First things first, when you hear cyber-anything your immediate thoughts may jump to computers. That’s reasonable, since the words “cyber” and “online” and “computers” tend to be used interchangeably. However, the exposure you have and the losses you may suffer extend far beyond your computer screen. It isn’t about simply not clicking on links from people you don’t know (you do know not to do that, right?) and the rest will be OK.

Here is a list of potential cyberexposure issues you could encounter that cyber insurance could help you deal with:

Cyberextortion. One day you try to turn on your computer only to find a message stating that you must pay a fee, either in cash or some form of cryptocurrency in order to get into your own computer. Yes, it happens, what expenses would you incur to get your computer back? Think about all that is on your machine — work documents, banking and tax information and personal photos. What wouldn’t you pay? A cyber insurance policy may cough up the bucks on your behalf to get your stuff back.

Network liability. While you’re lounging in your chaise lounge, a sudden pounding on the door startles you. It’s the FBI with a search warrant for your house. Seriously? Yes, seriously. Turns out a hacker gained access to a computer on your home network — maybe your laptop or a desktop computer, maybe even a phone that connects to your Wi-Fi — and was sending out messages threatening people and trying to extort money from them. Naturally, you haven’t a clue about any of this, but this is going to take time to explain and money to deal with.

Identity theft. Remember the name of that odd rectangular object that is mounted near the end of your driveway? I’ll help you — it’s your mailbox. Visiting your mailbox, you open it up to find a statement for a credit card that you don’t recognize. What’s more, it’s a pretty darn active credit card with charges for items that, again, you don’t recognize. Your personal identity has been stolen, and some lowly character parading around as you is opening up credit cards and going on shopping sprees. And that’s just the tip of the iceberg. Later, you find out they have applied for multiple credit cards and even a home equity line of credit. This can be one of the most costly events you can imagine. You will likely need an attorney who specializes in identity theft, because you will now need to actually prove to every bank or creditor that you did not make these charges or open these accounts.

Phishing attacks. Having nothing to do with putting a worm on a line and casting it out to poke some holes in fish, a phishing attack is when someone attempts to convince you they are a legitimate person or business in need of your personal information. What they do with this information can range from opening accounts to promoting illicit drugs, or worse. You may not be aware this has occurred or has been ongoing for months or longer. Just try to explain that away at the next PTA meeting.

Reputation management. Like it or not, you have an online reputation, even if you’re not a heavy user of social media. Type in your name at Google.com, and you may or may not be surprised. However, you will find results that purport to be about you. If a bad actor is out there spreading lies, attacking others or just generally being a jerk, it’s a pretty complex process to get those false narratives offline. If you are at all in the public spotlight, or work for a company that is, your reputation is everything.

It's expensive to put things right

As you can see, you have cyberexposure, whether you like it or not, whether you realize it or not. Sometimes through zero fault of yours, you may end up in a position where you have to endure the time and expense to put things right. You can do it yourself, perhaps, and foot the bill, but do you really want to?

Cyber insurance policies tend to be inexpensive, and there are many insurers offering them. Remember to read your policy carefully, since there is no standard package that exists; comparing the coverage from company to company is challenging. Talk to a broker, talk to the insurance company, find out what they offer and compare it with what you want or, more accurately, what you need.

Cyberexposure is here to stay. Your options are simply to weather the storm on your own or buy a heavy-duty raincoat and umbrella.

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Beryl is exceptional in two ways.

First, Beryl is the earliest Category 5 hurricane observed in the Atlantic basin on record and only the second Category 5 hurricane to occur in July. On average, the first major hurricane (Category 3 strength or higher) does not form until September 1, meaning Beryl developed exceptionally early, according to the National Hurricane Center.

Second, Beryl has rapidly intensified. Starting as a weak tropical depression on June 28, 2024, Beryl became a destructive Category 4 hurricane within just 48 hours. And while rapid intensification is common for major hurricanes, the timing is not. "Beryl is the earliest storm to ever undergo that kind of rapid intensification," according to NPR. "Usually, rapidly intensifying major hurricanes don’t form until later in the summer and the early fall, when water temperatures in the tropical Atlantic peak and hurricane activity is at its highest."

