Money Management

Insurance helps policyholders cover costs. Learn why you should check with your insurer before filing a claim against your policy. [[{“value”:”

People purchase insurance for a reason. The point of buying coverage is to share the risk of loss. When a covered event happens, the insurance company pays to repair or replace property like a vehicle or a home or personal property in the house.

When policyholders make an insurance claim, though, their premiums typically go up afterward. After a car accident claim, for example, auto insurance rates could jump by as much as 92% in some states (although an increase between 30% and 60% is more common). Since insurance will be more expensive in the future, it’s important to consider whether making a claim is actually worth it before moving forward.

Before any insured policyholder goes ahead and asks an insurer to cover a loss, there’s one crucial thing they must do first.

Always find out what the deductible is before making a claim

The first and most important step to take before making any insurance claim is to figure out what the deductible is on the policy.

The deductible is the amount the insured person would have to pay for a covered loss before an insurer provides any help with the rest of the costs. Say, for example, a property owner incurred $2,000 worth of damage due to a kitchen fire and was considering a homeowners insurance claim.

That homeowner should check their deductible. If they have a $1,000 deductible, the insurer would expect them to cover the first $1,000 in losses, and the insurance company would then pay the other $1,000 to fix the damage.

It might make sense to do that, but the homeowner may also decide it’s not worth incurring the cost of increased premiums for years to come just to get a $1,000 payout. Homeowners insurance premiums usually rise about 7% to 10% following a claim. So a policy that costs $1,800 might cost $1,980 for the next three to seven years until the claim drops off the homeowner’s record. If the homeowner gets stuck with an extra $1,260 in premiums because of a claim that paid out $1,000, that’s not a good deal.

If the fire did $10,000 in damage, though, then making a claim would likely make sense. And if it caused just $500 worth of loss, it would be better to skip making a claim. The insurer would not actually pay anything in that situation.

Everyone with home insurance or auto insurance should be sure to check their policy documents to see exactly what their deductible is when any covered loss happens. That way, they can see exactly what the insurer would pay them and then decide if facing the premium increase is worth getting that cash.

Consider checking deductibles before a covered loss happens

While checking a deductible before making a claim is crucial, for many people it’s actually best to figure out what their deductible is before something goes wrong. That’s because it will be too late to change it once it comes time to file a claim — and no one wants to discover they can’t afford repairs because they don’t have the money to cover their policy deductible.

A lower deductible comes with higher premiums. But any driver or homeowner who discovers that paying their deductible would be a serious financial burden may want to just pay the extra costs for reducing their out-of-pocket expenses when a covered loss happens. Paying a little more in predictable monthly premiums could fit more easily into many people’s budgets than suddenly covering $1,000 in unexpected costs after tragedy strikes.

Insurance agents will provide information about a deductible, and the information is included in policy language as well. Give it a look today to see whether the deductible is affordable. If it’s not, making the call to the insurer to change it ASAP is important — before it’s too late.

Our best car insurance companies for 2024

Ready to shop for car insurance? Whether you’re focused on price, claims handling, or customer service, we’ve researched insurers nationwide to provide our best-in-class picks for car insurance coverage. Read our free expert review today to get started.

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Discover Financial Services is an advertising partner of The Ascent, a Motley Fool company. Christy Bieber has no position in any of the stocks mentioned. The Motley Fool recommends Discover Financial Services. The Motley Fool has a disclosure policy.

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After getting engaged, it’s important to look into insurance for the ring, as well as life insurance. Find out why here. [[{“value”:”

After getting engaged, there are a lot of exciting things to do — like posting ring pictures on Instagram and starting the wedding planning. But there are also two less glamorous tasks that may be a lot more important than scheduling those cake taste tests.

They involve buying two types of insurance that many newly-engaged people need to have in order to protect their loved ones — and a valuable new asset they may have acquired.

1. Life insurance

Anyone who does not yet have life insurance should seriously consider buying a policy ASAP after getting engaged. That’s because joining together romantically typically means taking on shared financial obligations.

