Annuities can help solve the biggest challenge of retirement.
When you save up for retirement, the two largest risks are intertwined. First, you risk not being able to pay your bills if you don’t properly calculate your annual spending. Second, you risk running out of money late in life if you don’t properly anticipate your lifespan.
A financial advisor can help you calculate how much retirement income you’ll need to generate once you stop working. Find an advisor today.
To help address these issues in tandem, insurance companies sell a product called fixed-index annuities or FIAs. These are designed to provide a baseline of growth-oriented income for the rest of your life. But, as Morningstar researchers recently pointed out, FIAs only work if you use them properly. Otherwise, they turn into money losers compared with more standard options such as fixed-income annuities or index fund portfolios.
What Is a Fixed-Index Annuity?
A fixed-index annuity is a contract you make with an insurance company. In exchange for money upfront the company will give you structured payments over time. Some contracts specify a duration for these payments, making them each month for 10 or 20 years, for example. More often people buy retirement assets called “lifetime annuities,” which start payments when you retire and continue for the rest of your life.
Fixed-income annuities make this payment based on a guarantee. When you buy the contract, the company agrees up front to a certain monthly payment. For example, you might buy a contract for $2,500 per month for the rest of your life beginning in retirement.
A fixed-index annuity is less determined. These contracts guarantee payment, but the amount is not static. Instead, the payments are based on the performance of an underlying index such as the S&P 500 or the Russell 2000. You cannot lose the underlying principal in your contract, and most will come with a guaranteed minimum monthly payment. Otherwise, your income from a fixed-index annuity will increase or decrease based on the performance of its index.
This makes fixed-index annuities a risk/reward tradeoff. If the index does well, this product can pay significantly more than fixed-income annuities, and can even act as a hedge against inflation. If the underlying index does poorly, however, you can potentially make much less money in the long run. This risk is significantly mitigated if you invest in a mainstream index like the S&P 500, but is not trivial if you invest in a higher-risk field.
The Key To Fixed-Index Annuities Is Proper Use
Risk and reward is a very delicate balance in retirement. On the one hand, you want your money to keep growing during these years. On the other hand, you don’t have new income to replace losses, so you want your money to remain safe.
Recently, Morningstar examined where fixed-index annuities fall in that balance. They compared the overall performance of an FIA with a guaranteed lifetime withdrawal benefit rider (GLWB) against standard fixed-income annuities and portfolio investments.
“Overall,” wrote analyst Spencer Look, “I found that FIAs with a GLWB improve projected retirement outcomes, but only if they are used properly.” Specifically, this product can result in stronger payments, fewer shortfalls and more money left over in your estate for the right investor.
But what constitutes proper use? Morningstar found two critical elements:
1. Early Investment
More than anything else, Look found that investors need to buy their FIA at least 10 years before they begin to make withdrawals. For a typical retiree, this means investing by or before age 55.
Why? The annuity needs time to grow. The more time the index has for cumulative growth, the more it will pay. Investors who need income more quickly than this typically see better results with single premium immediate annuities, meaning a fixed-income annuity that you purchase with a lump-sum upfront.
2. Lifetime Investment
This asset also is best for retirees who will hold it throughout their lives.
Exiting an annuity early is known as “lapsing.” When that happens, you collect back the money you put in (often minus a penalty fee) and the contract stops making payments.
Much of the reason to buy this product is that it makes payments for the rest of your life. Over those years and decades, Morningstar found that you will often make more money with an FIA than if you had invested in a fixed-income annuity or a simple stock portfolio.
But if you exit early, you miss out on those future gains. In this case, you often make less money overall than if you had invested in a lump-sum annuity or a stock portfolio.
Longevity Risk Protection
In particular, Morningstar found that a fixed-index annuity can help protect people from running out of money in retirement. “This is because,” wrote Look in his analysis, “an FIA with a GLWB is an insurance product that mitigates against market risk and longevity risk.”
Retirement savers who put their money into portfolios, such as stocks, bonds or index funds, can often get stronger growth than with more careful products like an annuity. But that money is finite, so they risk running out of it.
A fixed-index annuity offers a best-of-both-worlds approach. While FIAs don’t give the full return of their underlying index, they do tend to post stronger returns than a standard fixed-income annuity. Yet, they also come with lifetime payments and a minimum benefit guarantee, mitigating the risk of running out of cash in old age.
Bottom Line
Based on Morningstar’s analysis, investors who are looking for a lifetime retirement product should consider fixed-index annuities. They can offer a strong middle ground between the lower-return/higher-security of a fixed-income annuity and the higher-return/lower-security of a portfolio, but only if you use them correctly. Exiting the contract early can decrease or eliminate the benefits altogether.
Annuity Investing Tips
Annuities can be a strong product for the right investor, but they can often seem complicated. Don’t sweat it. With our step-by-step guide, you can learn the fundamentals of annuities so you can feel more confident about these financial products.
A financial advisor can help you build a comprehensive retirement plan. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Eric Reed
Eric Reed is a freelance journalist who specializes in economics, policy and global issues, with substantial coverage of finance and personal finance. He has contributed to outlets including The Street, CNBC, Glassdoor and Consumer Reports. Eric’s work focuses on the human impact of abstract issues, emphasizing analytical journalism that helps readers more fully understand their world and their money. He has reported from more than a dozen countries, with datelines that include Sao Paolo, Brazil; Phnom Penh, Cambodia; and Athens, Greece. A former attorney, before becoming a journalist Eric worked in securities litigation and white collar criminal defense with a pro bono specialty in human trafficking issues. He graduated from the University of Michigan Law School and can be found any given Saturday in the fall cheering on his Wolverines.
After crossing the 5% threshold last week, mortgage rates have provided no indication that they’ll drop below that mark anytime soon. Rates are moving north for the seventh consecutive week, according to the latest Freddie Mac PMMS.
Purchase mortgages this week averaged 5.11%, up 11 basis points from 5% a week ago. A year ago at this time, 30-year fixed-rate purchase rates were at 2.97%. The GSE’s index accounts for just purchase mortgages reported by lenders over the past three days.
According to Sam Khater, Freddie Mac’s chief economist, mortgage rates move as Treasury yields continue to rise, causing volatility in demand. “It continues to be a seller’s market, but buyers who remain interested in purchasing a home may find that competition has moderately softened,” he said in a statement.
Another index shows mortgage rates even higher. Black Knight‘s Optimal Blue OBMMI pricing engine, which considers refinancings and additional data from the Mortgage Bankers Association (MBA), measured the 30-year conforming mortgage rate at 5.3% on Wednesday. Meanwhile, the 30-year fixed-rate jumbo was at 4.8%.
Mortgage rates are following the Federal Reserve’s (Fed) inflation-fighting monetary policy. The central bank has signaled that it will raise rates more six times in 2022, and likely several more times in 2023.
Also, the Fed since early March has been letting its purchases of mortgage-backed securities run off. There is consensus from the Fed governors to stop replacing up to $35 billion of maturing MBS assets each month.
