the amount you agree to first pay out of pocket before renters insurance will kick in.

Your deductible transfers risk from the insurer to you, when it comes to losses incurred in a covered claim. Consequently, insurers are willing to charge you a lower premium if you opt for a higher deductible, as this reduces how much they need to pay out. As you might guess, if you want a low deductible, so you would pay as little out of pocket as possible, your rates will be higher.

Depending on your insurance provider, your optional deductible will usually range anywhere from $0 to $2,000. In some instances, insurance providers will allow you to pick your deductible as a percentage of your total insurance limit, for example, if your policy limit is $10,000 and your deductible allotment is 10%, your deductible will effectively be $1,000 for each claim filed.

Recommended: Choosing a Renters Insurance Deductible

Claims History

Similar to your FICO score, insurance companies use what’s called a “CLUE” report (Comprehensive Loss Underwriting Exchange) to track your history when it comes to filing insurance claims. This report contains information regarding all insurance claims filed within the past 5 to 7 years, regardless of whether you move or change insurer.

Repeated claims with hefty payouts can be a red flag for insurers and result in a hike to your insurance premiums. Beware that even claims filed under other types of insurance policies, like homeowners insurance, can impact your renters insurance premium.


You know that saying about the three most important things in real estate are location, location, location? Well, in terms of renters insurance, location isn’t the only thing, but it’s a major variable in terms of how much you will pay. Are you renting a cabin in the woods, in a low-crime rural area? Or are you moving into an apartment in the middle of a major city, where robberies are common? Or are you perhaps planning on signing a lease for the sweetest beach shack, just steps from the shore? The location of your rental will impact how expensive your premium is. Behind the scenes, insurance actuaries rely on complex formulas to price your premium; these take many factors into account, including the risk of natural disasters, crime, and fire, among other factors.

Depending on how risky the insurer perceives your area to be, expect to be charged a higher premium if you live in an area that’s especially prone to crime or natural disasters.


While we all love our pet pals, it’s fairly commonplace for pet owners to be charged higher premiums if they live with a furry friend. Regardless of how sweet your pet may be, insurers deem pets a liability risk, particularly when it comes to things like bites, scratches, and damage to personal property. Your renters policy will potentially pay out if your critter bites a guest or even nips someone while you are walking it in the lobby of your apartment building.

In some instances, insurers may be unwilling to insure certain types of pets; these are typically certain breeds of dogs or exotic animals deemed “higher risk.” Check with your insurer to verify whether or not your pet is covered under your renters insurance policy.

Added Coverage

Your policy will likely include standard coverage for personal property, liability, and loss of use (meaning expenses incurred if you can’t live in your usual dwelling) offered through your standard rental insurance policy. In addition, many insurers offer a suite of optional coverages, riders, and endorsements that you can tack onto your renter’s insurance policy to best suit your needs.

Naturally, added coverage comes with added cost, however as renters insurance is fairly affordable, it usually adds only a few dollars a month.

Depending on your personal assets, it may be worthwhile to consider some of these optional coverages. Some of the most common add-ons/endorsements/riders offered through insurers are as follows:

•   Scheduled personal property: This ups the coverage limit for a specific named item or items that would fail to be fully covered under the policy limits of your standard renters insurance.

•   Replacement cost: Typically, an insurance policy will reimburse you for the actual cash value of an item. So if your 5-year-old laptop is stolen or destroyed, you’d be paid the current value of it. With replacement cost coverage, the depreciation is eliminated from the calculation of your property’s value, resulting in a higher payout in a covered claim.

•   At-home business: This covers damages to any business equipment you have at home that isn’t covered under a standard renters policy.

•   Pet damage: This sometimes allows you to add coverage for property damage and liability caused by pets that isn’t covered under your standard renters policy. Exclusions may apply for specific breeds or types of pets.

•   Earthquake coverage: This covers damage to your property caused by an earthquake, which isn’t typically covered under renter’s insurance.

•   Identity theft: This covers costs incurred if you’re ever the victim of identity theft, as well as fees for expert assistance when it comes to restoring your identity and resolving any fraudulent activity.

What’s Covered by Renters Insurance

The majority of renters insurance policies provide the following standard coverages:

•   Personal property: This covers any loss or damage to your possessions due to a covered event, such as fire or theft.

•   Liability: This covers any property damage or bodily injury costs that you’re found liable for in the event of a covered claim.

•   Loss of use: Also known as “additional living expenses”, this covers the costs of temporary housing in the event your rental is rendered unlivable due to a covered loss.

•   Medical payments to others: This covers the medical costs of guests that are injured on your property. Unlike liability insurance, this does not require you to be legally liable for any injuries.

Most insurance providers will allow you to adjust the limits on these coverages to suit your needs. Keep in mind, this will likely impact your renters insurance costs; more coverage will probably mean higher premiums.

Recommended: What Does Renters Insurance Cover?

Do You Need Renters Insurance?

Legally, you are not required to purchase renters insurance. However it’s advisable for most individuals to purchase renters insurance, as your landlord’s homeowners insurance policy will not cover any losses or damage to your personal property; nor will it typically cover any liability for bodily injury or property damage that occurs while the property is under lease.

Certain rental properties will require you to purchase and maintain an adequate renters insurance policy as part of your lease agreement. Make sure to check with your landlord to fully understand what your contract requires.

Recommended: Why Do Landlords Require Renters Insurance?

Are There Ways to Save on Renters Insurance?

There are a variety of ways you can save on your renters insurance costs, these include bundling your insurance policies under one insurer, increasing the size of your deductible, and generally staying safe and claim-free. Here’s a closer look:

•   Bundle your insurance policies: Most insurance companies offer discounts for purchasing multiple policies through the same company. Purchasing renters insurance in tandem with other policies, like life or auto insurance, can result in cumulative discounts across all your insurance policies.

•   Increase your deductible: Raising the amount of your deductible increases your share of the costs in the event of a covered claim and consequently can lower the cost of your premiums.

•   Pay your entire premium at once: Some insurance companies offer a discount for paying your entire premium upfront as one annual payment rather than in monthly or quarterly installments. Check with your provider to see if they offer lump sum payment discounts.

The Takeaway

Renters insurance is relatively inexpensive when compared to other types of coverage, like homeowners, auto, or health insurance. However, it can prove invaluable in the event of any emergency that occurs on your rental property.

It’s a good idea to purchase a renters insurance policy when renting a home. Remember that your landlord’s homeowners insurance policy typically only covers their interests and generally will not reimburse your costs in the event of any incidents. Imagine losing all your possessions, or even just all of your clothes, to a fire. Or having a burglar break in and steal your electronics. Renters insurance can help minimize the pain by helping pay for you to replace what you’ve lost. That kind of peace of mind is well worth the usually inexpensive premiums these policies charge.

Protect More Than Your Possessions: Sofi and Lemonade Offer Renters Insurance

SoFi’s teamed up with Lemonade to bring you renters insurance that’s affordable, instant, and easy to understand. Starting at just $5/month, you can protect the stuff you own at home — and everywhere else.

Check out the simple way to buy affordable, reliable renters insurance with SoFi, powered by Lemonade.

Photo credit: iStock/dragana991

SoFi offers customers the opportunity to reach the following Insurance Agents:

Home & Renters: Lemonade Insurance Agency (LIA) is acting as the agent of Lemonade Insurance Company in selling this insurance policy, in which it receives compensation based on the premiums for the insurance policies it sells.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.


Minimum Car Insurance Requirements by State

To legally drive in most states, you need to have car insurance, with the minimum amount determined by your state of residence. We should really refer to “car insurance minimum coverages,” in plural, because requirements can exist for liability insurance, property damage, medical expenses, uninsured/underinsured coverage, and personal injury protection, among other possibilities. This post will provide a general overview using the most current information available. Verify information for your particular state to make sure you have the appropriate requirements for car insurance.

