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Your Collection Deserves to Be Protected

| August 01, 2017
A vintage New Yorker cartoon pictures a character surrounded by his collections. The caption reads: "Possessions are part of the self."

If you're a collector of something - and many of us are - you'll relate to the cartoon character. Whether it's a prized art collection, Beatles memorabilia, or antique teapots, it means something to you, and it should be protected. 

Many collectors underestimate the value of their collections, and while no one wants to consider the impact of a break-in, flood, or fire on their valuables, they should. Do consider insuring your collection before you're faced with a disaster. To any serious collector, the alternative is just unthinkable.

Homeowners insurance: The assumption many collectors make is that homeowners insurance covers these items. However, this policy is typically limited in coverage and has maximums that are probably insufficient to cover your collection. To ensure proper coverage, consider adding an endorsement to your homeowner's policy, or purchasing a separate floater policy that offers the right amount of coverage. Of course, this means knowing what your collection is worth. Even if you know what you paid for an item, its value in today's market may be quite different. And that means getting a current appraisal. 

Appraisal tips: To have your collection appraised, follow these steps.
  • Make a list of items.
  • Gather as much information as you can, including purchase receipts, restoration records, and other relevant details.
  • Let the appraiser know the purpose of the appraisal.
  • Avoid using an appraiser who also buys and sells the types of items you want appraised. It may constitute a conflict of interest.
  • Get a detailed, itemized report. This will provide the documentation you need in the event you need to file a claim.


Ostriches and Egos: How We Create Our Own Realities

Information avoidance is a common human tendency. It doesn't seem to matter that we're living in a hyper information age. We listen to news that supports our point of view, avoid information we don't want to hear, and convince ourselves we have the facts we need in order to make informed decisions - even when we don't. 

In an article detailing recent research conducted by Carnegie Mellon University (CMU), Shilo Rea explains that people "are remarkably adept at selectively directing their attention to information that affirms what they believe or that reflects favorably upon them, and at forgetting information they wish were not true."

In other words, we tend to create our own reality - because we like it that way. We choose what we want to believe and ignore what we don't. Apparently, ignorance is bliss after all. Writer Chris Fleisher notes, in an article for the American Economic Association, "This behavior drives economists nuts. Ideally, we should absorb all the information we can get so that we can make rational decisions. But it doesn't work that way."

In Psychology Today, Alain Samson calls it "the ostrich effect." Referring to the work of the CMU researchers, he writes: "Information avoidance has immediate benefits for people if it prevents the negative (usually psychological) consequences of knowing the information." And while we all like to think of ourselves as savvy information consumers, we may be more like ostriches than we'd like to admit. Even more embarrassing, we're probably egoists too. Says Samson: "Information avoidance is particularly pertinent when ego threat is involved."


'Dual Coverage' Reduces Your Dental Costs

If you have your own dental coverage as well as coverage under a spouse's or parent's plan, you have what insurers call "dual coverage" or "dual dental." And this is a good thing, as it can help reduce out-of-pocket dental costs. However, it can be somewhat complicated. 

Your "primary" plan. Your primary plan could be your private dental coverage or dental coverage provided by your employer. It's the one that pays as if no other coverage is in place; if you do have dual coverage, your primary is the plan that pays first. 

Your "secondary" plan. The other dental insurance - your secondary plan - usually will not pay until it confirms the amount paid by the primary, and then may pay all or part of the remaining amount.

Coordinating benefits. Most plans have a "coordination of benefits" clause that indicates which plan pays first, and spells out any special rules regarding payment. If one plan does not contain this clause, that plan is usually the primary. 

When both plans contain a coordination of benefits clause, whichever one covers you directly is the primary. This could be your employer's plan or Medicare, for example. In your secondary plan, you're usually the dependent, as you would be on your spouse's employer plan. 

Dual plan doesn't mean twice the benefits. Most insurers coordinate the benefits of both plans to reimburse you up to 100%. But your dual dental plans will not reimburse for you more than 100% of your costs. If, for example, each plan provides for two dental cleanings a year, you can't double the cleaning benefit to get four. And if your secondary plan has "carve-outs," such as a "non-duplication-of-benefits" clause, you may still have some out-of-pocket expenses. How the state requires insurers to coordinate benefits may also affect your payment.

Dental insurance plans vary, and as mentioned, it's complicated. Contact your insurance agent to have your options explained.


Discuss the '4 Ws' With Your Life Insurance Beneficiaries

The purpose of life insurance is to provide for your loved ones after you die - but for that to happen, your loved ones need to be aware you have life insurance.

This seems obvious, but in fact, many people don't discuss their policies with their beneficiaries, perhaps because they're uncomfortable with discussing death with their spouse and/or children.

But even if you believe you have time later to talk about it, tackle the subject as soon as possible, and ensure your loved ones know the "who, what, when, and where" of your policy. 

The 4 Ws

The 4 Ws includes the name and address of the insurance company that holds it, as well as the policy number, what it covers, the amount and date it was issued, and whom to contact in the event of your death, plus where to find your insurance records. 

Without this information, your loved ones may not even realize this source of financial security exists, and won't obtain the money you intended them to have. Your goal in buying life insurance - ensuring you protect those you will leave behind - would have failed.

Life insurance companies do try to contact your beneficiaries, but if they've moved to another state, and/or changed their names, phone numbers, or email addresses, the company may not be able to locate them and will likely abandon the search. 

Keep records

The Insurance Information Institute (III) recommends you keep copies of your life insurance records in two separate places, so should you lose one copy, another one will still be available. 

One copy of your life insurance policy information should be stored at home with your other important papers; the other, in a safe deposit box or lawyer's office. 

Talk to your loved ones today. Tell them you have life insurance and that they are beneficiaries. They (and you) will be glad you did.