Many people buy houses together after marriage, or even simply move into a bigger and more expensive apartment. They may have kids, or take on other shared responsibilities that affect their finances. As a result, both people in the relationship usually develop some dependence on the other person’s income since they’ve built a shared life based on two salaries. Or, if one person starts staying home and managing the couple’s life, then that person becomes dependent on their partner’s earnings and their partner starts relying on their services.

Once two people need each other’s income or personal support, a death can be not just emotionally devastating, but financially disastrous as well. That’s why a life insurance policy is so important. The policy can ensure that if one person passes away unexpectedly, the other still has the money they need to cover living expenses.

Buying a life insurance policy with a death benefit equal to about 10 times the policyholder’s income is a quick and simple way to protect a new life partner after an engagement. And it’s best to buy it ASAP, as the younger and healthier someone is when buying coverage, the cheaper a policy will be.

It’s easy to compare life insurance policy quotes online and sign up for coverage either online or with help from an insurance agent. Do so ASAP after getting engaged so the right protections are put in place.

2. Jewelry insurance

There’s another important type of insurance many couples will need after getting married. It’s called jewelry insurance.

The national average cost of an engagement ring is $5,500, according to The Knot. But, many homeowners insurance companies limit coverage for jewelry to $1,500. This means if something happens to a ring, most people wouldn’t be able to get back the full amount they paid for it.

But there are standalone jewelry insurance policies out there, as well as riders that can be added onto a standard homeowners insurance policy. In any situation where a valuable engagement ring is involved, it’s a good idea to look into getting this kind of coverage. After all, no one wants to be left unable to afford to replace an engagement ring if it is stolen or damaged beyond repair due to a covered loss.

Talking to an insurance agent about policy options, or comparing quotes online, are two great ways to find a jewelry policy that offers affordable protection.

By buying these two kinds of insurance, newly-engaged couples can move forward into their new life together with the protections they need to avoid a few big financial disasters, should things go wrong.

Our best car insurance companies for 2024

Ready to shop for car insurance? Whether you’re focused on price, claims handling, or customer service, we’ve researched insurers nationwide to provide our best-in-class picks for car insurance coverage. Read our free expert review today to get started.

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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Got money saved for the near future? Learn why capitalizing on CDs is a good idea right now — even if savings accounts are easier. [[{“value”:”

There’s really no simpler bank account option for your savings than a savings account. Yes, stashing some cash under your mattress is easier — but you won’t earn any interest, and your money won’t be protected. But if you open a savings account, you’ll earn interest and have the peace of mind that comes from knowing your money is safe in the event of bank failure (assuming your bank has FDIC insurance).

But savings accounts come with one big pitfall when you compare them to their cousin, the certificate of deposit (CD). Let’s take a closer look at the downside of relying exclusively on a savings account — rather than diversifying by opening a CD, too.

Rates — fixed or variable?

There are a few big differences between CDs and savings accounts, and the type of interest rate they come with is one of them. Specifically, savings account APYs (annual percentage yields) are variable and subject to change at any point. I opened a high-yield savings account with an online bank in early 2022, and I have received multiple emails from the bank informing me of changes to my rate. Over this period of time, they’ve all been increases, and this makes sense.

The Federal Reserve addressed sky-high inflation in 2021 and 2022 by increasing the federal funds rate. This doesn’t directly inform rates on consumer bank accounts and loans, but they tend to trend in the same direction. The federal funds rate is predicted to fall this year, and when it does, I expect to start getting emails from my bank with the news that my savings account’s APY is dropping, too.

But the cool thing about CDs is that when you open one and deposit your cash, you’re getting to lock in the CD rate you started with. If you open a 1-year CD with an APY of 5%, you’ll earn that 5% over the entire year. If that CD holds $5,000, that equals $250 earned on your money. Over that same year, the rate on your savings account might fall — but your CD’s rate won’t.

When is a CD a good idea?

You’re probably thinking, “Great! I’ll put all my savings into CDs and lock in those high rates.” And that may be a great choice. While a CD isn’t the perfect solution for all savings situations, it really shines for one in particular.

