Retrieved from Grange Insurance: https://www.grangeinsurance.com/tips/before-you-loan-your-car?utm_source=grangewire&utm_medium=email&utm_campaign=tips&utm_content=41719

Have you ever loaned your car to a friend or family member when they were in need? It’s a kind gesture, but if they were to get in an accident behind the wheel of your vehicle, you may be uncertain whose insurance will cover the costs.
Since accidents can happen at any time, it’s important to understand how your coverage works and ultimately who will cover accident-related costs. Here’s what to know before you loan your car.
​
1. Know your coverage.

First, it’s important to know if the driver is covered by your insurance. Family members living in your household are typically covered by your insurance unless you expressly exclude them from your policy.
If a friend or a family member who is not a member of the household borrows your vehicle with your permission and gets in an accident, you may or may not be liable for some of the costs depending on your policy, the state you live in, and if the other driver carries their own insurance. Always check your policy and be familiar with how your coverage works so you aren’t stuck with surprise costs after an accident.

2. Understand who pays.

There’s a common misconception that the driver’s insurance will always cover an accident, but that’s not always the case. Most times, car insurance follows the vehicle. However, exact coverage will depend upon the language in your policy and the state you live in, which is why being familiar with the in’s and out’s of your policy is so important before someone loans your car.

There are exceptions, of course. If the accident wasn’t your friend or family member’s fault, the other driver will pay for the accident and your insurance will be unaffected. Or, if your vehicle is stolen and crashes, you will not be held liable for damages or injuries. However, damage to your own vehicle will most likely be covered under your insurance.

3. Lend responsibly.

If there’s a chance someone will regularly use your car, include them on your policy. And, always make sure you are lending responsibly. You could be sued for damages if you let an impaired or unlicensed driver operate your vehicle.
There are many scenarios that can play out when someone borrows your car, which is why it’s important to understand the terms of your coverage and be familiar with who is covered under your insurance policy. Talk with us if you have questions about the terms of your insurance.

This article is for informational and suggestion purposes only. If the policy coverage descriptions in this article conflict with the language in the policy, the language in the policy applies. To learn more about Grange’s auto insurance, speak with us!

Written by Erie Insurance

As a proud business owner, it’s your job to consider the “what-ifs” for your business. Of course, you don’t want to think about the worst… but in order to be prepared, it’s a necessity. No matter how careful or cautious you and your employees are, accidents do happen – and sometimes they can be serious.
If you experience a catastrophic accident, things can get costly… and fast. That’s where your ERIE agent and ERIE’s Business Umbrella Policy can help.
 Why Do I Need a Business Umbrella Policy?
This specialized policy can kick in with extra financial protection against a legal judgment for a covered loss. Business umbrella liability offers a cushion above and beyond the limits of your commercial general liability, professional liability, business auto liability and employer’s liability insurance.
Business umbrella insurance could help you when facing a serious and costly claim, for example:

• One of your drivers causes a very serious accident and a suit is filed against your business.
  
• A fire starts at your owned location and damages several other buildings in the surrounding area. A suit is filed against your business for the resulting damage.
  
• Your business gets sued because a customer is injured by a product he or she purchased through your business.
  
• A competitor claims you made false or malicious statements about their business in public or in an advertisement and decides to take legal action.
  

A major claim, like those mentioned above, could threaten the very existence of your business. And if a claim is serious enough, it could even have the potential to put your own personal assets — like your home and your retirement account — at risk.

What Erie Insurance Offers
ERIE’s Business Umbrella coverage offers your business $1 million or more of extra protection above your primary Erie Insurance policy’s liability coverage.
 ERIE’s business policies also give you access to a variety of resources including:

• Coverage for legal costs to defend a covered claim.
  
• Assistance from a risk control consultant who can recommend measures to help you identify, manage and reduce your business’s risks 
  
• Access to online disaster planning and business continuity tools through the Institute for Business and Home Safety’s “Open for Business” program.
  

 Business umbrella insurance is probably more affordable thank you think. Talk to your local ERIE agent about adding business umbrella insurance to your current business policy. He or she will talk to you about affordable options that can work for your business.