Beryl's early development and rapid intensification are due to near-record warm ocean temperatures caused by human-caused climate change, the development of La Nina conditions in the Pacific, reduced Atlantic trade winds and less wind shear, according to NOAA. Earlier this year, NOAA predicted an above-normal Atlantic hurricane season, forecasting a range of 17 to 25 total storms, with 8 to 13 forecast to become hurricanes.

Do you have the right insurance?

As hurricane season continues, home insurance becomes increasingly important. As a first step, make sure you have adequate coverage before a storm hits. In addition to comparing different insurance providers and policies available, you may want to look into additional coverage options. 

For a good starting point, use our widget below — powered by Bankrate — to compare home insurance rates today.

For full coverage against hurricane damage, you’ll need a flood insurance policy. No, flooding is not covered by standard home insurance, although lenders may require it if your home is located in a high-risk area. According to Policy Genius, flood insurance has an average cost of about $888 per year, but how much you’ll pay will ultimately depend on location and whether you opt for federal or private coverage. 

Wind can also do a lot of damage to your home. And while wind and wind-driven rain are covered by a standard homeowners policy, many charge separate wind deductibles, which are based on a percentage of your coverage and not a fixed dollar amount. For example, if your home is insured for $500,000 with a 5% wind deductible, and you have $30,000 worth of roof and siding damage from high winds, you’ll be responsible for $25,000, with your insurance covering only $5,000. 

Your risk for flood and wind damage can be found by going to Realtor.com or Redfin. Type in your address, and on your property's summary page, scroll down to the "environmental risk" or "climate risk." You'll see an assessment of your home's flood, wind, fire and heat risk on a scale from one to ten, where ten is the highest risk. These assessments are based on data by First Street. 

Another thing to consider? Your Tree, Your Neighbor’s Property: Whose Insurance Pays?

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Start by reviewing how much you have left to meet your deductible. The average amount that employees have to pay before most health insurance coverage kicks in has increased by 10% over the past five years and 53% over the past 10 years, according to KFF (formerly the Kaiser Family Foundation). 

The average deductible for workers with single coverage was $1,735 in 2023, and 31% had a general annual deductible of $2,000 or more. If you’ve reached your deductible or are close to it, schedule appointments and elective procedures by the end of the year, before a new deductible kicks in for 2025.

Even if your insurance company offers some level of coverage if you go out of the plan’s network, you’ll have lower co-payments on a lower negotiated rate if you choose in-network providers. You can save even more by comparing how much in-network providers charge for specific procedures. 

Employers and insurers are offering better tools to help you decide where to get care when you need it, says Regina Ihrke, managing director of health and benefits at WTW, a benefits consulting firm. Some employer health plans also offer one-on-one concierge services to help employees navigate their care options; by phone, a representative will walk you through your choices from providers covered by your insurance.

“Transparency tools have been around since about 2010, and now every carrier has them to at least show you what the range of the costs would be for certain procedures,” Ihrke says. The new generation of tools include quality measures in addition to cost data, she says. “The cheapest options may actually cost you more in the end because you may get misdiagnosed or have more readmissions.”

For example, Healthcare Bluebook, which is offered through some plans, lets you search by procedure to see the fair price in your area and look up cost and quality information for nearby doctors who perform the procedure. You’ll also see whether the provider falls in the top third, middle third or bottom third of quality ratings.

Other ways to make the most of employer and insurance benefits:

Take advantage of preventive care services. Even if you have a high-deductible health insurance plan, you likely qualify for many preventive care services, such as mammograms and colorectal cancer screenings, without having to pay the deductible or co-payments. 

Depending on your age, you may also be eligible to get vaccines for the flu, shingles and other diseases without having to pay the deductible or co-payments. Also, some services and medications for chronic conditions may not be subject to the deductible. Take advantage of these tests, screenings and programs without any cost to you.

Cash in on wellness benefits. Many employers offer additional benefits to keep their employees healthy. You may, for example, get a discounted gym membership, a reduced insurance premium or extra contributions to your health savings account if you take a health risk assessment and complete certain activities, Ihrke says. 

About 10% of employers offer lifestyle savings accounts, in which employees are given up to $1,000 to use for a variety of physical, mental or financial wellness expenses, such as a gym membership, a mindfulness resiliency app, nutrition counseling, financial wellness courses or student loan assistance. If you have access to these programs, make sure to use them by the end of the year.