Car Insurance Requirements By State

Take a look at Alabama’s requirements for car insurance: 25/50/25. This means that the state requires $25,000 of bodily injury liability insurance per person with $50,000 for all bodily injuries that take place within a single accident and $25,000 in property damage per accident. This is the general format we’ll use while adding other insurance information about a state when available and applicable.

State Requirements for Car Insurance Additional Requirements
Alabama 25/50/25
Alaska 50/100/25
Arizona 25/50/15
Arkansas 25/50/25
California 15/30/5
Colorado 25/50/15
Connecticut 25/50/25 The state also requires uninsured/underinsured motorist coverage of $25,000 per person and $50,000 per accident
Delaware 25/50/10 The state also requires personal injury protection (PIP)
Florida Property damage liability of $10,000 per accident and $10,000 PIP coverage
Georgia 25/50/25
Hawaii 20/40/10 and $10,000 PIP
Idaho 25/50/15
Illinois 25/50/20 Under state law, policies automatically include what’s required for uninsured motorist coverages
Indiana 25/50/25 This state also requires $50,000 in underinsured motorist coverage for bodily injuries
Iowa 20/40/15
Kansas 25/50/25 Along with uninsured/underinsured coverage ($25,000 per person/$50,000 per accident) and personal injury protection (PIP or no-fault)
Kentucky 25/50/25
Louisiana 15/30/25
Maine 50/100/25 Along with $50,000 uninsured coverage per person and $100,000 per accident, and $2,000 in medical payment coverage
Maryland 30/60/15
Massachusetts 20/40/5 and $8,000 PIP
Michigan 20/40/10
Minnesota 30/60/10 Along with $25,000 uninsured/underinsured coverage per person, $50,000 per accident, and $40,000 PIP
Mississippi 25/50/15
Missouri 25/50/25 Plus $25,000 uninsured coverage per person and $50,000 per accident
Montana 25/50/20
Nebraska 25/50/25 Plus $25,000 uninsured/underinsured coverage per person and $50,000 per accident
Nevada 25/50/20
New Jersey 15/30/5 Along with $15,000 PIP
New Mexico 25/50/10
New York 25/50/50 and $50,000 PIP
North Carolina 30/60/25 The state also has detailed specifics about required insurance coverage for uninsured/underinsured motorists
North Dakota 25/50/25
Ohio 25/50/25
Oklahoma 25/50/25
Oregon 25/50/20 Plus $25,000 uninsured coverage per person and $50,000 per accident, and $15,000 PIP
Pennsylvania 15/30/5 Plus $5,000 for medical payments
Rhode Island 25/50/25
South Carolina 25/50/25 Plus $25,000 uninsured coverage per person, $50,000 per accident, and $25,000 in property damage
South Dakota 25/50/25 Plus $25,000 uninsured coverage per person and $50,000 per accident
Tennessee 25/50/15
Texas 30/60/25
Utah 25/65/15
Vermont 25/50/10
Washington 25/50/10
Washington D.C. 25/50/10 $25,000 uninsured coverage per person, $50,000 per accident, and $5,000 property damage
West Virginia 25/50/25 Plus $25,000 uninsured coverage per person and $50,000 per accident, and $25,000 property damage
Wisconsin 25/50/10 Plus $25,000 uninsured coverage per person and $50,000 per accident

Which States Don’t Require Insurance?

You may notice that two states are not in this list: New Hampshire and Virginia. That’s because they don’t require car insurance, per se, although they do have laws on the subject.

In Virginia, if you don’t have car insurance, you pay a $500 fee, which is more than the average cost of liability insurance in the state.This fee does not, though, provide the driver with any coverage. So they are responsible for any damages they inflict when at fault in an accident and for compensation for any medical injuries and/or property damage.

In New Hampshire, there are no fees associated with not having car insurance but the at-fault driver is responsible for paying for any damages when they are at fault in an accident.

If a driver decides to buy car insurance in either state, then the car insurance minimum coverage in each is 20/50/25.

Recommended: How to Get Car insurance in 5 Simple Steps

Understanding Required Coverages

Here are definitions for key auto insurance terms connected to coverages:

•   At fault: A driver is “at fault” when an action they took or didn’t take caused the collision.

•   Liability insurance: This pays for the other driver’s/drivers’ car repairs (property damage) and medical bills (bodily injuries) if you’re at fault in an accident.

•   Uninsured and underinsured motorist coverage: This protects drivers and passengers alike if the other motorist has little or no car insurance. The bodily insurance portion covers medical costs while the property damage portion pays for vehicle repairs.

•   Personal injury protection: This helps to pay for accident-related medical expenses for the insured driver and the passengers, regardless of who is at fault.

Liability auto insurance may also cover loss of income, legal fees if a lawsuit occurs, and/or funeral costs. The property damage coverage can go beyond paying for vehicle repairs, also covering a fence, bicycle, shed, or building — as just four examples — that was damaged in an accident.

Exceptions to State Minimum Car Insurance Requirements

As already described, New Hampshire and Virginia take a different approach to car insurance requirements. As another approach, in the state of Kentucky, a driver can have 25/50/25 coverage or a policy with a $60,000 limit. In Maine, as another example, you can have the menu of coverages as described above or a $125,000 policy. Because each state is different, it’s best to verify what insurance is required by law where you live and what options exist.

In more than half of the states, a driver can decide to purchase a bond from the state instead of buying car insurance. Specifics vary by state (but none of the bond amounts are small) and these funds are used if you cause an accident. Any time that the state pays an injured party (from an accident where you are at fault), the money must immediately be reimbursed by you to the state along with interest. The bond is connected to the driver, not the vehicle, so it provides coverage to any vehicle driven by the bondholder.

Recommended: How Does Car Insurance Work?

Going Beyond Car Insurance Minimum Coverage

So far, this post is focusing on what insurance is required by law. But how much car insurance do you really need? That’s another question entirely.

For example, even when your state doesn’t require comprehensive coverage, if a vehicle is being financed or leased, the lender will likely require that you have this type of coverage. This covers physical damage to a vehicle that isn’t caused by an accident. This can include weather damage, theft or vandalism, hitting an animal, and other damages. Even if a vehicle is paid off, it often makes sense to include this coverage in your policy because the cost is small in comparison to what repair or replacement costs would be if the vehicle is damaged or stolen.

Collision coverage goes beyond accident-related damage and can cover costs if you run into a tree or building, hit a pothole, for example. If paying for damages out of pocket would be challenging or your risk tolerance is low, you might consider having this coverage.

Then there’s guaranteed auto protection (GAP) that can protect you as your vehicle’s value depreciates. If that car is totaled in an accident or stolen, then GAP would pay the difference between what you owe on it and its actual cash value. This allows you to pay off your loan or lease and then get any remainder from the insurer. Typically, you need full auto insurance in order to add the optional GAP.

Lowering Car Insurance

To lower your car insurance, here are tips to consider:

•   Get quotes. Using an online comparison tool can make your search especially efficient. The Insurance Information Institute recommends that you get at least three quotes. To check out the insurer’s financial health, you can use Standard & Poor’s, AM Best, or another rating service — and/or contact your state insurance department to see if there are any complaints about them.

•   Talk to your current insurance provider and ask them what discounts they can offer you. They may give you a better premium to keep your business.

•   See which discounts you may qualify for: a good driving record, a vehicle with anti-theft features, carpooling/remote working, going paperless with statements, or other strategies.

•   Find out how much you can save if you bundle other insurances with your car insurance. This can be homeowners or renters insurance, for example, or perhaps you can combine car insurance policies for multiple vehicles.

•   Consider a higher deductible, which is the out-of-pocket amount you’d have to pay before your insurance kicks in to pay a claim. This can lower your premium significantly, but if you have an accident, you may need to use your personal savings before the insurer pays your claim.

•   Reevaluate coverage needs. If your car is older, you may not need all of the coverages you once did. That said, you’ll want to balance what you can save today on premiums with what might happen tomorrow if an accident or other covered event occurs. You’ll need to keep state minimum car insurance in mind, of course.