Retrieved from: https://www.erieinsurance.com/blog/business-liability​

by RACHEL WRAY THOMPSON

It’s winter — that means you’re probably piling on your blankets and turning up the thermostat. But if you’re looking to reduce energy bills and heat specific areas of your home, consider a space heater. ConsumerSearch recently complied a great space heater report — here are their tips on how to select a space heater, and their top four picks:

ConsumerSearch pulled from great review sources like Consumer Reports, Good Housekeeping and This Old House, as well as user reviews from sites like Amazon.com.

Types of heatersRadiant Space Heaters
Advantages: Good for spot heating, quick heating; most efficient for short periods; quiet
Disadvantages: Not good at heating rooms; heat dissipates quickly; orange glow is distracting and/or annoying to some

Convection Space Heaters
Advantages: Best for heating rooms; variety of shapes and price ranges; some have fans
Disadvantages: Models without fans are slow to heat; models with fans can be noisy; can be expensive

Questions to ask yourself before you buy:

• What kind of heating do I need? 
  Specifically, are you looking for a heater that will heat a room (like a convection space heater) or are you more looking for a personal heater that will just warm you up (in which case a radiant space heater might work best)?
• How safe do I need this space heater to be? 
  Obviously, all space heaters should be relatively safe to use before buying, but parents in particular might want to consider other safety issues before purchasing a heater, like considering how hot the materials get and whether materials are protected from curious kids. Also look for tip-over sensors and an overheat cut-off.
• How much noise can I handle? 
  Some folks find the ambient noise of a heater to be soothing, others find it annoying. Know which camp you’re in before you choose a heater type to purchase.
• Do I care if it looks good? 
  Chances are if you’re reading a design website you care about aesthetics, and yes, if you’re looking for a space heater for a public space in your home and happen to entertain a lot, you might want to spend a little extra dough on models that also sport sleek design. But if you know you’ll be the only one seeing it or have a spot you can stow it out of sight when guests come over, consider saving some money.
• What’s my budget? 
  If this is a temporary solution or you’re not sure how long you might need a space heater, consider budget options that still rate highly. But if you know this is a tool you’ll be using to keep your home warm for years to come, you should take that into consideration and invest in a high-quality one.

4 ConsumerSearch top picks:

1. Lasko 754200 Ceramic Heater with Adjustable Thermostat, (Around $25). 
   It heats well for the price, and its small size would work great in small spaces. It doesn’t have a tip-over sensor and some users complain that it’s a bit too loud
2. DeLonghi TRD0715T Oil-Filled Radiator, (Around $85).
   Consistent heat output and quiet operation. Performs reasonably well in comparative tests, scoring excellent ratings for temperature control and noise. Users agree, saying the DeLonghi radiator runs quietly and has a convenient programmable timer. Like most radiators, it does take awhile to heat a room.
3. Vornado TVH500 Whole Room Vortex Heater, (Around $155). 
   Good for warming a person that’s seated next to it, this heater has been reported to do well at warming rooms, too. It has good safety features and isn’t very loud, but some users have complained that the heat distribution is uneven.
4. Honeywell MyEnergySmart Infared Whole Room Heater (Around $180).
   With lots of safety features, this heater is efficient at heating small spots well, but doesn’t exactly scream high design. But, it what it lacks in looks it makes up for in convience, offering lots of function and even a remote control.

Sourced from: ​https://www.apartmenttherapy.com/the-best-space-heaters-consume-163936

There are a handful of tasks during the winter months that need to be addressed in order to keep your home or business in good condition. From shoveling snow that’s obstructing pathways to ensuring your pipes don’t burst, the process of protecting your home or business during the winter is one that should not be overlooked. But there is one task that some people may not be aware of: protecting your roof from ice dams.

Ice dams occur when warm air from your living area escapes into your attic. This warm air then heats up your roof, causing any snow that has accumulated on there to begin melting. This melting snow runs down to your roof’s edge, freezing in your gutters to create an ice dam. The remaining melting snow is then trapped and begins to back up underneath the shingles of your roof.