Clear out your flexible spending account. An FSA allows you to set aside tax-free money from your paycheck to cover deductibles, co-payments and other out-of-pocket costs. And to use an FSA, you don’t need to enroll in a high-deductible health plan, as you do with a health savings account. 

But unlike HSAs, FSAs generally require you to use the money by December 31 of the plan year (or March 15 of the following year, if the plan offers a grace period); otherwise, you forfeit the unused balance. A study by the Employee Benefit Research Institute found that half of FSA contributors forfeited funds to their employers in 2022, with an average forfeiture of $441.

The Coronavirus Aid, Relief and Economic Security (CARES) Act of 2020 made it possible for FSA (and HSA) users to buy over-the-counter medications such as aspirin or acetaminophen without a prescription, says Rachel Rouleau, chief compliance officer at Health-E Commerce, parent brand to FSA Store and HSA Store, which sell products that qualify for FSA and HSA reimbursement. You can also use FSA money for ibuprofen, cough syrups, and allergy pills and sprays.

Other items that you can buy with FSA money include glasses, contact lenses, prescription sunglasses, broad-spectrum sunscreens, certain lip balms and sun protection moisturizers with an SPF of 15 or higher, first aid kits, acne medications, menstrual care products, hearing aids, acupuncture devices, health monitors, and deep-tissue pain relief devices. 

“The list of eligible FSA expenses has expanded in recent years to include a wide variety of clinical services, an extensive list of everyday essentials and several surprisingly eligible products,” Rouleau says. See a list of eligible expenses at https://fsastore.com/fsa-eligibility-list.

Pay less for prescription drugs

The Inflation Reduction Act also eliminated deductibles and co-payments for all recommended adult vaccines. And starting in 2025, Medicare Part D will have a $2,000 spending cap on out-of-pocket drug costs.

Websites such as GoodRx.com, SingleCare.com and Amazon Pharmacy can help you save money on prescription drugs, and more employers are incorporating cost-saving tools — such as Rx Savings Solutions and Scripta — into their pharmacy benefits. “It further directs members to additional cost savings,” says Chantell Sell, senior director in the pharmacy practice at WTW. Using these resources can help you find the lowest-cost pharmacy to buy the drug, coupons to reduce the cost or similar drugs that may cost less under your insurance.

“This can help people save quite a bit of money because prescription drug prices can vary by up to $100 between pharmacies — even between pharmacies in the same neighborhood,” says Charlene Rhinehart, a certified public accountant and personal finance editor at GoodRx. Using a coupon can help if you’re paying cash, and sometimes it can reduce the cost to less than you’d pay by going through your insurance plan instead, says Rhinehart. Other ways to lower your prescription drug costs:

Explore generic and alternative drugs. If you’re prescribed a drug that isn’t covered by your health insurance or that has high co-payments, ask your doctor whether there’s another drug that can serve a similar purpose but costs less under your plan. You may save a lot of money by switching to a generic drug. And even if no generic medication is available, there may be a “therapeutic alternative” — another name-brand drug that has similar effects — with better coverage from your insurance and lower co-payments for you.

“If your medication isn’t on the formulary, then in some cases there are generic versions or drugs within the same class that work the same, and they might be covered by insurance,” says Rhinehart. For example, several types of statins are prescribed to lower cholesterol and treat heart disease. 

“There are many different options within the drug class, so you may have a better shot at finding an affordable alternative,” she says. When you look up a drug on GoodRx, you’ll see a list of alternatives you can ask your doctor about.

Use a preferred pharmacy. Many drug plans have preferred pharmacies with lower co-payments than other in-network pharmacies. If you have a Medicare Part D prescription drug plan, you can use the Medicare Plan Finder to compare costs for your medications at several pharmacies in your area. If you and your spouse have different health plans, make sure you know the preferred pharmacies for each one because you may need to go to different pharmacies to get the best deals. Using your prescription plan’s mail order pharmacy may save you even more money.

Buy in bulk. If you take maintenance medications every month, it can cost less to buy them in larger quantities. For example, ordering a 90-day supply of your medications instead of a 30-day supply could save you money, Rhinehart says. Ask your pharmacist for other ideas to trim costs.