The Takeaway

Most states have minimum requirements for car insurance (and when they don’t, they still have coverage parameters that must be met). This post shares insight into the types of coverages as well as the amounts that each state requires. To find the right insurance policy for your needs, you can compare multiple car insurance rates from top insurers and see quotes in just a matter of minutes.

Photo credit: iStock/Weekend Images Inc.

Insurance not available in all states.
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SoFi is compensated by Gabi for each customer who completes an application through the SoFi-Gabi partnership.

Third Party Brand Mentions: No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third party trademarks referenced herein are property of their respective owners.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
This article is not intended to be legal advice. Please consult an attorney for advice.


What is Supplemental Life Insurance?

Supplemental life insurance is typically an additional policy that you can purchase to augment the group life insurance policy obtained via your employer.

These policies can provide extra peace of mind when it comes to protecting your loved ones, but is more insurance always better? You may wonder whether purchasing this kind of policy is a good idea or not worth the added expense. Let’s take a closer look to see whether supplemental life insurance makes sense for your situation.

Understanding Supplemental Life Insurance

Supplemental life insurance is a policy that’s taken out in addition to basic coverage, which might be term or permanent life insurance. You can often purchase a supplemental policy through an employer to augment what they offer as an employee benefit. However, these policies don’t have to be secured through your job. We’ll learn more about that in a minute.

Some of these policies come with a death benefit, a lump sum payment that goes to the beneficiaries you’ve named (the loved ones who will inherit the money). Others may be a different kind of policy; say, one that pays funds that are earmarked to pay for funeral expenses. Depending on the details of your life, these add-ons may be an inexpensive way to boost your protection and sense of security.

Do You Need Supplemental Life Insurance?

Deciding whether or not to buy a supplemental policy is a very personal decision. To help figure out the right answer for your situation, it may help to ask yourself and answer a few questions. Let’s consider some of those here.

Does Your Employer Provide Life Insurance?

Because supplemental insurance is meant to enhance the life insurance policies you already have, check to see if your employer offers basic life insurance as a benefit. If so, how much? Many times, employers offering this insurance will provide a multiple of the employee’s current salary. Other times, it’s significantly less: Among employers offering flat-dollar plans, the median amount of group life insurance provided is only $25,000, according to a U.S.

Bureau of Labor Statistics’ 2021 National Compensation Survey. That’s a figure that many people will find too low to provide the kind of protection they’d like.

If you feel you don’t have enough protection, you may want to check out what is offered that could boost your coverage so that in a worst-case scenario, you know your loved ones will have enough money to cover their expenses. Perhaps your employer offers supplemental policies that will get you to the level of life insurance coverage that you desire. Otherwise, you can also look on the open market for primary or supplemental policies.

Have Your Compared Life Insurance Rates?

If you haven’t compared prices of life insurance rates in a while (or ever), you might want to give it a try. Just because an employer offers life insurance, including supplemental coverage, you may not want to buy it. You may discover that you can get enough life insurance through a standard policy without adding a supplemental one. You can quickly get quotes by calling an insurance agent or, to save even more time, from a website that provides them from multiple companies. When looking at the quote that gives you the best coverage for the most affordable premiums, would you still need a supplemental policy? The answer may be no. There’s a good deal of competition in the marketplace and great deals to be found.

Recommended: How to Buy Life Insurance in 9 Steps

How is Your Health?

First, let’s understand that your health rating is a key factor in buying life insurance on the open market. Rates tend to be lower when you are healthier and younger. Health is typically assessed by the insurer asking you questions about your medical status and possibly having you submit to a brief health exam that involves the collection of blood and urine samples.

That said, plenty of life insurance policies require health exams and/or medical records. That said, many insurers also offer lab-free options that don’t require medical exams (although you’ll almost certainly need to answer health-related questions), and these are often the kind employers offer employees. Typically, these policies are for people who fit into certain age groups and other categories in which they’re likely to be healthy. These lab-free policies are often available for up to $1 million.

Now that you know how this works, understand the implications of your health status. If you have an underlying health condition, are a smoker, or have other qualifying factors, you would probably pay more for life insurance if you went shopping on the open market. In these cases, buying a supplemental policy through your job could be a good way to get coverage at a relatively low cost.

Do You Need Portable Coverage?

Before you sign up for a supplemental policy, consider whether it’s portable. “Portability” is your ability to keep certain benefits if you switch your place of employment or leave the workforce entirely — in this case, your life insurance. If you’re thinking about changing jobs or have reason to believe that you may not work at your current employer for much longer, it’s important to know if your life insurance is portable.

How Much Supplemental Life Insurance Should You Buy?

Many financial experts recommend that you carry 10 to 15 times your annual income in life insurance coverage. Your goal is to choose a policy that would replace the income you would have brought in if you weren’t around to provide for your family. So, if you multiply your salary by those numbers and then subtract what you have in your “regular” life insurance policy, that can be a starting point to determine how much supplemental insurance makes sense.

If you make $50,000 a year and multiply by 10 or 12, that’s $500,000 to $600,000 in coverage you want to purchase. (You might want to bump it up a bit to account for inflation.) So, if you have a term life insurance policy for $500,000, you might decide to get a supplemental policy for $200,000.

Now, factor in your outstanding debt. Life insurance payouts can be used to pay them off, including mortgage loans, car loans, student loans, credit cards, and so forth. So, if you have these debts, you can add their outstanding balances up and consider adding those amounts to your life insurance needs. If, for example, these debts total $300,000, you might bump up the supplement policy example above to $500,000.

Recommended: Life Insurance Definitions

Types of Supplemental Life Insurance

We’ve been focusing on one kind of supplemental insurance, a popular option that lets you increase the overall life insurance coverage you own. This kind of policy would pay a lump-sum death benefit to your beneficiaries. If you purchase this, it’s an employee benefit that can increase the amount of coverage that you own (although you may be responsible for part of all of those premiums albeit at a group rate).

But let’s consider some other possibilities that may be offered:

•   Supplemental spouse life insurance. This kind of insurance provides a death benefit if the employee’s spouse dies and may also be called supplemental family life insurance. Employees may also have the option to buy supplemental child life insurance to cover the death of a child or other dependent who qualifies.

•   Accidental death and dismemberment. This provides coverage to your beneficiaries if you are killed or lose physical function in a type of accident that’s covered in the policy. Depending on the kind of work you do or the pastimes you pursue, this may or may not suit your needs. With AD&D insurance, you could receive a benefit, say, you were to lose your eyesight, your hearing, or limb in an accident. But it won’t provide any benefit if you die due to other medical conditions, which are more likely to occur.

•   Final expenses. These policies pay a small benefit (typically between $5,000 and $35,000) to cover end-of-life expenses, such as funeral and burial costs. Some people like to have this kind of coverage, which means your loved ones wouldn’t have to pay out of pocket for these charges.

How Much Coverage Can You Get Through Work?

It’s worthwhile to evaluate what life insurance options are available through your work. Employers may offer lower rates since they get a group insurance rate. Also, it’s also possible that your employer would subsidize (pay part of) your premiums. It’s typically easier to get insured through a group plan. While you may need to answer medical questions, it’s less likely that you’ll need a medical exam for group insurance.

Group plans through your employer, though, are usually not portable. This means that if you leave that employer, the coverage ends and then you’ll need to shop around again — now at an older (although not necessarily old) age and perhaps with new health conditions. Plus, these plans aren’t as customizable as you might get on your own.

How Much Does Supplemental Life Insurance Cost?

If your employer offers this benefit as part of a group policy, the cost may be minimal, especially if the workplace subsidizes the premiums.

Otherwise, it can make sense to get personalized quotes, given that age, gender, health conditions, amount of the policy, term, and more can impact the price. There are online calculators that can help you do the math and see how the numbers add up.

The Takeaway

So, what is supplemental life insurance? It’s a policy that enhances a person’s primary life insurance policy. It helps to ensure that they have enough financial benefit to protect their loved ones if they weren’t there to provide for them. While supplemental policies through one’s employer can be affordable, they still may not deliver the level of coverage you need. Take a close look at your options, and take advantage of the simple online tools that can help you find the kind of policy you need at the right price.