Cutting the Fed’s monthly MBS purchase tally will create a lot of new supply in the market, which will likely further increase pressure on interest rates, and could be amplified by other potential world events, Lawrence Yun, chief economist for the National Association of Realtors, recently told HousingWire.
According to economists, the tightening monetary policy will reduce originations in 2022 and 2023, and can also bring a recession to the U.S. economy next year.
Higher rates are reducing borrowers’ demand. Mortgage applications dropped 5% from the past week, and refi applications were down 68% from a year ago, according to MBA. Just 2% of homeowners can save money by refinancing these days, a Fannie Mae survey showed.
This week, Fannie’s Economic and Strategic Research (ESR) Group dropped its projected single-family mortgage origination volume for 2022 from $3 trillion to $2.8 trillion. It also downsized the 2023 forecast from $2.7 trillion to $2.4 trillion. To compare, in 2021, the total was $4.5 trillion.
“Data from U.S. economic history suggest that successfully negotiating a ‘soft landing’ requires monetary tightening to be pre-emptive rather than responsive,” Doug Duncan, Fannie Mae senior vice president and chief economist, said in a statement. “As such, we’ve updated our 2023 forecast to include a modest recession, but one that we do not expect to be similar in magnitude or duration to the recession of 2008.”
The 15-year fixed-rate purchase mortgage averaged 4.38% with an average of 0.8 point, up from 4.17% the week prior, according to Freddie Mac. The 15-year fixed-rate mortgage averaged 2.29% last year. The 5-year ARM averaged 3.75% with buyers on average paying for 0.3 point, up from last week’s average of 3.69%. The product averaged 2.83% a year ago.
If you haven’t started your children or teens off with a kids checking account optimized for their needs, you’ll want to help your college student open a checking account before they begin school.
Opening a checking account for your child can teach them about money management and financial responsibility, along with providing them an easy way to make debit card purchases. It’s never too late to get started.
One advantage to helping your young adult open their first student checking account is they have more options than they might have when they were 16 or younger. Students over 18 can open a bank account with few restrictions.
But choosing a student checking account may give them access to higher interest rates and added features and benefits, along with fee-free checking, no monthly maintenance fees, and no minimum deposit to open an account.
12 Best Student Checking Accounts
Not surprisingly, many of the best student checking accounts come from banks that also offer some of the best checking accounts for any age. However, the products below – in most cases – are tailored for young adults from the ages of 18 to 24, with the features this age group desires most, including an intuitive mobile app and low or non-existent minimum deposit requirements.
1. Best for Students under 18: Capital One MONEY Teen
Most of the student bank accounts on our list exclude children under the age of 17 or 18. Capital One MONEY Teen checking is available to children ages 8 and up. It comes with all the benefits and security of a big bank, providing peace-of-mind. This includes access to Capital One branches and Capital One Cafes for in-person service. This account also serves as a great tool to teach your young adult the basics of banking.
Capital One MONEY Teen checking is a joint account with no monthly fee, no overdraft fees, and access to 70,000 ATMs with no fees. Plus, earn 0.10% on all balances, including those in checking.
You can link Capital One MONEY Teen checking to any other bank account through any bank or neobank, making it easy to transfer money to your teen while they are away at college. Plus, you can keep tabs on their spending with their linked account in the Capital One mobile app.
When they graduate, your teen can hold onto their MONEY account or transfer the funds into a top-rated Capital One 360 Checking account of their own.
2. Best for Working Students: Chime
Chime is not a bank. It’s a financial technology company and mobile app backed by Stride Bank, NA, and The Bancorp Bank. Many features make it perfect for working students. First, you can receive your paycheck up to two days earlier than you might at other banks with ACH deposit.
Plus, you can set up automatic transfers to your linked Chime Savings account, helping you to establish good financial habits early on. Simply set up Chime to transfer a percentage of your paycheck into your Savings Account every time you receive a direct deposit.
When you use your debit card for purchases, the “Save When You Spend” program rounds up your purchase and transfers the difference directly into savings. That small change can really add up, whether you’re saving for your first apartment after college, a new car, or your next tuition bill.
For working students looking to build their credit, Chime gives account holders access to a Credit Builder Secured Visa, with no annual fee, no credit check, and no security deposit required. Instead, the credit account is secured by your Chime checking account with monthly direct deposits.
Like many of the best student bank accounts on this list, Chime has no overdraft fee, no monthly service fee, no ATM fee for in-network ATMs, and no minimum balance requirements.
3. Best Account Opening Bonus: Chase College Checking
Chase Bank has been handing out student account opening bonuses like they hand out lollipops at their branches lately. College students ages 17 to 24 can snag a $100 bonus when they open an account online or at a local branch (students age 17 will need to visit a branch). You’ll just need to make 10 qualifying transactions within the first 60 days of opening the student bank account.
What’s a qualifying transaction? Virtually anything, according to the Chase website, including debit card purchases, online bill payments, Chase QuickDeposits, Zelle transfers, and ACH credits. Bank as you normally would, and you should easily earn that $100.
In addition to the generous sign-up bonus, Chase College Checking has no monthly fees for college students for up to five years, access to 16,000 ATMs and 4,700 branches across the U.S., and zero liability protection for unauthorized debit card purchases.
Chase Overdraft Assist covers purchases that exceed your account balance. You’ll pay no overdraft fee if you’re overdrawn by $50 or less at the end of the next business day.
4. Best for Yield: Ally Interest Checking
Ally Bank is the first bank on our list not designed specifically for students, but the vast array of features in this interest bearing checking account makes it ideal for young adults.
Ally Bank offers an APY of 0.25% on checking account balances and 4.00% APY on balances in a linked Ally Bank savings account. Neither account has any monthly fees.
Ally offers several features to help those on a tight budget manage their money. You can organize your money into spending and saving buckets, which can help you see exactly where your money goes each month. Ally will also review your bank accounts and help you find opportunities to save, and shuttle that extra money into your high yield Ally savings account.
Customers who have deposited $100 or more into their Ally checking account, or $250 via direct deposit, gain access to Ally’s CoverDraft service after 30 days. This protection covers up to $100 or $250 in charges that would overwise overdraft your account. Some purchases, including Zelle transfers, or ATM withdrawals, may be declined if they would put your account into overdraft.
Ally has no monthly maintenance fee, no overdraft fees, no ATM fee for in-network ATM transactions and no minimum balance requirement.
5. Best for Referrals to Earn Extra Cash: GO2bank
GO2bank, the digital bank associated with the top financial technology company Green Dot, offers an easy, straightforward money account with overdraft protection up to $200 with eligible direct deposits. The linked savings account pays a high 4.5% APY, with no fees for qualifying customers and no minimum balance requirement.
You can get regular ACH deposits from your job or side gigs up to two days earlier than most traditional banks. If you receive government benefits, such as Social Security, you can receive those deposits up to four days early.