Find out about pharmaceutical assistance programs. Several types of programs can help you spend less on prescription drugs. People with low incomes who have Medicare Part D drug coverage may be able to save money on premiums and co-payments through the government’s Extra Help program, which was recently expanded to include those with higher income levels. You may also be able to save through a state pharmaceutical assistance program or state discount program. Many pharmaceutical companies have programs to help with the cost of drugs that aren’t covered by insurance or co-pay assistance programs. Check with the drug manufacturer or go to this Medicare page.

Manufacturers also sometimes offer co-pay cards for certain name-brand drugs that don’t have generic alternatives, Rhinehart says. These cards cover part or all of the costs that aren’t covered by your health insurance. They don’t have income requirements, but most are available only to people who have private health insurance. You can find these co-pay cards either on the manufacturer’s website or through GoodRx.

Check out new benefits for Medicare Part D. The Inflation Reduction Act of 2022 included several changes to make prescription drugs more affordable under Medicare Part D. It capped the cost of a monthly supply of insulin at $35, but not all Part D plans cover all types of insulin. Use the Medicare Plan Finder to find out what the plans available in your area cover.

Use a health savings account

You can stretch your health care dollars by taking advantage of a health savings account, and it’s not too late to sign up for an HSA and make contributions for 2024. You can contribute to an HSA in 2024 if you have an eligible health insurance policy with a deductible of at least $1,600 for single coverage or $3,200 for family coverage — whether you get your health insurance through an employer or on your own. Maximum contributions for 2024 are $4,150 for self-only coverage and $8,300 for family coverage, plus $1,000 if you are 55 or older. 

Many employers offer incentives to participate in an HSA, such as by matching contributions or contributing a fixed amount for all employees who have a high-deductible health insurance plan. Some employers provide HSA contributions for employees who participate in a wellness program or take a health risk assessment, Ihrke says.

Contributions to an HSA are pretax if you have a plan through your employer (or tax-deductible if you don’t have an employer plan), the money grows tax-deferred through the years, and you can withdraw it tax-free for eligible medical expenses at any time in the future; there are no use-it-or-lose-it rules. You can withdraw money from the HSA tax-free for out-of-pocket medical expenses, such as your deductible and co-payments, as well as your costs for vision, dental and hearing care, prescription drugs, and over-the-counter medications. 

Once you reach age 65, you can even use HSA money to pay premiums for Medicare Part B (and Part A, if you have to pay premiums for it), Part D prescription drug coverage, or a Medicare Advantage plan. You can also pay a portion of long-term-care insurance premiums with HSA money (the amount you can cover with HSA funds is based on your age).

You’ll get an even bigger tax benefit if you keep the money growing tax-deferred in the HSA for future health care costs. You have an unlimited amount of time to with-draw money for eligible expenses you incurred since you opened the account — you can even claim re-imbursement for expenses years after you paid them out of pocket. Just keep your receipts for the health care costs you paid with cash, and then you can withdraw the money tax-free at any time.

If you plan to keep the HSA money growing in the account for future expenses, make sure your investments match your time frame. Many people keep HSA money in the plan’s savings account and don’t realize that they may have a menu of mutual funds to choose from. 

If you plan to use money in the account for medical expenses soon, check out the HSA’s interest rates on savings, which can also vary significantly by administrator. “It’s shocking to me how low the interest rates being offered by some major providers are,” says Greg Carlson, senior manager and research analyst at Morningstar and coauthor of the firm’s annual HSA landscape study.

In addition to comparing investment options and interest rates, pay attention to fees, which can vary significantly among HSAs. A study by the Consumer Financial Protection Bureau found that some HSAs charged monthly maintenance fees, paper statement fees, outbound transfer fees and account closure fees. “This complex fee structure may obscure the true cost of the product, and the financial impact of these fees directly reduces the funds consumers can spend on health care expenses,” the report said. 

If your employer offers an HSA, look for ways to minimize the fees, such as by receiving online account statements and keeping a minimum balance to avoid or reduce fees. For example, Carlson says, some plans don’t charge a maintenance fee if you have a certain account balance.