Protection at a Great Price: Life Insurance from SoFi Powered by Ladder

Part of adult life is financial responsibility: Keeping your dollars and sense in good shape and knowing you are providing for your loved ones. But with that, come some important decisions and planning for the big “what-ifs,” such as “What if you weren’t there to provide for your family? How would the mortgage, tuition, and other expenses be paid?” Term life insurance can help give you the security you crave, beyond what’s offered by your employer’s group life insurance and supplemental options. SoFi and Ladder have partnered to provide a quick, easy, and affordable path to term life insurance from $100,000 to $8 million. Eligible applicants seeking up to $3 million don’t require a medical exam. And because we value your time, we’ll provide you with an instant decision when you apply.

Photo credit: iStock/Kemal Yildirim

Ladder policies are issued in New York by Allianz Life Insurance Company of New York, New York, NY (Policy form # MN-26) and in all other states and DC by Allianz Life Insurance Company of North America, Minneapolis, MN (Policy form # ICC20P-AZ100 and # P-AZ100). Only Allianz Life Insurance Company of New York is authorized to offer life insurance in the state of New York. Coverage and pricing is subject to eligibility and underwriting criteria. SoFi Agency and its affiliates do not guarantee the services of any insurance company. The California license number for SoFi Agency is 0L13077 and for Ladder is OK22568. Ladder, SoFi and SoFi Agency are separate, independent entities and are not responsible for the financial condition, business, or legal obligations of the other. Social Finance, Inc. (SoFi) and Social Finance Life Insurance Agency, LLC (SoFi Agency) do not issue, underwrite insurance or pay claims under LadderLifeTM policies. SoFi is compensated by Ladder for each issued term life policy. SoFi offers customers the opportunity to reach Ladder Insurance Services, LLC to obtain information about estate planning documents such as wills. Social Finance, Inc. (“SoFi”) will be paid a marketing fee by Ladder when customers make a purchase through this link. All services from Ladder Insurance Services, LLC are their own. Once you reach Ladder, SoFi is not involved and has no control over the products or services involved. The Ladder service is limited to documents and does not provide legal advice. Individual circumstances are unique and using documents provided is not a substitute for obtaining legal advice.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.


What Is Indexed Universal Life Insurance (IUL)?

When life insurance policy types are listed and described, the focus is usually on two of them: term life and whole life policies. There are more types than those two, though, and they’re typically more complex. They include universal life insurance — and, as a subset, indexed universal life insurance, or IUL. This is an advanced type of policy, where interest on the cash value component is linked to a market index.

In this post, we’ll define IUL, explain how it works, share its pros and cons, and more.

Definition of Indexed Universal Life Insurance (IUL)

First, let’s define universal life insurance. Universal life insurance is a permanent policy, which means that it doesn’t have a set term (say, for 10 or 20 years) and it comes with a cash value. A universal life insurance policy allows policyholders to flexibly adjust premiums and death benefits, though this can have an adverse effect on the policy.

Now, what is IUL? Indexed universal life insurance adds another twist to the equation. This is a type of universal life insurance that doesn’t come with a fixed interest rate. Instead, its growth is tied to a market index. (More about the index soon.)

How Does IUL Work?

After someone buys an IUL policy, they pay premiums, which is similar to other types of life insurance policy structures. Part of that premium covers the insurance costs that, like with other types of life insurance, are based on the insured’s demographics. Remaining fees paid go towards the cash value of policy. Interest paid is calculated in ways that are based on an index (or indexes).

This may sound similar to investing in the stock market, but there’s a key difference. The part of the premium that goes towards the cash value of the policy doesn’t get directly invested in stocks. Instead, the market index(es) is how the interest rate and amount is determined, with a minimum fixed interest rate usually guaranteed.

IULs typically offer policyholders a choice of indexes and allow them to divide the cash value portions of their premiums between fixed and indexed account options.

Explaining the “Index” Feature

A market index represents a broad portfolio of investments with the use of weighted average mathematics to come up with the index figure, which then plays a central role in the amount of interest paid. The three most commonly used market indexes in the United States are the Dow Jones, the S&P 500 and the Nasdaq Composite.

Note that funds invested for the cash portion of the insurance policy do not need to be invested in the index used to calculate the interest. Many times, insurers invest these dollars in bonds rather than stocks.

Benefits and Drawbacks of IUL Insurance

Like other types of life insurance policies, indexed universal life insurance comes with pros and cons. Here is an overview of the benefits and drawbacks of IUL.

Benefits of IUL Insurance

Benefits include:

•   There’s a death benefit for beneficiaries, as well as the cash value of the policy.

•   Withdrawals can be tax-free up to the amount of premiums paid.

•   Premiums are flexible — you can pay different amounts each month as long as it’s enough to cover fees and doesn’t go beyond an IRS limit.

•   Gains are locked in each year, which means you can’t lose the previous years’ gains, though if the market is down the following year it can decrease unless the policy has a built-in floor.

•   Because of the annual reset feature, you never need to make up any losses from prior years.

•   No mandatory distributions exist.

•   You can explore your tax benefits with your accountant or other financial advisor, and they may be significant for your situation.

•   You can borrow against this policy and, if you do, you typically won’t face negative tax consequences.

Recommended: Life Insurance Definitions

Cons of IUL Insurance

Challenges include:

•   An IUL is complicated and, to get the most benefits from this policy, you’ll need to understand how to maximize its value.

•   Although you can pay a minimal premium amount when you want, this can have a negative overall effect on the policy’s cash value.

•   Because the cost for the insurance portion depends on your rating, how much is insured and your age, the cost will go up over the years as you get older.

•   Although the rate is based on an index, policies come with a cap. So, during high index years, you likely won’t realize the full benefit because of this cap. On the flipside, however, many policies also have built-in floors to offset the cap.

•   Fees can take a big chunk out of the policy, causing you to lose much of its value.

•   If you don’t keep the policy in force, you may lose the death benefit (which is true of other types of policies), along with the extra money paid into the premiums.

Alternatives to IUL Insurance

Whether you’re not sold on IUL insurance or simply want to know what your other life insurance options are, here are some of the alternatives to indexed universal life insurance:

•   Adjustable life insurance: This combines aspects of term life insurance with whole life and provides policyholders with the flexibility to adjust the policy’s amount, term premiums and more. Adjustable life policies also come with a cash value component. A key benefit of adjustable life insurance is that you can make adjustments to your policy without the need to cancel the current policy or buy a new one.

•   Variable universal life insurance: Variable universal life is similar to IUL, as it is a permanent life insurance policy that has a cash value and flexible premiums. The investment portion comes with subaccounts and can resemble investing in mutual funds. When the market is doing well, this can benefit the policyholder, but when it’s not, significant losses can occur.

•   Standard universal life insurance: Then, of course, there are universal life insurance policies. These come with a fixed interest rate rather than one tied to an index.

•   Whole life insurance: Additionally, there’s the more basic whole life insurance policy with standard premiums. There is also a guaranteed death benefit and a cash value component.

•   Term life insurance: Then, life insurance at its simplest: term life insurance policies. These don’t come with cash value components or any real bells and whistles. These policies have a term limit (perhaps 10 to 20 years) and are more straightforward and affordable than other options, coming with a death benefit to beneficiaries when the covered individual dies while the policy is paid up and in force.

•   Current assumption whole life insurance: Another type of cash value insurance is called current assumption whole life (CAWL), and it has similarities to universal life insurance policies. Premiums are fixed for a certain period of time and, on predetermined dates, premiums are recalculated (and perhaps the death benefit is, as well). Plus, interest is handled in a way that’s similar to universal life.

Recommended: How to Buy Life Insurance in 9 Steps

Is IUL Insurance Right for Me?

By comparing this overview of indexed universal life insurance with, say, term or whole life insurance, you can see that IUL insurance is quite complex. If, though, you’re earning a high income or want to explore long-term investment opportunities, it can make sense to consider whether the tax benefits associated with an IUL would be worthwhile.