Your GO2bank account will have a monthly service fee that costs $5 per month, unless you have a qualifying direct deposit that month. You will also pay fees for transfers from a linked debit card from another bank or fintech, mobile check deposits, and cash deposits.
If you are the type of person with friends who come to you for advice, you can earn $50 for each friend you refer to GO2bank who signs up with direct deposit. Your friend will also earn $50. You can use this offer for up to 30 friends, yielding $1,500 annually. This makes a GO2bank account great for social media influencers or college students with a large friend group.
6. Best for Full-Service Banking: Bank of America Advantage SafeBalance Banking
Bank of America Advantage checking accounts offer options for people in various stages of their financial life. College students might be best to start out with Bank of America Advantage SafeBalance banking, a straightforward money account with no overdraft fee and no checks.
The account has no monthly fee for students under the age of 25 or customers under the age of 18. Preferred Rewards customers also receive free checking. There is a $25 minimum deposit to open an account.
New Bank of America customers can earn a $100 account opening bonus when they open an account and set up direct deposits of $1,000 or more within 90 days.
7. Best for Comprehensive Money Management: PNC Virtual Wallet Student
Money Magazine named the PNC Virtual Wallet on its best banks for students list three years running. PNC Bank divides this mobile account into three separate accounts for everyday spending, “reserve,” or short-term savings, and “growth” for long-term savings.
The account has no monthly service fee for students for up to six years, along with all the benefits of a regular PNC Virtual Wallet. Additionally, students receive a courtesy refund of your first overdraft fee on your Spend account, one free incoming domestic or international wire transfer per statement period, and free paper statements if you opt in to receive them.
Once six years have passed or you are no longer a student, your account converts into a regular PNC Virtual Wallet, which may have associated monthly fees. Check the PNC website at that time to determine the fees and how you can waive them.
Your PNC Virtual Student Wallet pays a 0.01% APY on money in your Reserve account, and .02% on account balances up to $2,499 in your Growth account, with .03% APY on balances over $2,500. These may not be the best rates available, but the reputation of PNC Bank, along with the money management features in a Virtual Wallet Student account, make this an account worth considering for students just learning to budget.
8. Best for Establishing Savings Habits.: Wells Fargo Clear Access Banking
As one of the Big Four banks in the U.S., Wells Fargo offers a reliable and safe place to store your money, plus access to thousands of branches nationwide.
The Wells Fargo Clear Access banking account is great for teens and college students, since it’s available for account holders ages 13 to 24. Anyone under the age of 18 will need to open their account in a branch and anyone younger than 17 must have an adult aged 18+ as a joint account holder. The account has no monthly maintenance fee for anyone 24 or younger. A $25 minimum opening deposit is required.
Wells Fargo Clear Access banking is a simple, straightforward money account with no checks and personalized service at Wells Fargo branches. There are no overdraft fees with the account, but also no overdraft protection. Transactions that exceed the account or minimum balance amount will be declined, which helps put teens and young adults in charge of their money.
You can link your Clear Access bank account to a Way2Save Savings account and earn a 0.15% APY. You can establish good money habits by setting up automatic savings. Wells Fargo will transfer $1 from your Clear Access account into your checking account each time you use online bill pay or use your debit card for a one-time purchase. You can also transfer as little as $25 per month or $1 per day into your account to see your savings grow even faster.
9. Best for Cash Back: Discover Cashback Debit
The Discover Cashback Debit account may not be marketed to teens and students, by name. But, it’s enticing to anyone looking for a standard checking account with no monthly service fees and 1% cashback on debit card purchases, up to $3,000 per month. It’s highly unlikely for most college students to max out that free money (unless they are putting housing, tuition, and car expenses on their card).
Discover Cashback! debit card offers many of the benefits you’d expect from these top-rated money accounts, including early direct deposit, 60,000+ no-fee ATMs, and overdraft protection from your linked Discover Savings with no fees. Discover charges no fees for insufficient funds, bank checks, regular checks, or expedited delivery of a replacement debit card.
These features make it one of the most convenient accounts you can hold. Plus, you don’t have to worry about “aging out” of the account and facing fees for a non-student bank account. Your Discover Cashback Debit account will be free no matter your age. Link it to a Discover Savings Account to earn 4.0% APY with no minimum deposit required.
10. Best for Unlimited Out-of-Network ATM Fee Reimbursement – Axos Bank Rewards Checking
Another bank account not marketed to students but meeting all their needs is the Axos Bank Rewards Checking account. This account has no monthly fees. It also reimburses ATM fees for out-of-network ATMs nationwide, which is great for students who travel domestically or who don’t have ATMs in their network on campus.
Pay no overdraft fee or non-sufficient funds fees with this account. Best of all, earn an APY of 0.40% on your checking balance if you receive monthly direct deposits of $1,500-plus. Young investors can ramp up their interest rate by 1% with an average daily balance of $2,500 in an Axos Invest Managed Portfolio Account, plus another 1% by holding $2,500 in a self-directed trading account. If you take out a loan through Axos, you can add another 0.60% to your APY.
College students likely won’t regret opening an Axos Bank account to take them through adulthood, especially with options for investing, low mortgage rates, car loans, and more.
Plus, earn a welcome bonus when you open an account and have direct deposits of at least $1,500 within a single calendar month during the first three months of account opening.
11. Best Credit Union: Alliant Credit Union Teen Checking
Alliant Credit Union offers a teen checking account for minors ages 13 to 17. The account is insured up to $250,000 per account holder by the National Credit Union Administration (NCUA). The adult account holder must be an Alliant Credit Union member. But it’s easy to join by depositing $5 into an Alliant Credit Union saving account. Alliant Savings earns an APY of 0.25%.
The teen checking account has no overdraft fees or non-sufficient funds fee. It also has no monthly fees or minimum balance requirements. Account holders gain access to 80,000+ fee free ATMs nationwide plus $20 per month in ATM fee reimbursement for out-of-network ATM use. This is an interest earning checking account which also pays 0.25% APY on all balances as long as you have at least one deposit, via ACH direct deposit, mobile check deposit, or transfer from another bank or credit union, each month.
12. Best for Young Shoppers: Varo Bank
Varo Bank is another account not necessarily marketed to college students but definitely optimized for their needs. The Varo Bank debit card delivers up to 6% cash back, with money deposited into your Varo account as soon as you accrue $5 in rewards.
Like many of the best student accounts on this list, Varo has no monthly fee, no minimum balance requirements, and no overdraft fee. If you need money before payday, you can use Varo Advance, an interest-fee program that allows you to borrow up to $250 and pay it back within 30 days. You will not pay fees to borrow less than $20. Borrowing up to $250 comes with fees that can be as high as $15, depending on the amount of cash advance you need.
Varo Bank uses the Allpoint network of ATMs, with fee free access to 55,000+ ATMs nationwide. Using other bank ATMs could result in charges up to $3 from Varo and fees charged by the other banks, as well.