Ice dams are very harmful and can cause severe damage to your roof if they are not prevented. Here are a few tips to prevent ice dams from forming this winter:

1. Keep your gutters clean. 
Keeping your gutters clear of debris, like twigs and leaves, is a very simple way to prevent ice dams from forming on your roof in the winter. Make sure there is a place for melting snow to drain from your roof to eliminate the possibility of ice dams from forming.

2. Invest in a snow rake. 
Investing in a snow rake is an excellent idea to protect your roof and help eliminate the formation of ice dams. Snow rakes are flat-headed with a long handle (some have extensions), and they allow you to remove snow from your roof while being able to stay on the ground. These rakes can range anywhere from $35 to $110, depending on the length and quality of the rake. This is an efficient and safe way to clear accumulating snow that could potentially melt and form an ice dam.

3. Ventilate your attic. 
Making sure your attic is well ventilated is crucial when it comes to maintaining your roof during the winter. According to Energy Star, allowing a natural flow of outdoor air to ventilate into your attic will help keep it cold and prevent ice dams from forming.

4. Consult a professional. 
Consulting a professional snow removal contractor to assist in the snow removal process is a fantastic way to protect your roof from ice dams. These professionals will inspect your roof to ensure that it is able to handle the winter months, as well as remove any snow or ice dams that have accumulated. Professional snow removal contractors use rakes, shovels, de-icing and anti-icing techniques to remove existing snow and to prevent the formation of ice on your roof. Carefully research the snow removal contractors in your area so you know the professional you are hiring is credible and will take the necessary steps to clear your roof in a safe and effective manner. Although this is the most expensive method for maintaining your roof during the winter, it is also one of the best ways to prevent ice dams and snow from causing issues on your roof.

References:
- IBHS
- Energy Star
-https://www.grangeinsurance.com/tips/4-ways-to-prevent-ice-dams?utm_source=grangeagent.com&utm_medium=news&utm_campaign=tips&utm_content=121218
​

by Erie Insurance on November 19, 2018

The fall season is beautiful, but it also introduces a few different driving hazards… deer collisions being one of them. From October to December, mating and hunting season make deer go on the move. For drivers, that means you’re more likely to hit one.
According to the National Insurance Crime Bureau, deer-vehicle collisions are the top animal-related claim in the U.S. Before you get too worried, here are some helpful tips on how to avoid hitting a deer… and how to handle things if you end up hitting one despite your best efforts.
HOW TO AVOID HITTING A DEER

1. Know where the deer are likely to be. Areas with high deer populations are normally marked with a bright yellow sign. Deer also tend to graze in wooded areas or open fields. When driving your usual route to work, be attentive to areas where you’ve seen deer in the past – they are likely to cross there again.
   
   
2. Be alert at sunrise and sunset. Deer are more active during dawn and dusk hours.
   
   
3. Use your high beams. When possible, use your high beams for better visibility. The extra light will help make it easier to spot a deer, or other animals, lurking alongside the road.
   
   
4. Don’t rely on deer gadgets. Whether it’s a deer whistle, deer fence or other type of product to scare away the deer… don’t rely solely on them to keep deer away. Research isn’t exact on whether or not these products truly work.
   
   
5. When you see one… you’ll probably see more. Deer travel in groups. If one comes across your path, proceed with caution in case there are more.
   
   
6. Don’t swerve. Swerving isn’t always the safest option. Hitting a deer might often cause less damage than swerving to avoid it… and then hitting a more dangerous obstacle, like a vehicle in oncoming traffic.
   
   
7. Wear your seat belt. If you do hit a deer, wearing a seat belt decreases your chances of injury.
   
   
8. Spread the word. When friends or family head out on the road, let them know to be careful and alert. Even a simple reminder can help prevent deer collisions.
   
   

WHAT TO DO IF YOU HIT A DEERTaking the above precautions can help you avoid hitting a deer… but nothing can entirely rule out the possibility. Here are steps you can take after you hit a deer.

1. Pull over. Move your vehicle to a safe place off the road. Don’t forget to turn on your hazard lights.
   
   
2. Stay away from the deer. An injured deer can still lash out and hurt someone.
   
   
3. Assess the damage. When you’re out of harm’s way, examine your vehicle and take photographs of any damage to your car. Use good judgement to know if your car is safe to drive or if you’ll need to call for a tow truck.
   