For those who do consider moving forward with exploring indexed universal life insurance, it’s important to compare its pros or cons against those of other types of life insurance. Also take the time to research and compare different life insurance policies.

The Takeaway

Although the question of “What is IUL?” is quite short, the answer isn’t. If this type of policy interests you, consider exploring it in more depth to ensure that you’re clear about its complexities.

At Lantern by SoFi, we make life insurance easy to understand and quick to set up. You can conveniently get a quote for a term life insurance policy and apply in just minutes. You can then benefit from flexible coverage for 10 to 30 years, adjustable at any time, in amounts from $100,000 to $8 million.

Photo credit: iStock/DragonImages

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Ladder policies are issued in New York by Allianz Life Insurance Company of New York, New York, NY (Policy form # MN-26) and in all other states and DC by Allianz Life Insurance Company of North America, Minneapolis, MN (Policy form # ICC20P-AZ100 and # P-AZ100). Only Allianz Life Insurance Company of New York is authorized to offer life insurance in the state of New York. Coverage and pricing is subject to eligibility and underwriting criteria. SoFi Agency and its affiliates do not guarantee the services of any insurance company. The California license number for SoFi Agency is 0L13077 and for Ladder is OK22568. Ladder, SoFi and SoFi Agency are separate, independent entities and are not responsible for the financial condition, business, or legal obligations of the other. Social Finance, Inc. (SoFi) and Social Finance Life Insurance Agency, LLC (SoFi Agency) do not issue, underwrite insurance or pay claims under LadderLifeTM policies. SoFi is compensated by Ladder for each issued term life policy. SoFi offers customers the opportunity to reach Ladder Insurance Services, LLC to obtain information about estate planning documents such as wills. Social Finance, Inc. (“SoFi”) will be paid a marketing fee by Ladder when customers make a purchase through this link. All services from Ladder Insurance Services, LLC are their own. Once you reach Ladder, SoFi is not involved and has no control over the products or services involved. The Ladder service is limited to documents and does not provide legal advice. Individual circumstances are unique and using documents provided is not a substitute for obtaining legal advice.


Here’s Exactly How to Shop for Car Insurance in 2022

When it comes down to it, auto insurance can be one of the most important things you purchase all year. But finding the right policy can feel like a daunting task.

Whether you’re buying your first car or trying to save money on your current policy, it’s important to explore your options.

With a little preparation, you can get a good policy with the amount of financial protection you need at an affordable price.

Our step-by-step guide breaks down everything you need to know before you shop for car insurance, including state minimum requirements, online comparison sites and ways to save money on your policy.

How to Shop for Car Insurance in 5 Steps

Car insurance can be expensive.

The average cost of auto insurance in the U.S. is around $137 per month, according to PolicyGenius, an online insurance marketplace.

Shopping around for car insurance is one of the best ways to save money while ensuring you have the coverage you need.

If you’re getting quotes without the help of an independent agent, it’s helpful to understand some car insurance basics before exploring your coverage options.

Step 1: Understand Car Insurance Terminology

First, let’s cover some car insurance terms you need to know before you begin shopping for quotes.

Premiums: The amount you pay for your insurance coverage — and how often you pay your premium — varies by insurance company. Your car insurance policy will generally accept monthly or even semi-monthly payments, but many offer discounts for paying upfront for the entire policy, which typically lasts six or 12 months.

Deductible: The out-of-pocket amount you must pay before your auto insurance starts paying for damage to your vehicle — not damage you cause to other people’s property. Say you hit a deer, causing $1,000 worth of damage to your vehicle, and your deductible is $500. You must pay the first $500, then your car insurance pays the remaining balance.

Coverage Limits: The maximum your auto insurance will pay. Any damage above these limits is your responsibility, so make sure you’re aware of your limits when you purchase an auto insurance policy. For example, suppose you were at fault in a crash that caused another driver $50,000 of injuries. Your car insurance policy has a $25,000 per-person bodily injury limit, so it pays out the first $25,000 — but you’re on the hook for the remaining $25,000.

Claims: These are filed when you or another person asks an insurance company to cover losses from an accident. Let’s say you’re in a crash that’s your fault, and you cause $1,000 worth of damage to your car and $2,000 worth of damage to someone’s fence. You would file a claim with your car insurance company to have your car repaired. The fence owner would also file a claim with your insurance company to have their fence repaired.

Step 2: Gather Your Information

To get an accurate auto insurance quote, you’ll need to provide some basic information about yourself and your car.

To save time, gather this information before you start shopping for quotes.

  • Vehicle information: Vehicle identification number (VIN), date purchased, make, model and mileage. This information can be found in the vehicle or on your registration. If you haven’t bought the car yet, make sure to have the mileage, make, model and year of what you’re planning to buy.
  • Drivers’ information:  This should include all drivers who will be on the auto policy: Drivers license numbers, birthdates, addresses, occupations and marital status.
  • Accident History: Include any tickets, violations and claims you’ve had over the past five years.
  • Auto Insurance History: This helps you compare new policy features with your current coverage. Also, some insurers won’t cover you without some previous coverage history.
Cars driving down the road.
Tina Russell/The Penny Hoarder

Step 3: Determine How Much Auto Insurance You Need

Minimum coverage requirements vary greatly by state, and that has a huge impact on what you pay for your policy.

If you shop for car insurance quotes online, website comparison tools should automatically pre-load your state’s minimum insurance requirements.

There are different types of coverage, and different requirements for each type. Here’s a simple breakdown.

Liability Coverage

Liability coverage is required by law in every state except New Hampshire. However specific coverage requirements and minimums vary by state.

Liability insurance protects your assets in the event of a crash. It’s the most important part of your auto insurance.

The more assets you have, the more liability insurance you should carry to protect yourself.

That’s why getting the minimum amount of coverage your state requires isn’t always a smart money move.

A good rule of thumb is to have coverage that equals the total value of your assets. Total assets include your home, car, savings and investments.

How to Figure Out Your Liability Limits

Liability coverage limits on policies are shown as three different numbers: like 50/100/50 up to 250/500/250. Each number is equal to the amount of money (in thousands) your insurance will payout for different types of damages.

  • Individual injuries (bodily injury)
  • Total injuries (total bodily injury)
  • Property damage (damage liability)

Suppose your policy lists the numbers 50/100/25. The first number means one person injured is covered up to $50,000; the second number is the limit for injuries to all people in the same accident ($100,000). The third number ($25,000) is the coverage for property damage liability, which protects you if your car damages someone else’s property.

Pro Tip

When shopping for liability car insurance coverage, you want that middle, highest number to be equal or greater than your net worth. 

Uninsured and Underinsured Motorist Coverage

Uninsured and underinsured motorist coverage is required in some states and optional in others.

However, adding this type of coverage to your policy can save you a lot of money if you’re involved in a car crash with someone who doesn’t have insurance.

If you don’t have this coverage and something were to happen at the fault of an uninsured or underinsured driver, you could end up paying for some or all the damage yourself because your insurer wouldn’t have another insurance company to recover money from.

Personal Injury Protection (PIP) Insurance

Personal injury protection, also known as no-fault insurance, covers your medical expenses after an accident, regardless of who’s at fault.

It can cover things like ambulance bills, emergency room costs, follow-up medical appointments, lost wages and transportation to and from doctor visits.

It does not cover damage to your car, theft or damage to other people’s property.

No-fault insurance is mandatory in 18 states.

Collision and Comprehensive Coverage

If you want as much protection as possible, look for policies that include liability coverage, plus collision and comprehensive coverage. This is sometimes called full coverage car insurance.

No state requires drivers to carry collision or comprehensive insurance coverage. Adding this coverage can cost twice as much as your basic insurance requirements.

But if you can afford it, this extra coverage can be a smart move — especially if you have a new car.

Collision coverage pays for damage to your car when the accident involves an object or another vehicle. Owners of older cars without much value can consider dropping this coverage because it’s normally limited to the cash value of your car. This coverage is optional unless you finance your car.