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

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Checking email first, I had three regarding accidents. I immediately responded to those and then went on to check my voicemail. Another two messages there, one of which was from someone who had also emailed. So before the day began, four car accidents meant four people I needed to try to connect with first. I began dialing.

The names will be changed to protect the not-at-fault folks. Christopher was quick to say that he had a “little thing” happen and wanted to see about reporting the claim. This “little thing” entailed him backing over his own mailbox while exiting his driveway. Not his fault, he proclaimed, since the car was parked in the driveway, not in his garage, and the rear window and side-view mirrors were covered by rain, obstructing his view of the vengeful mailbox that must have moved from its usual location during the night.

But… but… my shoes were wet

Jodi was next. In a somewhat breathy voice, she told a fifteen-minute tale about how she was driving on the freeway and rear-ended someone. It wasn’t a big deal, not a lot of damage, nobody was really hurt, and she wanted to be sure I knew it was not her fault, although she professed her greatest apologies for the accident. In case I didn’t notice, she honestly touted, it’s raining cats and dogs this morning. I’ve never been a huge fan of this expression since I am a dog lover, and the image is troublesome.

Be that as it may, when she’d entered her vehicle that morning, her shoes were, of course, wet from the walk to her car — and actually wetter than even that since she was forced to step in a pool-size puddle when entering her vehicle. Her wet shoe simply slipped off the brake pedal before her car smacked into the car in front of her — she’d allowed plenty of space to stop, as any good driver would, but alas her shoe lacked the usual friction with the brake pedal.

Edward was the third person I spoke with, and he was mad. Not upset, frustrated or simply annoyed, he was mad. In a profanity-laced soliloquy of his morning commute, he gave life to the story of how he was rushing to his morning appointment. He is typically not someone to speed — I can verify this, he told me, with his lack of speeding tickets on his driving record.

However, today there was traffic due to the rain, and he was forced to drive in a manner in which was not typical for him. He had to get to this appointment, and going a bit over the speed limit was the only way to make up for the traffic jams caused by this darn weather! Not his fault — the rain forced him to drive over the speed limit or risk being late!

It was my husband’s fault

Finally, Frieda. Oh, yes, Frieda. A mother of four and twins in the bunch! This frazzled mom on the verge of tears told me just what her morning had been like. The twins were safely strapped in their respective car seats, and she was driving along on her way to daycare. She is a safe driver, hasn’t had an accident or a ticket in years, maybe decades. She wanted to be sure I remembered that, and as she told me this, I was waiting for the punch line.

Her crazy husband texted her. Normally, she wouldn’t check her phone while driving. However, since she had left the house only moments earlier, she suspected that it was something important, like she forgot the kids’ lunch or some such thing. During those few seconds she was reaching for her phone — I should be clear that she hadn’t even picked it up yet — she smashed into a car moving into her lane. She didn’t see it happen, exactly, since she was looking down for her phone. It wasn’t her fault.

These four stories are not anomalies. If you ask any professional insurance agent or broker, I can guarantee you they will have heard similar stories. While I can’t opine as to whether it is simply human nature to not take responsibility for actions that are clearly within your personal control or if it is the fear of a premium surcharge for a, gasp, at-fault accident, it is a mystery.

What distracted driving is

I can tell you that this theme of it never being your fault brings me back to my days in school where the big joke was to say your dog ate your homework. You did your homework, you did everything correctly, so how could it be your fault, or how could you be to blame for the dog’s actions?

Let me generalize without scolding or being flippant. Driving into your stationary mailbox is more than likely going to be considered a solo-negligent at-fault accident. Your foot slipping off the brake pedal is just that — it’s your foot, your action. Speeding? Never a good idea, let alone when the weather is wet and the roads slippery. And, for sure, whatever you do, keep your eyes on the road. Distracted driving includes anything taking your attention away from — wait for it — driving.

Drive safe.

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The IRMAA is calculated on a sliding scale with five income brackets, topping out at $500,000 and $750,000 for individual and joint filing, respectively. These figures change annually with inflation. IRMAA calculations have a two-year lag time. Whether you pay an IRMAA in a given year depends on your tax returns from two years ago. 