It pays to open a linked Varo Bank savings to take advantage of a high 3% APY. Account holders with direct deposits equal to $1,000 per month and a positive balance in their Varo checking and savings can earn up to 4% APY.
One of the best things about a Varo account is it can grow with you. You won’t pay additional fees as an adult out of college, so you can keep the same bank account you started with for your entire life if you want.
Methodology: How We Select the Best Student Checking Accounts
To find the best student checking accounts, we evaluated the monthly maintenance fees, ATM fees, minimum deposit requirements, features, benefits, banking services provided, along with customer service and mobile app access at several of the biggest and most well-known banks and credit unions.
ATM Network
Most banks have ATM networks or partner ATM networks of 20,000 or more ATMs nationwide where you can use your debit card with no ATM fees. You might be surprised to learn that even online banks and financial technology companies that are not a bank provide access to thousands of ATMs nationwide through partner programs.
Nationwide availability (physical locations or mobile access)
College students often split time between their college campus and the home where they grew up. Finding a bank with physical locations in the areas they live or an online bank that provides a mobile banking app with fee free mobile banking from anywhere is important.
Fees and minimum requirements
Bank fees no longer have to be a way of life for today’s young adults. We chose financial institutions with no monthly maintenance fees or easy ways to waive maintenance fees.
Benefits such as high APY, cash-back rewards, or other additional perks
Student checking accounts today are more than just “bare bones” places to store your cash. Many student bank accounts offer perks, benefits, and high-yield savings or an interest bearing checking account to provide added value.
Overdraft fees
Cash management mistakes happen, especially when young adults first start learning to budget and manage their finances. Many banks have no overdraft fees and some offer overdraft protection to help out in a pinch.
How to Choose the Best Bank for College Students
We’ve offered 12 solid options to help you choose the best student checking account. Before you open a student bank account, it’s a good idea to think about what you need in your primary checking account and a linked savings.
The list below makes it easy to review your must-haves and nice-to-haves when you choose your first bank account as a college student.
Best student checking account interest rates
If you’re looking to earn interest on your standard checking account, many banks offer this feature. Review annual percentage yield (APY) figures for your top choices.
Remember, a higher savings interest rate might benefit you more, since money in your checking account tends to fluctuate based on paychecks, bills, and expenses. The best checking account may not pay interest, but can save you money in other ways.
Annual Percentage Yield (APY)
Likewise, you can put money in your pocket with an account with linked savings offering a high annual percentage yield (APY).
Mobile Check Deposit
If you get paid via paper checks, you’ll want to find an account with a mobile app that offers mobile check deposit. Find out how fast deposits clear, and if mobile banking services are fee free.
No Monthly Maintenance Fees
Many banks today make it easy to find a free checking account with no maintenance fees. If you have to pay a monthly maintenance fee, find out exactly what you’re getting for your money. Find out if the perks and benefits, such as a cash back debit card or reimbursement of ATM fees make the maintenance fees worthwhile.
Minimum Deposit and Minimum Balance Requirements
When you’re just getting started, cash may be tight. It’s important to find an account with no minimum deposit to open.
Banking Services Provided
Accounts should have customer service online, by phone or in branches, plus an easy-to-use mobile app and a debit card with no ATM fees.
FAQs About Student Checking Accounts
Read what people are asking about the best student checking accounts, including minimum deposit requirements and benefits of a student checking account.
What are the benefits of a student bank account?
A bank account tailored for students gives young adults a head start on their financial future and learning how to manage money. For students who work, they can receive direct deposits in their student account, pay bills online, and send money to friends and family using Zelle.
How to get a student checking account bonus?
Several student checking accounts, including Chase, provide sign-up bonuses. Make sure to read the fine print and complete the requirements, which may include setting up direct deposit or making a minimum opening deposit, to collect the bonus.
Can I open a student checking account without a deposit?
To open a student checking account without a minimum deposit amount, simply look for a bank account, like Varo, that has no minimum opening deposit.
Are there any downsides to opening a student checking account?
When you open a student checking account, you’ll want to make sure you won’t pay monthly maintenance fees. Some student checking accounts convert to a regular account once the student graduates, and there may be fees associated with the regular account.
Is there an age limit on a student checking account?
Most student checking accounts are open to students from the age of 18 to 24 without a joint account holder. Customers under the age of 18 may be able to open an account with a joint owner.
Can minors open student checking accounts?
Accounts like Capital One Money Teen are available to children ages 8 and up with a joint account holder. Some other accounts require students to be 18 or older.
What happens to your student checking account when you graduate?
Many of the student bank accounts on this list won’t change when you graduate college. Others offer the option to convert your account to one of the bank’s regular checking products. A Chase College Checking Account has no monthly fees for your first five years in college, but if you graduate or exceed that time frame, you might pay a $6 monthly maintenance fee unless you meet other requirements.
As the world grapples with reducing the effects of climate change, people are looking to their homes for solutions. Investing in renewable energy by using solar panels or wind turbines is one option. Another is lowering the total amount of energy you use by switching to efficient appliances and using less water. Yet another method is by starting a home garden and using a living roof. But what if you could accomplish all of this with one house? You can with an Earthship home.
Earthship homes redefine sustainable living by bringing it to your home. With an Earthship, your entire house is lowering your carbon footprint and helping pave the way toward a sustainable future. This home style uses renewable energy, indoor gardening, on-site water treatment, and passive heating and cooling to be as climate-neutral as possible.
So whether you’re in the market for a new house in Wilmington, NC, or are looking to build a new home in Charleston, SC, this Redfin article has everything you need to know about Earthship homes. Are they right for you? Read on to learn more.
What is an Earthship home?
An Earthship home, or Earthship, is a type of sustainable home that is entirely self-sufficient and designed to have a minimal to no environmental impact. These unique homes are typically built using natural and recycled materials, and are designed to use the natural resources of their environment to provide all human needs. These include: food, shelter, energy, clean water, garbage management, and sewage treatment. Earthship homes are intended to allow people to live completely free from municipal utilities, sometimes called “off the grid.” The most common type of Earthship is the Global Model Earthship.
Earthship homes can function in most places around the world. However, because of their design and environmental requirements, Earthship homes aren’t right for all climates; they work best in seasonal, subarctic regions of the world. Tropical and bitterly cold areas are often not a good fit due to excess cost or overwhelming maintenance demands.
History of Earthships
Earthship homes were created by architect Michael Reynolds in the 1970s, around the time of the environmental movement and first Earth Day. Reynolds was concerned about the amount of trash in the environment and the lack of affordable housing, and wanted to create a solution.
Earthship homes promote personal autonomy, environmental responsibility, and affordability, aiming to provide sustainable housing for all. The first Earthship homes were built in New Mexico, and have undergone many design changes up to the present day.
Principles of Earthship homes
The Earthship concept has six design principles that are focused on eliminating the home’s environmental impact and promoting sustainable living.