Comprehensive coverage helps cover damage to your car from things like theft, fire, explosions, flood and vandalism. This coverage includes a deductible.

Step 4: Shop for Car Insurance Quotes

Rates vary considerably from one insurance provider to another, so it’s wise to get more than one or two quotes.

While you still have the option of making dozens of phone calls or working with independent agents or brokers, comparison shopping can be made even simpler by doing it online.

Pro Tip

Make sure to compare the exact same coverage levels when shopping online for car insurance quotes to get an apples-to-apples comparison.

If you don’t know where to look, here are some providers that can find you a good rate with a reputable company:

  • EverQuote is the largest online marketplace for insurance in the U.S. When you answer a few questions about yourself and your driving record, you’ll get the top options from more than 175 different carriers handed right to you.
  • A digital marketplace called SmartFinancial can compare auto insurance quotes from dozens of different car insurance companies. It takes one minute to get quotes from multiple insurers, so you can see the best auto insurance rates side-by-side.
A woman drives a convertible.
Getty Images

Step 5: Look for Discounts and Review Your Car Policy Regularly

When shopping for quotes, keep in mind that auto insurance companies consider specific factors when they determine your premiums.

Pricing Factors Car Insurance Companies Look at Generally Include:

  • Type of car
  • Age
  • Gender
  • ZIP code
  • Marital status
  • Credit
  • Education and occupation
  • Driving habits

You can’t really control these factors, but there are a few ways to get yourself a better deal on car insurance.

Shop and Compare Rates at Least Once a Year

A lot can change in a year — including your car insurance rates.

Experts recommend you shop around for car insurance at least once a year to make sure you’re getting the right coverage, service and of course pricing to suit your changing needs.

Check for Discounts

Most car insurance providers offer discounts for things like good grades or a clean driving record.

Some insurers may even offer you a discount for taking a defensive driving course.

To find out more about the discounts offered by your insurer, visit the insurance company’s website or call and speak to an agent.

Raise Your Deductible to Lower Your Monthly Premium

A higher deductible might be an option if you’re willing to save up your own financial buffer in case you’re in an accident.

But be careful and realistic about how much you could afford to pay out of pocket if you’re in an accident.

Just like a high-deductible health plan seems great until you get sick, lower monthly car insurance premiums may not mean much if you’re left with thousands of dollars in bills because your deductible is so high.

Ditch Miscellaneous Coverages

Roadside assistance and rental reimbursement should be the first car insurance policies you drop if you’re trying to lower your insurance bill.

However, you should never reduce your liability coverage to save money.

Forgo Comprehension and Collision Coverage on That Older Vehicle

If you drive an older vehicle that’s worth less than your deductible, you might skip comprehensive and collision insurance and save that money for a new car in case your current one gets totaled.

This article contains general information and explains options you may have, but it is not intended to be investment advice or a personal recommendation. We can’t personalize articles for our readers, so your situation may vary from the one discussed here. Please seek a licensed professional for tax advice, legal advice, financial planning advice or investment advice.

Rachel Christian is a Certified Educator in Personal Finance and a senior writer for The Penny Hoarder. 




5 Common Reasons for Being Denied Homeowners Insurance

Buying a home is a complicated process, especially for first-time homebuyers.

Yet, purchasing a property is one of the landmark moments in many peoples’ lives, and a home is often a family’s most valuable asset. Therefore, it’s incredibly important to make sure that it has the proper insurance coverage. Some homes, however, can be more difficult to get homeowners insurance for than others. Being denied homeowners insurance is likely to scuttle the deal with a mortgage company.

There are several reasons why obtaining homeowners insurance can be difficult, from where the home is located to who occupies it and what it is being used for. In addition, issues like flooding, wildfires, construction, and renters can all factor into whether or not you can receive homeowners insurance coverage.

5 Common Reasons Insurance Companies Deny a House

This article will lists five of the major factors why obtaining a policy can be difficult (or impossible) for certain houses and how to prevent or resolve these issues so that you can have success with an insurance provider.

1. The House Is Structurally Unusual

The first major category and the hardest to resolve problems for home insurance coverage relate to homes that are structurally unusual. Structural issues involve questions of what type of home it is or what it is made out of. Alternative homes are becoming increasingly popular as buyers seek to find ways around high home prices.

However, homes made of unconventional materials or unusual construction fall under this category and create hurdles to getting a home insurance policy. It includes houses like barndominiums, or barndos, which are barns that have been converted into a residential home. Other unusual home construction includes cloth or canvas homes like yurts, A-frames, dome houses, and even mobile homes and trailers. Tiny homes can also fall under this category making the hunt to find coverage more painstaking.

For some of these types of homes, there are special policies that cover them. In other cases, you may have to find the right homeowners’ insurance company that will underwrite a policy because of the house’s unique status.

Older homes, properties under construction, and homes with severe flaws that need fixing may also be difficult to insure. Typically, houses that are over 50 years old have to be updated by having rewiring, plumbing, and other updates done. Houses under construction need a special type of insurance called “course of construction” insurance. Sometimes this is called builder’s risk insurance.

Remember, the purpose of purchasing homeowners insurance is to mitigate risk. Married couples may find they also need joint life insurance as additional protection.

It is good to be aware of these issues and to make sure to discuss them with a real estate agent or better yet, talk to mortgage lenders or an insurance company before you make an offer. Ensuring you can obtain insurance is as important as having your financing in order.

2. The House Is in a Risky Location

It’s hard enough to find a home in 2022, but it’s important you find a home in the right place. Some homes may be located in an area that puts them at a particular type of risk, like hurricanes, flooding, and forest fires. Houses in dense bush or forest areas may be deemed too high-risk as well. Houses in a flood zone can often only buy insurance if they purchase a separate flood policy.

Location, location, location has always been the driving mantra when looking for a home but that usually had to do with its proximity to work and schools, not so much about insurance requirements. There are now other factors to thinking about a home’s location in the house hunting process.

Finally, if your home is inaccessible or difficult to access, you may have trouble becoming insured. Houses that are difficult for emergency services, like police and fire, to get to may have higher premiums or be denied homeowners insurance.

Ensuring you select an area without some of these risk factors will make acquiring homeowners insurance far easier than elsewhere.

3. The House Is Being Used for a Business

Third, some buyers forget to consider usage issues when purchasing their homes. Some types of uses will not be covered under a homeowners insurance policy or may result in you being denied coverage.

Special uses include things like businesses, such as daycare, or even farming and ranching. If you are planning on incorporating an LLC and running a business out of your home, then it’s important to make sure that your homeowners’ policy permits this use. You certainly don’t want to find this out by getting denied insurance claims after the fact.

Working from home for another company is not likely to affect your ability to get a policy, especially if you are sitting at a computer most of the day and clients are not regularly coming to the house.

Agricultural business uses that occur on a property can also make you ineligible for standard homeowners insurance. Other home-based businesses, like caring for others in your home, require their own type of insurance. Home daycare insurance is required if you plan to run a daycare out of your home and a reputable insurance company can help you with this.

4. The House (Or Part of It) Will be Rented

Another usage issue for the insurance company is whether or not you will rent out your home. Renting is a great way to earn additional income, especially now as national rent prices are hitting all-time highs.

Rental issues encompass long-term renting as well as short-term renting, like listing your home on websites like Vrbo or Airbnb. It’s critical to double-check your property insurance policy before you rent out your home — or even a bedroom — because it may end up voiding your coverage in many cases.

5. The House Has Maintenance Issues

The final set of issues is related to how you occupy your home. Most homeowners insurance policies require the home to be “owner-occupied.” This means that you have to live in your home. Periods of vacancy or living elsewhere, like in another home, can all potentially undermine your efforts to acquire or maintain homeowners insurance.

Additionally, it is important to be mindful of how you live in your home. A frequent issue is a home that does not show “pride of ownership.” It means that the property is not being maintained. Hoarding is a common issue in this category, but so is failing to maintain your lawn and landscaping. or failing to repair property damage caused by natural disasters. These things represent a risk to insurers.