I scoured the best sources and found sound 2025 projections of the IRMAA brackets and surcharge amounts. The 2025 amounts discussed below are not final; they are estimates prepared by financial professionals who specialize in Medicare planning and IRMAA issues. 

IRMAA is assessed based on your modified adjusted gross income (MAGI)

The Social Security Administration will receive notice to inform you if you are liable for the IRMAA surcharge. However, you can appeal the assessment if your financial situation has changed. For instance, if you amended your tax return, and it changes the income counted to determine the IRMAA (your MAGI), let the SSA know. They will need to see a copy of the amended tax return you filed and your acknowledgment receipt from the IRS. 

Your MAGI amount is calculated anew each year, so your IRMAA can change, or even disappear, depending on how your income fluctuates. Whether or not you pay the IRMAA in 2025 will be determined by your 2023 MAGI. (Your IRMAA eligibility in 2024 was determined by your 2022 MAGI.) There are many definitions of MAGI for different purposes

It's not difficult to determine your Medicare-specific MAGI. Find the beneficiary’s adjusted gross income (AGI) on line 11 of the IRS tax form 1040. AGI is the sum of all your income that is subject to tax — the most common sources for this for retirees is IRA withdrawals, capital gains, dividends, interest from CDs, and only the taxable portion of your social security. You add the amount from line 11 to the tax-exempt interest income that can be found on line 2a of IRS Form 1040.

Projected IRMAA income brackets and surcharges for 2025 

Medicare will determine the 2025 IRMAA charge in the 4th quarter of 2024. That is why your IRMAA determination is based on 2023 filing status and income — it's the last data point Medicare can obtain from the IRS to determine the 2025 IRMAA charge. 

The IRMAA is indexed for inflation annually. The indexing is based on the percentage by which the average of the Consumer Price Index for Urban Consumers (CPI-U) for the 12-month period ending in the most recent August exceeds the average of the 12-month period that preceded that.

Here are projections for the 2025 IRMAA brackets and surcharge amounts:

Married Medicare beneficiaries that file separately pay a steeper surcharge because there are only two brackets. If income is greater than $102,000 and less than or equal to $403,000 will pay a $406.90 surcharge for Part B coverage and $78.60 for Part D coverage. Income greater than $403,000 will result in a Part B and Part D surcharges of $443.90 and $85.80 respectively.  

Bottom line

Income for determining IRMAA comes from the savings vehicles used by many retirees, including from traditional IRAs, 401(k)s and 403(b)s. The IRMAA is a “cliff” surcharge. That means if your modified adjusted gross income exceeds the threshold by as little as a dollar, you will have to pay higher premiums

You should be mindful of the risk of a one-time spike in income that could trigger the IRMAA. To avoid this risk, be sure to properly time a Roth conversion; you can then avoid the IRMAA when you convert and take distributions. Learn more about strategies such as how to lower taxes on required minimum distributions that could otherwise trigger the surcharge.

Just like any other insurance plan, life insurance requires you to pay premiums in exchange for coverage. These premiums can be paid through a series of payments or all at once, depending on what works best for your budget. However, you’re not required to purchase a life insurance policy, so it’s important to determine whether you can afford it before moving forward.

In addition to the financial aspect, there are other factors to consider. If your death and the loss of your income would cause financial hardship for your beneficiaries, a life insurance policy may be a good choice. Life insurance can also cover your end-of-life care, funeral expenses and any outstanding debt in the event of a premature death. If any of these apply to you, life insurance might be a feasible solution.

The different types of life insurance

Before purchasing a life insurance policy, it’s important to know the different types that are available. Some are temporary and some are permanent.

Term life insurance is an example of a temporary policy. These policies typically provide coverage for 10, 20 or 30 years. There are also different subcategories for term life insurance.

Decreasing term life insurance is a renewable type of insurance with coverage that decreases as the end of the term nears. These policies also have a predetermined rate.

With convertible term life insurance, policyholders can convert the term policy into a permanent one.

Renewable term life insurance gives policyholders a quote for the year the insurance was purchased. From there, the policy’s premiums increase annually.

If you’re interested in receiving lifetime coverage, a permanent policy might be more suitable. Permanent life insurance is usually more expensive than term, but the coverage will last until you die or stop paying the premiums. Similar to term life insurance, there are different types of permanent coverage.