1. Natural and recycled materials
Earthships are constructed using a variety of natural and recycled products. One of the most common materials is used car tires, which are packed with earth and then stacked to form strong, insulating walls. Other common materials include recycled cans, bottles, and reclaimed wood. This not only reduces the home’s environmental impact, but also gives them a unique and recognizable appearance.
2. Passive heating and cooling
Earthships are designed to take advantage of natural climates to provide a comfortable indoor environment without traditional heating or cooling systems. Earthships have thick walls typically made from natural and recycled materials, providing thermal mass which naturally regulates the indoor temperature. The buildings are also often partially covered with soil or even built into the side of a hill, which further helps stabilize the home’s temperature.
Additionally, Earthship houses are often oriented specifically to allow the sun to heat the interior during the winter, while using overhangs and other shading techniques to prevent overheating during the summer.
3. Solar and wind energy
Most Earthships are usually equipped with solar panels or wind turbines to generate electricity, making them independent of the conventional power grid. The electricity is stored in a bank of batteries and then used as needed for lighting, appliances and other electrical requirements. Inside, most homes have efficient appliances and LED lighting to help to reduce electricity use.
4. Water harvesting
Earthships capture and store rainwater and snowmelt from their roofs, making them ideal for fairly wet climates. The water is filtered and used for drinking, cooking, and bathing. After being used once, the water becomes greywater and is reused for irrigation. The remaining water is then treated and used for flushing toilets. After this, it becomes blackwater, which is then treated and used for landscape irrigation.
5. On-site sewage treatment
Instead of being connected to a municipal sewage system, Earthship homes treat their own waste water. Most homes accomplish this through a mix of greywater and blackwater systems. Greywater (water from sinks, showers, etc.) is typically filtered through indoor gardens and used to grow food. Blackwater (sewage) is usually treated in an anaerobic digester or a constructed wetland, with the goal of reusing it for landscaping.
6. Food production
A key part of Earthship architecture is self-sustaining food production. Earthship homes include internal greenhouses, which are used to grow a variety of plants, including fruits and vegetables. Greenhouses also aid in heating and greywater treatment. The combination of direct sunlight, greywater irrigation, and a controlled climate makes it possible to grow healthy food year-round. Some designs also incorporate outdoor garden spaces and even aquaponic systems.
Pros and cons of Earthship homes
In theory, Earthship homes offer reduced environmental impact without sacrificing many modern amenities. However, there are important pros and cons to consider before building a new Earthship house.
Pros
Sustainability: Earthships are built largely from recycled and natural materials, which reduces their environmental footprint. They also incorporate renewable energy systems, water harvesting, and on-site waste treatment, which further enhances their sustainability.
Self-sufficiency: Earthships are designed to be largely self-sufficient. They can generate their own electricity, collect and purify their water, manage their sewage, and even produce food. This reduces their reliance on public utilities and can provide security in case of a utility outage.
Energy efficiency: The design of Earthships allows for natural temperature regulation, reducing the need for artificial heating and cooling. The use of solar and wind energy for power contributes to energy efficiency and further reduces the carbon footprint of the home.
Cons
Regulations and permits: Because Earthships deviate from traditional construction methods, they can face challenges with local building codes and regulations. Obtaining the necessary permits can be a difficult and time-consuming process.
Initial investment: While Earthships often save money in the long run through reduced utility costs, the initial investment can be high, especially when considering the cost of land, materials, and labor. However, construction costs are dramatically lower than a traditional house, and usually an entire community helps out.
Labor-intensive: Earthship construction and maintenance can be labor-intensive, especially if using traditional Earthship building techniques, such as pounding dirt into used tires. This can add to the time and cost of building.
Not suitable for all climates: Earthship homes are a financially viable and environmentally sustainable home style in most parts of the world, including dry, humid, and subarctic climates. However, they are impractical in warm and wet climates.
Challenging to sell: Because of their unique designs, challenging upkeep, and typically remote locations, Earthship houses can be hard to sell. However, recently, they’ve been gaining value and are becoming a more popular option.
Earthship homes vs. earth homes
Earthship homes and earth homes (sometimes called earthen homes) are two home styles that are designed to reduce your carbon footprint. While they have similar names, they are often entirely different from each other. Let’s break this down.
Earthship homes are a style of home use entirely renewable, recyclable, and natural materials. They must adhere to a strict set of principles such as passive heating and cooling, renewable energy, and water harvesting. Some people use a significant amount of earthen materials during construction, but it’s not necessary.
Earth homes, or earthen homes, are homes that are built using a significant amount of earthen materials, often built into the earth, such as the side of a hill or buried underground. Importantly, earth homes don’t have to adhere to certain design principles and may not be as environmentally friendly as other home styles. However, many earthen structures are environmentally friendly.
Final thoughts
Earthship homes offer a unique and reliable way to reduce your carbon footprint, and are proof of the possibilities of sustainable architecture. While building and maintaining an Earthship can pose challenges, the rewards can be very rewarding. Exploring the potentials of Earthships invites people to reimagine their homes and see the part they play in slowing the effects of climate change.
All images are credited to Earthship Biotecture, founded by Michael Reynolds.
Yesterday, as I was otherwise occupied (I spent five hours writing a post about programmable thermostats, a post nobody will even like!), the conversation on Donna Freedman’s article got a little cranky. Donna wrote about pinching pennies on some things so that she could splurge on others. In Donna’s case, that meant a trip to England.
Tyler K., who’s always a little cranky, wrote in response:
I’m just waiting for the post where someone’s passion, the thing they’re willing to scrimp on everything else so that they can afford, is a Range Rover. Or anything else but travel, really…It’d be fantastic to see someone write about not going to Europe so they could buy a luxury SUV…
The Other Brian expressed his frustration, too:
I agree with Tyler 100%. I’m pretty sure the person that wrote that post would get absolutely BLASTED in the comment section for their prioritization of Stuff over experiences…
And Jane, who is usually mild-mannered, chimed in:
I would love for someone to actually have the courage to write a reader story or guest post about how they scrimped and went without for a big screen television! Why is that any less valid than saving for a trip to Paris? I’m sure everyone would say that it is just as valid and cite J.D.’s mantra “Do what works for you.” But let’s be honest — there is a pretty obvious privileging on this site and others of certain types of ways to spend your money. Travel is one of the ones that people categorically praise.
First of all, I’m as tired of travel articles as everyone else. Yes, it’s one of my pet topics, but we’ve featured it a lot around here lately. Time for it to take a back seat for a while. Second, I think travel gets praised a lot because people enjoy it. For years, I heard people extolling the virtues of travel, but until I tried it, I didn’t really understand.
That said, Tyler, Jane, and The Other Brian have a valid point. We do talk a lot about Experiences here — but I think that’s because in Real Life, so much attention is heaped upon Stuff.
Stuff isn’t evil (though too much of it can certainly become a burden). Maybe it’s time for a little reality check…
How to Spend Your Money
Jane is right: My gut reaction is to cite my motto: “Do what works for you.” Because that’s what it’s all about. If you’re out of debt and meeting your savings goals, spend your surplus on whatever you want.