   
4. Call for help. Depending on the circumstances, consider calling the police or an animal expert. While it’s not always required to file a police report, it can provide evidence if you decide to make an insurance claim. If the deer is still in the middle of the road, a trained professional from animal control, the game commission or your local fish and wildlife service can move it away for everyone’s safety.
   
   
5. Know if you should file an insurance claim. An insurance professional like an Erie Insurance agent can help you make the decision based on the specifics of your auto insurance policy. Talking with someone you already know and who is familiar with the claims process can help put your mind more at ease.
   
   

DOES MY AUTO INSURANCE COVER HITTING A DEER?You can’t always predict if a deer will walk into your path, but if one does, we’re here to help get you back on the road as soon as possible. At Erie Insurance, deer-vehicle collisions are covered under the comprehensive portion of your auto insurance, which is an optional coverage you can choose to add on. 
An insurance professional like a local Erie Insurance agent can help you customize an auto insurance package that fits your needs and budget. 

Call us, your local Erie Insurance agent at 740-927-1469.
Retrieved from: https://www.erieinsurance.com/blog/hitting-a-deer
​

Does your business need cyber coverage?

The simple answer is yes. If you have a computer—or even just do business with someone who has a computer—you, your business and your information are at risk.
And the consequences can be severe. Sixty percent of small businesses close within six months of a data breach.
For small and medium-sized businesses, cyber coverage might seem unnecessary. But data breaches aren’t just for big retailers. While those large-scale attacks generate headlines, most cyberattacks target businesses with less than 250 employees.

And if you think your business liability insurance has got you covered, think again. Standard business liability insurance typically doesn’t cover cyber liability, and with new threats emerging rapidly in the digital world, cyber liability will likely remain separate from business liability.

Now that you know the facts, here’s how cyber coverage can help your business:

Data breach

A data breach is a security failure where sensitive, protected or confidential data is copied, transmitted, viewed, stolen or used by someone who is not authorized to do so.
It can be as high-tech as a hacker cracking a complex encrypted system or as simple as an employee losing a smartphone. And it happens more often than you can imagine. More than 1 billion personal information records were stolen in 2014 alone.

Losing your customers’ data can quickly become expensive. In 2015, the average cost paid for each lost or stolen record containing confidential information was $154.4 And there can be severe penalties for losing credit card data, along with the costs of forensic investigations, credit card reissuance and fraud. But maybe the biggest cost is the loss of your customers’ trust if you aren’t covered by insurance or prepared to remedy the situation.

Third-party data

Whether it’s your company handling someone else’s data or a vendor that handles your sensitive information, you must make sure you’re protected.

Even if you’ve entrusted someone else or another company to keep your data safe, cyber coverage can cover you if that information is ever lost or stolen.

Ransomware and extortion

Hackers who target small businesses will sometimes install malware on your system or devices, then demand payment to remove it. With cyber coverage, your business can be protected against this kind of threat.

Cyber coverage is rapidly evolving and determining your risk and needs is essential. The best way to find what fits your business is to speak with an independent agent. Your agent will review your business exposure, different coverage options and make the best policy recommendation for you.

1 - U.S. House Small Business Subcommittee on Health and Technology
2 - Aabacosmallbusiness.com
3 - Quickbooks.intuit.com
4 - Securityintelligence.com

Source: https://www.grangeinsurance.com/tips/cyber-coverage-for-business​

By Lisa Linnell-Olsen
Updated March 21, 2018

​Many schools publish a list of school supplies every late summer. Often local retail stores will have copies of the lists available for shoppers before the school year starts. But these lists usually aren't the final word on what your child will need for the entire school year. 
If you are trying to be a savvy shopper, getting the best prices on school supplies while ensuring your child has what they need, and maybe even a few fun or special items, you need a complete strategy rather than just buying from the school supply list that comes out during the last months of the old school year.
Before we dive into the full strategy, it's important to understand explain how most school supply lists are created.

Typically, the school administrators, such as the school principal or assistant principal, will survey the grade level departments in elementary or subject departments in secondary schools to come up with supplies that most students will need for the following school year.  