One common type is whole life insurance. In addition to providing life-long coverage, this policy also offers a cash value component, which is like a savings account. The cash value component allows the policyholder to take out loans or pay premiums.

Universal life insurance also provides a cash value component, but unlike whole life insurance, the cash value component earns interest. Another perk is that the premiums are flexible, and the policy provides options for level death benefit or increasing death benefit. A level death benefit is a payout from the policy that remains the same regardless of when the policyholder dies. An increasing death benefit is a little different. This type of benefit allows the policyholder to increase the payout amount over time, but the premiums are more expensive.

Another type of permanent life insurance is an indexed universal policy. This type of insurance allows the policyholder to earn a fixed or equity-indexed rate of return on the cash value.

The last option is a variable universal life insurance, which gives the policyholder the option to invest the cash value into a separate account. This policy also includes flexible premiums, and policyholders can choose between a level or increasing death benefit.

How life insurance premiums are determined

In addition to understanding the different types of policies, it’s important to understand the premiums, which are based on a number of different factors. For example, your health and age are huge factors that determine the cost. Therefore, maintaining your health as best you can and purchasing life insurance as soon as you need it may help lower the cost. But how do you know if you actually need it?

As briefly mentioned earlier, life insurance is about providing your dependents with financial support after you're gone. Parents with minor children or children who have special needs could benefit greatly from life insurance. If one parent dies, these policies can help supplement the surviving spouse’s income. If you have a child who requires life-long care, life insurance can help cover that cost once you and your spouse have passed away.

However, parents aren’t the only ones who can benefit from life insurance. These policies can also be useful for adults who jointly own property, families who can’t afford funeral expenses, married pensioners and those who have pre-existing medical conditions.

Purchasing life insurance can be a great way to make sure your beneficiaries have financial support once you pass away, but it comes at a cost. If you’re considering buying life insurance, determine just how much you’ll need and do your research. Meeting with a financial adviser can help determine what kind of policy works best for you and your situation. The last thing you want to do is purchase a policy you can’t afford or one that doesn’t provide the coverage you need.

Pat Simasko is an investment advisory representative of and provides advisory services through CoreCap Advisors, LLC. Simasko Law is a separate entity and not affiliated with CoreCap Advisors. The information provided here is not tax, investment or financial advice. You should consult with a licensed professional for advice concerning your specific situation.

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If you’re philanthropically inclined, you can contribute your life insurance to a 501(c)(3) public charity, like a donor-advised fund. By contributing your policy during your lifetime, you’re able to use the value of your policy to benefit your favorite causes, while also claiming a current-year income tax deduction (if you itemize) and potentially reducing your estate tax liability. You can also name a charity now to be a beneficiary of your policy after your lifetime, helping to extend your charitable legacy.

What are the different ways you can donate life insurance?

There are two primary methods to contribute life insurance to charity, and each one has different timing and tax benefits.

1. Transfer the policy ownership and beneficiary interest to your favorite charity, which is generally possible with permanent life insurance. After taking ownership, the charity may opt to surrender the policy for its cash value. (Life insurance companies often allow a policy owner to “surrender” their policy — in other words, cancel it to receive a cash value, minus any surrender charges and fees.)

Tax benefits to this method:

• Life insurance is considered an ordinary income asset, meaning that surrendering a policy for its cash value would trigger ordinary income taxes for you on the policy’s appreciation — even if you took that money and then donated it to charity. But, by contributing your policy directly to charity, you potentially avoid the tax you would otherwise incur if you surrendered the policy yourself and donated the proceeds. And because U.S. public charities are tax-exempt, the charity can surrender the policy for its full, untaxed value, maximizing the impact of the contribution.
• Assuming you itemize your deductions, you may also claim a current-year tax deduction for the policy contribution. Because life insurance is an ordinary income asset, the deduction is limited to the lesser of the policy's value or your adjusted cost basis in the policy (generally, premiums paid to date).
• An added benefit is that the policy’s value could potentially be removed from your gross estate, lowering your estate’s eventual tax burden.