If you’ve saved money for a sizeable expense that you’ll be incurring in the next few years (such as a down payment on a house purchase, a wedding, or perhaps your child’s first year of college), a CD can be a good place to keep it safe and earn a predictable return. The key is to be sure that you really can leave the money alone for the duration of the CD term, as you’ll incur early withdrawal penalties if you need to pull your money out sooner.

When is a savings account a better option?

A savings account, on the other hand, is best used for money you’ll need soon but that doesn’t have a set timeline. This includes your emergency fund — a CD is a terrible place for that.

Imagine that you have $10,000 in the bank for unplanned expenses, and you need $2,500 of it for a home or car repair. If you have that money in a CD, you’ll have to pay a penalty to break your CD term, which means losing part of your interest earnings (or even part of your principal, depending on how long the CD has been open and how long the term is) in the process. But if it’s in a savings account (or possibly even a money market account), you can access it without penalty.

A savings account is also a great fit for people who are still actively saving. You generally can’t add more money to a CD once it’s open, but you can make contributions to a savings account anytime you please.

Now that you know the benefit of CDs over savings accounts (particularly in this high interest rate environment), you might want to take some time to decide if they fit into your savings strategy. If they do, it’s a good idea to open one sooner rather than later — before rates fall.

These savings accounts are FDIC insured and could earn you 11x your bank

Many people are missing out on guaranteed returns as their money languishes in a big bank savings account earning next to no interest. Our picks of the best online savings accounts could earn you 11x the national average savings account rate. Click here to uncover the best-in-class accounts that landed a spot on our short list of the best savings accounts for 2024.

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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Investing in a CD is a great way to earn a favorable return, but you’ll want to avoid a few key errors in the process. Learn more here. [[{“value”:”

Investing in a certificate of deposit (CD) can be a great option for many people. If your bank has FDIC insurance, this investment is covered for up to $250,000, so you aren’t putting your money at risk. You can also generally earn a better return on your investment than would be available from a high-yield savings account.

While a CD can be a good place to put your money, you could also be left with financial regrets if you make certain common mistakes in CD investing. Here are three errors you’ll want to be sure to avoid.

1. Choosing the wrong CD term

CDs typically require you to lock up your money for between three months and five years, depending which one you pick. If you take your funds out early, you face a financial penalty called an early withdrawal penalty. So one major mistake in CD investing is picking the wrong term.

If you are going to need your money in a few months, or in a year or two, you don’t want to choose a certificate of deposit that would force you to leave your money invested longer than that. On the other hand, if you definitely won’t need the funds for a while and you pick a CD with a short term and the interest rates go down, you may regret not locking in the high rate for longer.

Consider how long you want to leave your money invested in this particular CD, so you can pick a term length that makes sense. Typical terms available range from three months to five years, but depending on where you open your CD, you could find terms of a few weeks all the way up to a decade or longer.

2. Not shopping around for rates

The national average rates for a certificate of deposit are under 1.5% for all CD terms between one month and 60 months. For a 12-month CD, for example, the national average rate is 1.86%.

While these rates are higher than the national average APY for a savings account (which is 0.47%), they are still pretty low compared to what some CDs offer. For example, it’s possible to find CDs offering APYs above 5.00%. If you don’t shop around with multiple banks and find the best rates, you could leave a lot of money on the table.

Say, for example, you deposited $5,000 into a 12-month CD. The table below shows how much you could end up with if you have a 1.86% rate versus a 5.30% rate.

As you can see, one of these CDs leaves you much better off than the other — so it’s worth shopping around to make sure you find the best rates.

3. Allowing the CD to automatically renew without making sure that’s right for you

In many cases, CDs will auto-renew at the end of your investment term. While this can be convenient if you want to keep the same CD, it may not be ideal if you’ll need to get your money out sooner. And if rates have fallen, you could end up stuck in a CD that auto-renews at a lower rate than you could have had if you’d switched to a different CD instead.

Be sure to plan for when your CD term is done and explore all of your options for what to do with the invested funds when that happens.

Now you know how to avoid these three common errors, and ideally, you can invest in CDs successfully and grow your net worth over time.