If you want a big-screen television, buy a big-screen television.
If you want a Range Rover, buy a Range Rover.
If you want a surfboard, buy a surfboard.
And if you want to travel, travel.
I don’t care what you spend your money on, and neither should anyone else. Travel isn’t inherently better than television, and I’m not arguing that it is. (For me, travel is better than television, but maybe not for Jane.)
I spend plenty of money on Stuff. In the past two years, I’ve bought a used car, a new bike, some nice furniture, season tickets to the Portland Timbers, and more comic books than a grown man really needs. (Trust me: If I’m buying all these comic books, I’m not about to judge you for buying a television!) I’ve also paid for an expensive gym membership and traveled to nine other countries.
I’m careful to avoid debt and meet my savings goals, but I spend my surplus on Experiences and Stuff. Both have value.
And Donna, who just wrote about eating lunches of cheese and crackers so she can afford to travel the U.K.? Well, Donna’s willing to pay $9 for half a dozen cupcakes. Is that frugal? Of course it is! Well, maybe not frugal, but it’s certainly a reasonable expense. Donna can afford it, and it makes her happy.
There’s no one right way to do this. Donna splurges on cupcakes. I splurge on comic books. Maybe you spend on cable television. So what? If these are conscious decisions and we can afford it, there’s nothing wrong with buying Experiences or Stuff. Or both. (After all, that’s why we scrimp and save.)
What Do YOU Splurge On?
Financial writer Greg Karp recently dropped me a line. “I’m doing a column on what people splurge on,” he said. “Any thoughts?” I wrote back to share my main splurges: travel, travel gear, fitness, and computers.
I did a similar survey of personal-finance bloggers almost three years ago. “What do you splurge on?” I asked. Free Money Finance spends on cycling gear. Trent at The Simple Dollar splurges on videogames. And SVB from The Digerati Life buys stuff for around the house. Most of the people I polled spend on experiences: especially food and travel.
What about you? How do you spend your money? Assuming you have some sort of surplus after saving, do you focus on Experiences or Stuff? Do any of these purchases ever make you feel guilty? Or do you see this spending as a reward for making smart financial choices? (I used to feel guilty, but now I see spending as a reward for doing the other things right.) Chime in with your comments.
And, hey — if you want to write a reader story about how you saved for a boat or a television or a Range Rover, please send it in!
A house is the most expensive thing most of us ever will purchase. If you plan to stay put for some time, you could be paying on your mortgage for the next 15 to 20 years. But as any homeowner knows, expenses don’t stop at the purchase price and mortgage interest. You’ll also pay a small fortune in insurance, upkeep, and repairs over the years.
This is what makes it so important to fully understand the process of buying a home, especially when it comes to property inspection. With so many features and systems, there are any number of things that can break or malfunction in your house. Unlike a faulty appliance that you can take back to the store for replacement or refund, once you sign a contract on a home, there’s little recourse should something go wrong.
According to the National Association of Realtors, April through July typically outpace the balance of the year in home sales as people try to get settled before the new school year begins. If you plan to purchase a home soon, make sure you pay careful attention to the property inspection process to save both money and headaches.
The Purpose of a Property Inspection
A property inspection report is a list of issues with the property, such as roof damage or a crack in the foundation. After inspection the buyer has the opportunity to negotiate with the seller and reach an agreement to either repair the property or to lower the sales price to compensate the buyer for the cost of the repairs. Alternatively, the seller can decide to sell the home as-is, in which case he or she is declining to make repairs or lower the sales price, and the buyer must decide whether or not to buy the home at the original agreed-upon sales price.
You may have decided that the property is your dream home, but the property inspection is a much-needed reality check that will point out flaws of which you might not be aware.
Important Note
New houses still need an inspection!
You might think a new house is perfect, but that’s far from the truth. In fact, new homes can be even more dicey because they haven’t undergone a few inspections like the typical resale house.
When I was in real estate, I mentored with an incredibly knowledgeable agent who would try to talk her clients out of new homes (which often pay agents exponentially more because of builder bonuses). If they still wanted a new house, she would recommend additional inspections at various points in the construction process, and she’d show up for every single one.
During one inspection, she walked into the master bathroom. She noticed something was missing, and asked the builders to come in and see if they could figure it out. No one had a clue. Turns out they hadn’t put in plumbing for the toilet.
Review the Seller’s Disclosure Notice
The first step in the property inspection process is to review the seller’s disclosure notice, a form filled out by the property owner that outlines their knowledge of the properties present condition. If you’re working with a real estate agent, he or she can get the disclosure statement from the seller’s agent. Otherwise, you can contact the seller’s agent, or if the property is for sale by owner, you’ll get the notice from the seller directly.
Sellers are required to include everything they know about their property. If, for example, the home was previously under contract, but the potential buyer walked away because a property inspection found major structural damage, the seller is required to include that in the seller’s disclosure notice.
As the buyer it’s particularly helpful because if the house will require major structural repairs, and you’d rather pass, you can walk away from the property without having to shell out cash for your own property inspection to reveal the same issues.
Hiring an Inspector
If you carefully reviewed the sellers disclosure and you’re ready to move forward, the next step is to find an inspector.
Rather than firing up your Internet browser and doing a Google search, contact people in your network to get referrals. Who has purchased a house in the past several years? Do you know anybody in the real estate industry? If you have a buyer’s agent, he or she also should have at least three names of inspectors for you to consider.
After you’ve collected a small list of names, interview each candidate, asking questions including the following:
Are you licensed (not required in all states)?
Are you a member of a professional organization, such as the American Society of Home Inspectors?
Do you have errors and omission insurance?
What kind of ongoing training and education do you receive?
Do you specialize in certain types of properties? (For example, new homes and certain beachfront properties might need a specialist.)
What will the inspection cost?
If hired, how soon can you give me a property inspection report?
Finally, ask for a sample inspection report and see if it includes detailed descriptions of features and flaws in the home, which give more information about the property than a basic checklist.
It’s important that you make time to attend the inspection of the home. Besides learning more about your AC and where the fuse box is located, believe it or not, you might find issues that the inspector would normally miss. For example, an inspector won’t check underneath every rug in the house, but you can, and you might discover a major crack in the concrete floors.
Tip: Though the property inspection report will be invaluable after you purchase a home — it can serve as an agenda for which maintenance and repairs are highest priority — you can make it even more useful by filming the inspection. Don’t make yourself a nuisance, but tag along and film as the inspector goes from room to room. (You’ll probably want to let her crawl under the house on her own, though.)
Negotiations
Once the property report is finished, carefully read it. Many people don’t.
It can be disheartening to see so many things wrong with your “dream” home, but every home will have issues. Some are easy and inexpensive to fix, and it’s not reasonable to ask a seller to get a property in perfect condition. Typically buyers will ask that a seller take care of any health and safety concerns; structural damage; deferred maintenance, such as having the air-conditioning system serviced; or problems that require opening the wall, which often reveal much larger and more expensive problems.