Other issues may relate to keeping the house in good repair. For example, if your property has broken windows, a collapsing porch, or shabby paint, these factors may all contribute to whether or not you can acquire an insurance policy. Even if the lack of maintenance is a product of the previous homeowners, you could bear the consequences.

As the price of gold slips to $1,803 per ounce, it’s important to think about how you protect the value of your home as an investment. Keeping it in good condition and making home improvements plus ensuring you have the right insurance are both steps in the right direction.

Analyze Your Situation and Find the Right Insurance Company

These are just the main considerations to keep in mind when trying to find a home that will be covered by homeowners insurance. Remember that if one company does not write you a policy, another might.

More often than not, avoiding unique homes, older homes, properties in potentially dangerous areas, and houses that require updating is one of the best ways to make sure you can get homeowners insurance.

New York contributor Kiara Taylor specializes in financial literacy and financial technology subjects. She is a corporate financial analyst who also leads a group affiliated with University of Cincinnati that teaches financial literacy to Black students and helps them secure employment and internships.


Health Care Cost Basics: What They Are and Ways to Save

Putting aside money for emergencies, like replacing a roof or a major car repair, is one of the age-old mantras of personal finance.

But today there’s one major potential expense that, until relatively recently, few working people rarely thought about: Paying for out-of-pocket medical costs.

Why? Because until the past decade or so, most employer health care plans covered the majority of employees’ medical costs.

Not anymore.

The spiraling cost of health care has resulted in many employers shifting more of these expenses to employees. Monthly premiums for traditional health care plans that used to be fairly reasonable now may cost $600 per month or more. And most of these plans have annual deductibles — money you must pay out of pocket for medical expenses before the plan takes over most of the costs.

Since most employees can’t afford these plans, many companies now also offer high-deductible health plans (HDHPs). How pervasive are these plans? In 2019 51% of all U.S. employees were enrolled in HDHPs.

And for those who aren’t covered at work and have to purchase their own health insurance, HDHPs generally offer the lowest premiums of plans available in state and Affordable Care Act insurance marketplaces.

However, someday — maybe a few years from now, maybe next week — you will need medical treatment for an injury or a major illness. If you’re not financially prepared, you may discover the hard way what “high-deductible” really means.

Three kinds of expenses


Your HDHP may state that it has a $4,000 annual deductible. That means you’ll have to use $4,000 of your own money to pay for medical treatments before the plan starts covering some of the costs. If you don’t believe you’ll have to pay that much, think again. In 2018, the average cost for a knee replacement was $35,000. For spinal fusion, $110,000. Thinking of having a child? It could cost you $4,500 or more once all pre-natal care, delivery and post-partum expenses are tabulated.

As a participant in an HDHP, I’ve personally experienced the painful price of health care. Last year I was healthy for most of the year, but the costs for one visit to an out-of-state emergency room and follow-up appointments ate up my entire $2,800 deductible.

Thankfully, my deductible was relatively reasonable, considering that in 2020 the average deductible for individual subscribers was $4,364 and $8,439 for those with family coverage, according to research conducted by eHealth.

But your expenses may not end when you hit your deductible limit. Many HDHPs require to you to continue to pay partial costs through co-payments and co-insurance.


Co-payments are fixed amounts you pay out of pocket for health care expenses. How much you pay depends on whether you’ve hit the deductible or not. For example, if a procedure costs $500 and your co-payment for such a procedure is $20, you’ll pay $20 only if you’ve paid the maximum deductible. Otherwise, you’ll pay the full $500 out of pocket.


If deductibles and co-pays weren’t enough, co-insurance can add even more to your medical tab. It’s a percentage of covered health care services you may still have to pay on your own even when you’ve maxed out your deductible.

Let’s say your plan has a 25% co-insurance requirement. If you’ve already hit your deductible and then have another procedure that costs $1,000, you’ll still have to pay $250 out of pocket.

When does it end?

Fortunately, the IRS sets maximum annual limits for total out-of-pocket medical expenses for HDHPs. In 2022, this limit is $7,050 for individuals and $14,100 for families. Any expenses above that level will be fully covered by your HDHP.

But remember — these limits reset every plan year.

Health Savings Accounts to the rescue

If there’s one silver lining in this scenario, it’s that many employers that offer HDHPs also offer Health Savings Accounts (HSAs).

With an HSA, you make pre-tax contributions from your paycheck to an investment account that allows you to withdraw contributions and earnings tax-free to pay for qualified health care expenses.

In addition to medical treatments, you can use your HSA to pay for prescription and over-the-counter drugs, medical equipment, dental expenses, physical therapy and even acupuncture and aromatherapy. You can also use your HSA to help pay for long-term-care insurance premiums.

For 2022, the maximum amount you can contribute is $3,650 per individual ($7,300 per family) with an additional $1,000 in “catch-up” contributions per person for those 55 and older. Some employers also make periodic contributions to their employees’ HSAs to help offset some of these out-of-pocket expenses.

Completely portable

The great thing about HSAs is that you never have to make withdrawals. For example, you may choose to pay your current medical bills from your savings and reserve your HSA money for health care costs during retirement. (Note that once you enroll in Medicare you can no longer contribute to an HSA.)

If you start a new job with an employer that has an HDHP and HSA, you can transfer the assets from your old HSA into the new HSA. If they don’t offer an HSA, you can move assets from your old HSA into one offered by a financial services company. Keep in mind that if you don’t enroll in your new employer’s HDHP (or they don’t have one) you can’t make additional contributions to your HSA.

Having an HSA can help take the sting out of out-of-pocket medical expenses when they occur — but only if you contribute to it.

This may be challenging if you’re also trying to save for retirement, your children’s higher education or a new home. But considering that the pre-tax contributions you make to your HSA have the same taxable-income-lowering benefits as contributing on a 401(k) account, there are advantages to contributing as much as you can to both accounts.

If you’re fortunate enough to receive a tax refund, consider contributing some of it to your HSA. Even though these contributions are after-tax, they may be deductible. If you’re planning on doing this, make sure that your combined pre-tax and after-tax contributions don’t exceed the annual limit.

Other ways to lower health care expenses

This may sound like a tough-love situation, but the fewer family members covered by your plan the lower your premiums and out-of-pocket expenses may be. If your adult children are covered by your HDHP but work for a company that offers its own health care plan, it might be time to encourage them to experience the “joys” of managing their own health care expenses. They’ll have to do it anyway, since at some point they’ll be too old to be covered by your plan (generally age 26, but higher in a few states).

If you and your spouse both have HDHPs at work, compare the monthly premiums, deductibles, co-pays, co-insurance and maximum out-of-pocket expenses for each option. If both options let your use your current primary care physicians and specialists, you may both want to switch to the more potentially affordable option.

And if you’re thinking of having a procedure done, you may also want to estimate total costs in your area. 

It’s unfortunate that people may need to add “future health care costs” to their list of savings goals, but this is a reality that many will have to plan for. If you need help figuring out how to balance these competing priorities, a qualified financial planner can provide guidance to help you make sure that staying healthy doesn’t significantly harm your financial well-being.

Financial Adviser, Partner, Canby Financial Advisors

Joelle Spear, CFP® is a financial adviser and a Partner at Canby Financial Advisors in Framingham, Mass. She has an MBA with a finance concentration from Bentley University.
Securities and advisory services offered through Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. Financial planning services offered by Canby Financial Advisors are separate and unrelated to Commonwealth.


InsuredNation Could Add $500/Year to Your Budget

So you’ve achieved the American Dream. You’re married and you own a house and cars. Congrats!

Problem is, the American Dream is so expensive. You’ve got to pay so many bills to keep the whole thing going.

Here’s an easy way to lower one of those pesky bills: When’s the last time you compared car insurance rates? If it’s been more than six months, you should look again. Chances are you’re seriously overpaying.

If you look through a website called InsuredNation, you could save yourself up to $500 a year* in the time it takes to brush your teeth.

No matter where you live, what your credit score is or what kind of coverage you need, InsuredNation’s smart matching technology can match you with the right insurance provider — and make sure you stop wasting money every month.