Then, the items that are needed for any student are added to the list.  So the list will then include items like two composition notebooks, three different colored highlighters, a pack of 10 sharpened pencils, a backpack, and one zippered notebook.  This list is hopefully designed so that most students will have the basic items required for school.  What is not included are a specific teacher's class materials list.  

How the List Problem Happens
So, how does the school list become so different than what you actually need?  Remember, the list is created by surveys before the previous school year ends. It is also made to work for any teacher that your child may be assigned. 

Typically, over the summer months, teachers and administrators review new curriculum changes, update lesson plans, and even explore new teaching strategies to try in the new school year. These changes may require students to have a different set of supplies that what was anticipated before summer planning began.
Some schools may offer an updated list in the weeks before the new school year. The thing is, savvy parents have already started collecting supplies by then. 

As if this second list doesn't make you feel defeated in your quest, often teachers will tell students in the first few days school what additional items will be needed for their specific classes. 

The end results of these situations are that the school supply list is often the best guess made by well-meaning schools to help parents shop before school begins. Creating one-size fits all list for each school often does not work because teachers may need to change away from the list or what other teachers do in order to meet the needs of their own classrooms.  
While you may not be able to anticipate every single school supply need before the school year begins, here are some things you can do:

​

Take Advantage of Known Teacher Assignments  
If you are lucky enough to know which teachers your child will be assigned to before the school year begins, try to find out what your child's teacher will want for their class.  If you have a copy of the school supply list, show it to the teacher and see what the teacher will require or not use in their class.  If your child has more than one teacher try to ask each teacher what they expect their students to have.

Keep Stock of School Basics
There are certain school items that you can count on being needed by any school age child.

Here is a general list of items

• #2 pencils
• Basic blue or black ink pens
• Crayons or colored pencils
• A backpack or book bag
• Pair of non-marking shoes that can be worn for a PE class
• Markers
• Glue
• Paper
• Notebooks

The above list is a very general guide, not specific or surefire. Parents should think about the grade level of their child when purchasing supplies. For example, middle and high school student will need college rule lined paper while elementary students would need wide-rule. 

Also stay aware of local requirements for the bookbag. Some schools require all bookbags to be clear plastic, while others limit the size of the backpack.

Talk to Parents of Children One Grade Ahead
Ask parents of children one grade ahead of your child what school supply surprises they encountered when their child was in your grade.  This can be especially useful to find out about supplies that were used up and needed to be replaced often.  

This can happen if a teacher is a heavy user of a particular supply in their classroom.  
If highlighters or composition books are used daily, you may want to pick up extras when the price is super low so you have extras on hand when your child uses up their initial supply - and the price has dramatically increased.

Buy Extra Doorbuster Consumables
If one of your local stores is offering a fantastic special for a school supply that will get used up, go ahead and purchase extra items just in case.  Items like looseleaf paper packs, pens, glue sticks, and composition notebooks are all items that may get used up at school.  If you purchase too many for school you can use them at home or trade them with other parents for needed items.

Attend or Organize a Post Back-to-School Supply Swap  
Freecycle and other groups across the country have been hosting back-to-school supply swaps.  Parents bring new or good condition school supplies to these events and trade with other parents for items they need.  Attending a  second swap held after school begins would allow families to trade their extra items for the missing items they don't have.  
No event in your community?  Talk with your PTA or recycle/reuse groups about organizing such an event.  

Let the School Know of List vs. Actual Need Differences 
Letting your child's school know about the differences between the real school supplies needed versus the ones listed on the school supplies list can help the school troubleshoot the supply list. Some schools may be able to create lists for each teacher with enough time for back to school shopping. This can be difficult for many schools as they may not know what students will be in ​what class until a few days before the school year begins.  Still, politely and briefly mentioning to school staff what differences you ran into will let the school know where parents could use some school supply list improvement. Then the school can make the changes that will be helpful to parents and the school.  