These savings accounts are FDIC insured and could earn you 11x your bank

Many people are missing out on guaranteed returns as their money languishes in a big bank savings account earning next to no interest. Our picks of the best online savings accounts could earn you 11x the national average savings account rate. Click here to uncover the best-in-class accounts that landed a spot on our short list of the best savings accounts for 2024.

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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Are you into “hustle culture” or do you want “soft-life culture” with better work-life balance? See what this KeyBank survey means for your personal finances. [[{“value”:”

After several years of pandemic, high inflation, decreased savings accounts, and global economic uncertainty, Americans are re-evaluating their priorities and how they define success in life. Instead of chasing higher paying, higher status careers, a recent survey says that more Americans are seeking a “softer” definition of financial success.

A whopping 72% of Americans define success as having a “soft-life culture,” with a focus on happiness and personal fulfillment, according to the KeyBank 2024 Financial Mobility Survey. Only 28% of Americans say that they identify with “hustle culture” — focused on career achievement, wealth, and status.

Let’s look at the details of what the debate of soft-life culture vs. hustle culture means for the economy — and for your personal finances.

Americans are under financial stress and burning through savings

With the past few years of higher interest rates and rising inflation, Americans are feeling a lot of stress on their personal finances. They’re depleting their savings accounts and cutting back on spending just to keep up with the rising prices of groceries, housing, car ownership, and other everyday costs of living.

The KeyBank Financial Mobility Survey found:

77% of Americans believe that the cost of living has gotten worse in the past five years30% of Americans feel daily financial stress from the cost of living51% have pulled more money from their savings this year than they did before59% have cut back on non-essential spending like entertainment or dining out

Americans are more likely to say that they are “spending more and saving less,” compared to previous years. The survey found that, as of 2023, 25% of Americans said they’re spending more and saving less, while only 15% felt this way in 2022, and 13% in 2021.

What’s the new status symbol? Work-life balance

However, despite the stress of having less money in the bank, Americans seem less likely to believe that “money can buy happiness.” The survey also found that Americans are seeking work-life balance more than ever:

63% of Americans say they value work-life balance more than a high-paying salary (up from 57% in 2022)Only 27% say they value a high-paying salary over work-life balance (down from 33% in 2022)

Americans are also redefining their boundaries around work and life, and how much they’re willing to sacrifice for their jobs. The survey found that 66% of Americans would rather make less money at a job they love, than get paid a higher salary at a job they hate.

Why Gen Z is debating hustle culture vs. soft-life culture

The survey also found that 72% of Americans are more interested in soft-life culture instead of a hard-charging hustle culture. Understandably, many Americans might be more interested in having a softer existence and better work-life balance after the past few stressful years.

However, there’s a generation gap in the question of hustle culture vs. soft-life culture. Some younger people are still likely to identify with a hustle culture focused on making money and building successful careers. The survey found that, even though only 28% of Americans prefer hustle culture, Gen Z was most likely out of all generations to identify with hustle culture.

The following percentages of each generation of survey respondents chose hustle culture over soft-life culture to define their success:

47% of Gen Zers37% of millennials24% of Gen Xers15% of baby boomers

As people get older, they usually (hopefully) make progress in their careers, get promoted, earn higher incomes, buy homes, invest in stocks, and build wealth. Sometimes getting more financially comfortable can make people more likely to crave work-life balance. After a certain point, more money doesn’t make people happier.

If you’re a well-established senior-level professional who already owns your dream home and is on track for a comfortable retirement, you might not want to “hustle” as hard anymore. But if you’re young, ambitious, and feeling overburdened by expenses (and underpaid at your job), it’s understandable why you might want to choose hustle culture to guide your career efforts.

Bottom line

The KeyBank 2024 Financial Mobility Survey shows some powerful trends in American economic life. Even though they have less money than they used to, many Americans are still choosing work-life balance and a slower, softer way of life, instead of never-ending hustle. But younger Americans who are at the earlier stages of building careers and investing are more likely to say that they value hustle culture.

No matter the stage of your career, or where you stand on the soft-life vs. hustle culture debate, it’s important to boost your emergency savings fund. Use a budgeting app to manage your spending and automatically save for your most important goals. Having more cash in the bank can help you reduce your stress and enjoy life even more.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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