Remember that should negotiations go downhill and you want to walk away from the property, the inspection contingency will allow you to do so.
If there are only minor issues with the house, however, typically buyers continue with the original contract. After the contract is finalized, it’s fairly certain the buyers are about to become the new owners.
As you can see, the process of a house inspection can have a major affect on a buyer’s finances for years to come. If you’re in the market for a new home, don’t gloss over the inspection report or assume that your agent will show up for you on inspection day and handle any issues. Stay involved in the process, even if you have to ask a million questions along the way. As J.D. often says, nobody cares more about your money than you do.
Infidelity is always devastating. But if your spouse or partner has been cheating on you by hiding pricey vices or illicit spending sprees, the consequences can be far worse than an affair, for the simple reason that money — often large sums of money — are involved.
As one reader wrote to us, after a similar article ran on on DailyWorth:
My ex took out a credit card in my name and ran up $40,000 debt without my knowledge. Now I’m paying it off. I asked the credit card company to investigate the matter as fraud, but they didn’t. It doesn’t seem like I have many rights. As I found out, there were many secrets behind the numbers. Right now, I’m waiting for the divorce to come through.
Although incidents of identity theft and fraud are well-documented — and can be prosecuted — spouses who are the victims of their lying, cheating partners often have little recourse. As another woman wrote:
I just checked my credit report, and found out that my husband ran up $18,000 on one of our cards — when I thought we only owed $400. I confronted him, and he admitted it, but now what? He doesn’t have the money to pay it back.
To recover from financial infidelity, you need a two-pronged strategy. You need to shore up the non-financial side of your relationship and, at the same time, tackle the actual money mess.
The Mess
The first step is to find out where the money went and how much is owed, says credit expert Erica Sandberg, a columnist for Creditcards.com. Your credit report contains a list of all open accounts; ask your mate to show you all statements. In addition, your mate may have accounts opened in his or her name. These would show up only on their credit report, so ask them to come clean.
As you examine the statements, what you discover may be shocking. Your spouse wasn’t just deceiving you about debt; it’s likely that he or she was hiding habits (perhaps even vices) that cost a pretty penny.
To clean up the mess, you’ve got two main tasks:
Your mate’s secret spending has to stop (and the habit itself addressed).
The debt has to be repaid.
So, the second step is to make a debt repayment plan. While you may not feel that the debt is your problem, until it’s cleared up (or you split up, if that’s the case) it will affect you. First, have your mate sell any purchases they bought when they were cheating, and put that money toward the debt. Insist that they get a part-time job or work overtime.
Next, depending on the extent of what’s owed, credit counseling may be in order. (Two reliable sources for credit counseling are the National Foundation for Credit Counseling and the Association of Independent Consumer Credit Counseling Agencies.) At worst, you may need to consider bankruptcy.
Otherwise, create a budget, reduce spending, apply all excess funds to the debt, and stop charging until the balance is at zero!
The Marriage
As you address the financial problems, talk. Your partner’s financial infidelity is a red flag that you two are out of sync — and not just about money. Make time for regular discussions about the life you have and the life you want. As the great Russian writer and philosopher Leo Tolstoy once wrote, “What counts in making a happy marriage is not so much how compatible you are, but how you deal with incompatibility.”
Piggymojo is a new saving site, where couples can set a goal (in this case to save enough to pay down your debt), and find new ways to talk about money.
You may also want to seek professional help. Few relationships can survive this kind of strain without counseling. If you’re both invested in staying together, then it’s worth spending some money on a therapist who can help you, especially if gambling or other addiction issues are involved.
Lastly, if your spouse has committed financial infidelity, you may need to take a long hard look at your own money habits and head-in-the-sand behavior. As one reader described her sister’s loss of nearly $120,000 thanks to her husband’s secret gambling problem:
The moral is, you can’t afford to become a passenger in your own finances. Looking back, my sister said there were so many warning signs. But because her husband said he was taking care of the bills and expenses — and she believed him — she didn’t know what was really going on until it was too late.
With moratoriums on evictions throughout the country starting to expire, tenant groups are stepping in to try and save people from losing their homes.
Tenant organizers in South Central Los Angeles last week quickly organized a protest after a local landlord removed one resident’s belongings following their eviction. The landlord had changed the locks on the tenant’s apartment a week after he missed a rental payment, The Real Deal reported. More than 30 tenant organizers arrived at the property to protest his eviction, and blocked a moving company from loading his possessions into a van. They also hired a contractor to remove the new lock with a power drill, before moving the renter’s belongings back into the home.
David Wholman, the landlord, told The Real Deal that he had been “overwhelmed” by the response, saying he’s never seen anything like this happen before. He added that the tenant can stay put for now.
These kinds of efforts to keep renters in their homes following eviction are strategic, said Trinidad Ruiz, a member of the Los Angeles Tenant Union. “If you don’t have possession of the home going into court, you lose, because you’re already evicted,” he told The Real Deal.
It’s said that 27 U.S. states still have moratoriums on evictions in place following the COVID-19 outbreak, but the rest of the country has lifted those rules. And in the states where moratoriums are still in place, some landlords are suing to try and get the bans removed.
A recent report from the Aspen Group said 23 million renters across the U.S. are currently at risk of being evicted from their homes.
President Donald Trump said on August 3 that he might consider executive action to impose a sweeping federal moratorium on evictions while a new stimulus package designed to provide pandemic relief progresses through Congress. The previous moratorium on evictions for federally backed mortgages expired on July 24, and several state moratoriums are also set to expire this month.
Instead of extending eviction moratoriums, the National Association of Realtors has asked policymakers to provide rental assistance for those experiencing pandemic hardships.
“If residents are unable to pay their rent, housing providers will also be unable to meet their mortgage obligations, fund their payrolls and pay their property taxes to state and local governments that have been hardest hit by the pandemic. That, in turn, is likely to catalyze a chain of events with potentially devastating financial and economic effects,” The NAR said in a letter sent to congressional leaders on July 31.
While the wrangling goes on, tenant groups are stepping up their efforts to prevent people losing their homes. Several groups recently staged a protest at the New Orleans city courthouse, barricading themselves inside the premises. Due to this, the courthouse was unable to open and proceed with several planned eviction hearings on that day.
“The reason we’re seeing more militant direct action from tenants is because of weakened protections,” said Patrick Tyrell, a staff attorney at Mobilization for Justice, a nonprofit organization that provides free civil legal services. “What else can they do?”
Mike Wheatley is the senior editor at Realty Biz News. Got a real estate related news article you wish to share, contact Mike at [email protected]
With moratoriums on evictions throughout the country starting to expire, tenant groups are stepping in to try and save people from losing their homes.
Tenant organizers in South Central Los Angeles last week quickly organized a protest after a local landlord removed one resident’s belongings following their eviction. The landlord had changed the locks on the tenant’s apartment a week after he missed a rental payment, The Real Deal reported. More than 30 tenant organizers arrived at the property to protest his eviction, and blocked a moving company from loading his possessions into a van. They also hired a contractor to remove the new lock with a power drill, before moving the renter’s belongings back into the home.