Image Source: https://www.istockphoto.com/ca/photos/back-to-school?mediatype=photography&phrase=back%20to%20school
​
Article Source: https://www.verywellfamily.com/what-school-supplies-do-you-really-need-2601451

Retrieved from: https://www.erieinsurance.com/blog/regular-and-premium-gas​
by Amanda Prischak on May 23, 2017​

Most people are clear on which type of gas their car needs. But not as many are clear on the differences between regular and premium gas.
What’s the difference?
One obvious difference is the price—premium fuel typically costs about 20 cents more per gallon than regular gas. Premium fuel also comes with a higher octane level—92 or 93 compared to 87 for regular gas. (You may also see a midgrade gas with an octane of 89, which is less commonly used than 87 and 93.)
Octane is how much compression a fuel can withstand before igniting. A higher octane gas won’t pre-ignite or explode as quickly, which explains why high-performance cars with higher compression engines often require higher octane gas. Engines that take higher octane fuel tend to work more efficiently and emit less emissions and exhaust.
Why the right fuel matters
Cars are designed to run best with a specific type of fuel, and your owner’s manual will let you know what that is.
Still, you may be tempted to fill your car up with a different type of fuel. This is often the case when you have to fill up with more expensive 93 octane gas.
If you use a lower than recommended level, the gas may combust too fast for your engine. That can cause the engine to make a knocking noise. In addition to this unwanted noise, a lower than recommended gas can also reduce your car’s power and fuel economy and cause engine damage.
When it comes to the opposite—using a higher octane fuel than recommended—the risk of danger is lower. The general consensus is that using premium gas when your car can run on regular gas doesn’t deliver any extra benefits when it comes to engine life, fuel economy or reduced emissions. So save your money and fill up with regular gas.

By Investopedia Staff

What is 'Business Owner Policy (BOP)'A business owner policy (BOP) combines protection for all major property and liability risks in one package. This type of policy assembles the basic coverages required by a business owner in one bundle. It is usually sold at a premium that is less than the total cost of the individual coverages. BOPs are usually targeted at small and medium-sized businesses. They typically contain business interruption insurance, which provides reimbursement for up to a year of lost revenue resulting from an insured loss.

BREAKING DOWN 'Business Owner Policy (BOP)'Specific coverages included in a BOP varies among insurance providers, but most policies require businesses to meet certain eligibility criteria to qualify. A typical BOP policy includes... 

• Property insurance: The property insurance portion of a BOP is usually available as named-peril coverage, which provides coverage only for damage caused by events specifically listed in the policy (typically fire, explosion, wind damage, vandalism, smoke damage, etc.). Some BOPs offer open-peril or “all-risk” coverage; this option is available from the “special” BOP form rather than the “standard” type of BOP. Properties covered by a BOP usually include buildings (owned or rented, additions or additions in progress and outdoor fixtures). BOP will also cover any business-owned items or items owned by a third party but kept temporarily in the care, custody or control of the business or business owner. Business property must usually be stored or kept in qualifying proximity of business premises (such as within 100 feet of the premises).

 

• Business interruption insurance: The insurer covers the loss of income resulting from a fire or other catastrophe that disrupts the operation of the business. It can also include the extra expense of operating out of a temporary location.

 

• Liability protection: The insurance company covers the insured's legal responsibility for damages it may inflict on others. This damage would have to be a result of things done in the normal course of business operations, which may cause bodily injury or property damage due to defective products, faulty installations and errors in provided services.

Optional Business Owner Policy CoveragesA business owner policy might also include crime insurance, vehicle coverage, and flood insurance. Depending on a business' individual situation, the business owner and the insurance company may make arrangements for additional coverage components. Some of these might include certain crimes, spoilage of merchandise, computer equipment, mechanical breakdown, forgery and  fidelity bond, but the coverage limits for these inclusions are typically low.
​
A BOP typically does not cover professional liability, worker’s compensation, health or disability insurance. These items would require separate policies.

Source: ​https://www.investopedia.com/terms/business-owners-policy.asp

Mark J. Kohler
 
- VIP Contributor
Author, Attorney and CPA

The following excerpt is from Mark J. Kohler and Randall A. Luebke’s book The Business Owner’s Guide to Financial Freedom. 
​
Every day, life insurance companies pay death benefits to the beneficiaries of their policies, providing them with needed and certainly welcome funds. In essence, life insurance provides leverage: You pay a relatively small amount of money to the insurance company in the form of a "premium," and the insurance company will provide a guaranteed payout of a relatively large amount of money upon the death of the insured.