It takes just a couple of minutes to answer some questions. Then the website will show you options that could work for you. You have the freedom to choose whatever provider you think suits you most. You’re certainly not obligated to buy, so you have nothing to lose by checking.

The website is free to use and can even save you up to an additional 20% if you add another vehicle to your policy.

More than 10 million Americans have already used InsuredNation to save money on their car insurance. And don’t worry — InsuredNation uses advanced data security and encryption technology, so all your personal info is safe.

Answer a few questions here to see how much money you could save with a new policy.

Mike Brassfield ([email protected]) is a senior writer at The Penny Hoarder.

*average expenditure $88/mo (based on an NAIC report (2018); a real user’s experience. 




Personal Liability Insurance Coverage

Think your homeowners or renters insurance policy is just about covering your physical home and the stuff inside it? Think again. Most homeowners and renters policies include personal liability insurance coverage, as well — an important type of coverage that can really come in handy if you end up needing it.

Personal liability insurance coverage pays out in the event someone is accidentally hurt or has their belongings damaged on your property, as well as accidental property damage that you or your family may inflict on someone else outside your home. Personal liability coverage helps keep you from paying out of pocket for legal fees and medical bills that can arise from these situations — which can avert a financial catastrophe, given how expensive those costs can be.

Read on to learn more about this important type of insurance coverage and how to ensure you have it (and enough of it, at that).

What Is Personal Liability Insurance?

Now that we’ve got a basic definition of personal liability insurance — insurance that covers expenses you may be liable for in case of accidental injury or damage — let’s take a look at an example.
medical insurance, the broken ankle alone might cost them up to $2,500 if it’s a simple break that requires a cast… or orders of magnitude higher if it requires surgery.

Chances are you don’t have thousands of dollars to pay out of pocket for your friend’s medical bills, not to mention any legal fees you might incur if they should decide to actually bring you to court on top of all that. Personal liability insurance can come to the rescue here, paying out up to your coverage limit so your assets are protected.

Along with accidental injuries that occur in your home or on your property, personal liability insurance can also protect you from accidental damages perpetrated by your family. For example, maybe your 12-year-old boy accidentally throws a football through your neighbor’s window (oops), shattering the glass and also breaking an expensive picture frame in the process. Personal liability insurance can payout in this instance, too. Phew!

What Does Personal Liability Insurance Cover?

Personal liability insurance can certainly be a godsend in applicable situations, but it doesn’t cover everything. You should always review your policy information to ensure you know exactly what’s covered by your specific plan, but generally speaking, here are the types of expenses personal liability insurance covers:

•  Medical bills incurred by visitors who accidentally get injured at your home or as a result of your negligence

•  Legal fees incurred if a visitor sues you for injury or damages to their property

•  Actual property damage sustained by a visitor to your home, or as a result of your negligence

•  Bodily injury and property damage caused by your pets or children, both on and off your home property

As with most other forms of insurance, even covered damages can only be paid up to the given limit written into your policy. For many homeowners insurance plans, that limit is $100,000 per occurrence at a minimum, though there may be specific clauses about how those monies are paid out (more on this in just a minute when we discuss medical payments).

If you decide you need additional coverage, you may be able to obtain it through your homeowners or renters insurance policy (though it may drive up your premium cost). You might also choose to purchase an umbrella insurance policy, which extends your personal liability coverage substantially. Umbrella insurance can be a good idea for those with high net worths or who are at high risk of a personal liability claim.

Recommended: What Is Renters Insurance and Do I Need It?

Medical Payments

Most personal liability policies will pay out for the medical expenses of people accidentally injured on your property, even if they don’t sue you for those damages (or you’re not otherwise legally obligated to pay).

However, these medical payments come with their own limits, which may be as low as $1,000 per person. Again, you may be able to purchase higher amounts of coverage, but it’s important to thoroughly review your insurance policy to understand exactly what you’re getting.

Recommended: Beginner’s Guide to Health Insurance

What Is Not Covered by Personal Liability Insurance?

We’ve talked a lot about what personal liability insurance covers. But what, specifically, is excluded?

Personal liability insurance does not cover:

•  Injuries or property damages caused intentionally by you or your family — liability insurance is for accidents only

•  Liability resulting from a car accident — that’s what car insurance is for!

•  Accidental injuries or damages you or your family sustain in your own home

•  Any bodily injury or damage that occurs as a result of business or professional activities, even if those activities are occurring in your home (that’s why you need a separate business insurance policy)

Of course, the list of what’s not covered by a personal liability insurance plan is always going to be substantially longer than the list of what is covered. If you have questions about your coverage, speak with your insurance agent directly or refer to your policy documentation for full details.

What Else You Need to Know About Personal Liability Insurance

renters insurance policy (or any policy, for that matter), when it comes time to file a personal liability claim, you may still be responsible for some of the expenses. This is called the deductible, and it’s the amount you pay out-of-pocket to cover the damages you’re filing the claim for.

Many homeowners insurance policies have a deductible of $1,000. So, for example, if you’re held accountable for $30,000 of medical and legal fees resulting from a personal liability claim, you’d pay $1,000 and your insurance company would pay $29,000 toward those expenses.

The deductible is separate from the premium cost you pay on a monthly, quarterly or annual basis simply to keep the policy active. And while it may feel like a burden, even a high deductible is a way better deal than having to pay for the entire cost of the damages out of pocket in most cases.

The Takeaway

Personal liability insurance is a type of coverage that protects your assets by paying for bodily injury and property damage accidentally sustained by visitors to your property (or perpetrated by you or your family off your property). This type of coverage is generally baked into a homeowners or renters insurance policy, though you can also purchase additional umbrella insurance coverage to extend your personal liability limit.

While personal liability coverage — and homeowners/renters insurance as a whole — is certainly an important kind of protection, it’s not the only one you should rely on. If you have family members and loved ones who rely on your earnings, you should consider purchasing life insurance, which will help ensure they’ll continue to be taken care of should something happen to you.

SoFi has teamed up with Ladder to offer competitive, easy-to-understand life insurance policies that range from $100,000 to $8 million, and we’ll even help you draft your will and estate plan for free. We don’t require medical tests for eligible applicants, so you can get a decision in minutes — today.

Get your life insurance quote in just minutes.

Photo credit: iStock/Edwin Tan

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Ladder policies are issued in New York by Allianz Life Insurance Company of New York, New York, NY (Policy form # MN-26) and in all other states and DC by Allianz Life Insurance Company of North America, Minneapolis, MN (Policy form # ICC20P-AZ100 and # P-AZ100). Only Allianz Life Insurance Company of New York is authorized to offer life insurance in the state of New York. Coverage and pricing is subject to eligibility and underwriting criteria. SoFi Agency and its affiliates do not guarantee the services of any insurance company. The California license number for SoFi Agency is 0L13077 and for Ladder is OK22568. Ladder, SoFi and SoFi Agency are separate, independent entities and are not responsible for the financial condition, business, or legal obligations of the other. Social Finance, Inc. (SoFi) and Social Finance Life Insurance Agency, LLC (SoFi Agency) do not issue, underwrite insurance or pay claims under LadderLifeTM policies. SoFi is compensated by Ladder for each issued term life policy. SoFi offers customers the opportunity to reach Ladder Insurance Services, LLC to obtain information about estate planning documents such as wills. Social Finance, Inc. (“SoFi”) will be paid a marketing fee by Ladder when customers make a purchase through this link. All services from Ladder Insurance Services, LLC are their own. Once you reach Ladder, SoFi is not involved and has no control over the products or services involved. The Ladder service is limited to documents and does not provide legal advice. Individual circumstances are unique and using documents provided is not a substitute for obtaining legal advice.
SoFi offers customers the opportunity to reach the following Insurance Agents:

Home & Renters: Lemonade Insurance Agency (LIA) is acting as the agent of Lemonade Insurance Company in selling this insurance policy, in which it receives compensation based on the premiums for the insurance policies it sells.

Insurance not available in all states.
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