David Wholman, the landlord, told The Real Deal that he had been “overwhelmed” by the response, saying he’s never seen anything like this happen before. He added that the tenant can stay put for now.
These kinds of efforts to keep renters in their homes following eviction are strategic, said Trinidad Ruiz, a member of the Los Angeles Tenant Union. “If you don’t have possession of the home going into court, you lose, because you’re already evicted,” he told The Real Deal.
It’s said that 27 U.S. states still have moratoriums on evictions in place following the COVID-19 outbreak, but the rest of the country has lifted those rules. And in the states where moratoriums are still in place, some landlords are suing to try and get the bans removed.
A recent report from the Aspen Group said 23 million renters across the U.S. are currently at risk of being evicted from their homes.
President Donald Trump said on August 3 that he might consider executive action to impose a sweeping federal moratorium on evictions while a new stimulus package designed to provide pandemic relief progresses through Congress. The previous moratorium on evictions for federally backed mortgages expired on July 24, and several state moratoriums are also set to expire this month.
Instead of extending eviction moratoriums, the National Association of Realtors has asked policymakers to provide rental assistance for those experiencing pandemic hardships.
“If residents are unable to pay their rent, housing providers will also be unable to meet their mortgage obligations, fund their payrolls and pay their property taxes to state and local governments that have been hardest hit by the pandemic. That, in turn, is likely to catalyze a chain of events with potentially devastating financial and economic effects,” The NAR said in a letter sent to congressional leaders on July 31.
While the wrangling goes on, tenant groups are stepping up their efforts to prevent people losing their homes. Several groups recently staged a protest at the New Orleans city courthouse, barricading themselves inside the premises. Due to this, the courthouse was unable to open and proceed with several planned eviction hearings on that day.
“The reason we’re seeing more militant direct action from tenants is because of weakened protections,” said Patrick Tyrell, a staff attorney at Mobilization for Justice, a nonprofit organization that provides free civil legal services. “What else can they do?”
Mike Wheatley is the senior editor at Realty Biz News. Got a real estate related news article you wish to share, contact Mike at [email protected]
Have you ever been declined when applying for life insurance coverage?
Have you thought that you were super fit and that you would get approved instantly only to have a curve ball thrown at you to realize either something came back on your medical exam or you found out that you’re un-insurable?
You were probably shocked and had no idea where to turn next. Do you look for a different company? Go with a no exam policy? Or just skip life insurance altogether? (hint: that’s not the answer)
If this is the case I want to give you a few tips on how you can get approve for life insurance even if you’ve been declined.
First, let me share with you a quick story that helps illustrate this point.
I had a gentleman that applied trying to get the cheapest life insurance possible. As you know, I am a big fan of getting cheap life insurance, but if you have a previous condition – if you’ve had a felony, misdemeanor, or DWI – opting for that first quote, even if it’s the cheapest, is not always your best option.
Why Did They Get Declined?
In this case, this is what this gentleman did. He went for the cheapest rate and sure enough, because he had a DWI on his record he got declined. At that point he should have went with an independent agent, but he went ahead and went with the second cheapest quote. He isn’t the only one. Every year there are thousands and thousands of stories just like his.
Sure enough he got declined…. again!
This was all within a 90-day period. This is not recommended, so he was very frustrated and didn’t really know how to proceed next. Typically, if you’ve been declined in a 90-day period for the exact same thing, it’s going to be very hard for you to get insured. Because we went with an independent agent (myself) we were able to get him in touch with the right carrier.
Because he had some other high risk health conditions, we had to really do our homework. But we finally found the carrier that was going to approve him and to get him the life insurance coverage that he needed.
If you’ve ever been declined for life insurance, you know how frustrating it can be. You will feel lost and confused with no idea what to do next. You want to a plan that covers you and your family, but now you think that it’s impossible. Don’t worry, a lot of being are declined coverage, but still go on to find coverage with some other option. If you fall into this category, there are several different things you can do to make sure that you get the coverage you want and deserve.
Few Tips If You Get Denied for Your Life Insurance
The first tip is don’t go with the cheapest rate just because you’re trying to save a quick buck. If you have health conditions, if you have other items going on in your history, then going with the cheapest rate is not the best option. Make sure that you go with an independent agent that understands your complete situation to make sure they put you with the right carrier. It might not be the cheapest rate, but at least you know you’ll get insured.
The second tip is if you’ve been declined for life insurance, don’t apply to more than one carrier at a time. This gentleman was applying to three carriers over and above the two that initially declined him. If you’re trying to shop around and go through all these different top life insurance companies, they are not going to believe that you’re real and they are not going to insure you. Yes, it’s important that you receive quotes from several different companies, but not apply to a lot of them all at once. Shop around for quotes, but don’t apply.
Make sure you go with an independent agent, find the carrier that is best suited for you and stick with them. That way they can work with you and work with the underwriter to get you the insurance you need.
Finding Life Insurance after Being Declined
Life insurance is an investment you should make for the future of your family. More than likely, your wife and children will be left with a mountain of debt and unpaid expenses that they would be left to pay. Instead of leaving your family with mortgage payments, car loans, and credit card bills, life insurance will give your family the money they need to pay off those debts and get through that difficult time.
As I mentioned early, regardless of your situation or why you were declined for coverage, it’s important that you find the perfect company that will work with you to get the policy that fits your needs.
Each company is different with different views on applicants. Some of them view applicants with heart conditions more favorable while other companies look at applicants with diabetes or DWIs more favorable. The company that you apply with will make all of the difference between being accepted and being denied.
Sure, you could spend hours and hours researching different companies or calling them on the phone or you can have our agent do that instead. Our agents are extremely knowledgeable about the life insurance space and which companies can get you the best rates for quality coverage.
Not only will we find a company that will accept you, but we will find policies from the highest rated companies with excellent rates. In most cases, a life insurance policy is much more affordable than most people think. Having quality insurance shouldn’t break your bank.
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How much life insurance do you need?
Being accepted for life insurance is just the beginning of the life insurance policy process. You also have to decide how large of a policy that you need. As we mentioned early, one of the one purposes for life insurance is to pay off any debts that you would leave behind.
Because of that, you need to make sure that your policy will cover any final expenses that you leave. Total all of your debts, mortgages, car payments, etc. the final number is the best way to ensure that you have a large enough life policy.
The other factor to consider is your annual salary, and how many of your family members rely on your income. If you were to pass away, would your family suffer a huge financial loss? Would they be able to get by without your salary? If you have several family members that NEED your annual income, then one of your life insurance goals is to replace that income if your life ended.
There is no perfect number that you should aim for when purchasing a life insurance policy, however, experts normally suggest 10x your current salary. This will give your loved ones plenty of time to get through the emotional stress without having the added burden of bills piling up.