While there are thousands of different life insurance plans available, they all fall into two categories: term and permanent insurance. Term, as the name implies, provides a benefit for a fixed period of time; 10 years, 20 years and so on. Permanent insurance is in place for life.
​

Term Insurance

This is the most efficient way to purchase life insurance. The premiums paid are calculated to accurately represent the risk of your dying based on your age, your health and so on.

The primary issue with term insurance is that it rarely delivers on its promise. That is, the large majority of term insurance policies, north of 90 percent, will never pay a death benefit. Why is that? Most people will either outlive the term of the policies or just stop paying the premiums. These facts contribute to the profitability of these products to the insurance companies, which enables them to keep the premium costs lower.


Permanent Insurance

This type of insurance can be expensive, but it doesn't have to be. Traditionally, when people think of permanent insurance, they think of "whole life." The benefit of whole life insurance is that everything's fixed and guaranteed -- the premiums are fixed, the death benefits, the cash values. The problem is that those guarantees are expensive because the insured is shifting all the risks. The investment risk, the risk of dying, inflation risks, every risk sits on the shoulders of the insurance company. While the insurance companies are used to this and they know how to live in that realm, they also know how to charge for it and they do.


Universal Life Insurance

There's a third type of insurance, a hybrid model. Universal Life, or UL, is a term insurance plan that lives inside the shell of a permanent insurance policy. Designed correctly, a UL will provide the most efficient cost of benefits, which can also be guaranteed for your entire life. Designed improperly, the UL can become an even bigger waste of money than a term policy.


Living Benefits

​When most people think of life insurance, they think of dying and leaving a financial legacy for their loved ones. Modern insurance policies, however, contain many benefits you can enjoy while you're still alive. These "living benefits" range from tax-free accumulation of investment earnings to zero-interest loans. They can provide cash should you become seriously ill or if you need cash for a down payment on your home.

With living benefits so prevalent, more and more ways to utilize them have become popular. Among these is a strategy called "Bank on Yourself." The essence of this strategy is to take advantage of the tax-deferred growth on the earnings within life insurance policies by using tax-free loans to access the cash when needed. So you borrow the money from yourself instead of the bank, then pay yourself the interest and repay the loan you took from your policy.

Having your money grow tax-deferred and being able to access that tax-free is very powerful when you have a positive arbitrage -- that is, when you can borrow money at a lower rate and invest it at a higher rate.

Let's say you borrow $100,000 at an interest rate of two percent. Over the year, the $100,000 loan would cost you $2,000 in interest expense. Now, let's say you invested that $100,000 in a home and you flipped that home, netting you $104,000 and, after all expenses, making you a $4,000 profit. You might be tempted to say you made a four percent return on that investment, right? That would be wrong because you didn't invest $100,000. You borrowed it from someone else. You invested only $2,000 (what you paid out of your money in this deal). So in reality, you earned $4,000 on a $2,000 investment, or a 100 percent profit.

But, what if the rate you earn on your investment is lower than the cost of borrowing? This is called "negative arbitrage." Using the same example, if you were to borrow $100,000 and net the same four percent, or $4,000 profit, but this time the cost to borrow the money was five percent or $5,000, now you have lost money on the deal.

Most modern life insurance contracts offer very favorable terms on their loans starting at two percent. Some insurance policies will allow you to borrow the money at 0 percent interest after you hold the contract for 10 or 20 years. Now you're like the bank, borrowing money for free.

The two percent or zero percent loans are written into the contract and guaranteed for life. They're referred to as a "spread loan" and a "wash loan," respectively. With these loans, you borrow your money out of the policy and can't earn any interest on it.

But, what if you could continue to earn interest on your money inside the insurance policy even after you borrowed it? That's how a participating loan works. The money you borrow is loaned to you at one rate, say five percent. However, the insurance company will continue to invest your money as though it was never taken.
In our opinion, life insurance policies designed properly with the right guarantees and terms can become a very valuable and beneficial financial planning tool.

Source

• https://www.entrepreneur.com/article/306690