2. Retain ownership of your policy but name a charity as a full or partial beneficiary. In this situation, the charity would receive a designated payout from the insurance company after your lifetime. While you can’t claim a charitable income tax deduction during your lifetime in this situation, your estate will be entitled to claim a charitable estate tax deduction for the beneficiary proceeds distributed to charity at your death.

This method can offer you more flexibility in case your circumstances change (you can change the beneficiary named on your policy), and it can be appealing to those who might not otherwise be able to make a significant gift during their lifetimes. Keep in mind that you may need to continue paying policy premiums for the remainder of your life.

More advanced donation strategies exist, including options that replace income. If you’re interested in exploring those strategies, contact your tax adviser or estate planning attorney.

What types of life insurance can you donate?

You can donate both permanent life insurance (including whole life and universal life) and term life insurance to charity, but the donation options differ.

Permanent life insurance policies hold cash value that can be surrendered. A cash value policy (in particular, a paid-in-full cash value policy) can be an appealing donation because you have the option of gifting during your lifetime, not just at the end of it. And by gifting during your lifetime, you may be able to take advantage of the tax benefits described above.

On the other hand, term life insurance donations have their limitations. While term policies can still be used to benefit charity, gifting during your lifetime is not an option. You can only name a charity as an end-of-life beneficiary. And because term policies are only active for a specified period, you should investigate whether the term policy could expire during your lifetime.

Can you donate life insurance to a donor-advised fund?

A donor-advised fund account, like the one offered by Schwab Charitable™, is a simple, efficient and tax-smart giving solution. By contributing to a donor-advised fund, you can potentially reduce tax burdens, invest contributed assets for tax-free potential growth and recommend grants to qualified U.S. public charities immediately or over time.

Donor-advised funds like Schwab Charitable are public charities themselves. Subject to prior due diligence review, Schwab Charitable can accept your policy as a charitable contribution and surrender it for a cash value. The funds are then made available for you to recommend investments and grants.

Once you have an account open, you may also name your account as a beneficiary of your policy. Recommended grants to charities after your lifetime would then be based on your account’s succession plan or granting history.

Maximizing a gift during a donor’s lifetime: A case study

Years ago, Shannon invested in permanent life insurance, ensuring that her family would be cared for after her lifetime. Now in retirement, Shannon realizes she’s accumulated more wealth than her family needs, even without the life insurance policy, and she decides she wants to make a charitable impact during her lifetime.

Shannon learns that the value of her life insurance policy can be used as a charitable contribution. Alongside her financial adviser and tax adviser, she explores her policy surrender options and how she can maximize charitable impact.

Option 1: Surrender the policy herself and then contribute the post-surrender proceeds. Shannon’s policy has a $500,000 surrender cash value, with $200,000 in basis (premiums Shannon has paid over the years), without a loan against it. Because life insurance is an ordinary income asset, if Shannon surrendered the policy herself and then contributed the proceeds, she’d incur income tax on $300,000 (the policy gains). Assuming a 24% income tax rate, the post-surrender charitable contribution would be reduced from $500,000 to $428,000. (For simplicity, this hypothetical example assumes no surrender charge or other fees.)

Option 2: Contribute the policy directly to charity, which then surrenders the policy for its cash value. If Shannon transferred the policy ownership to her desired charity and let the charity handle the surrender (rather than Shannon surrendering the policy herself), she would eliminate the taxable income. And, as a tax-exempt entity, the charity would not pay income tax when surrendering the policy. Unlike the first option, the charity would receive the full $500,000 value. (Again, for simplicity, this hypothetical example assumes no surrender charge or other fees.)

Here’s a chart showing the tax impact for Shannon and the charity:

Note: This hypothetical example is only for illustrative purposes. The example does not take into account any state or local taxes or potential surrender fees. The tax savings shown are the tax deduction multiplied by the donor’s marginal income tax rate (24% in this example) minus the income taxes paid. In Option 2, the deduction is limited to the $200,000 policy basis.

Other considerations when donating a life insurance policy

1. Loans against the policy can complicate your charitable contribution.

If you have taken out any loans against the insurance policy, you may be subject to IRS “bargain sale” rules, which can generate taxable income for you and lower the value of your charitable deduction.

2. Annual limits apply to charitable deductions.

If you itemize deductions when filing taxes, your deduction for a during-life contribution of a cash value life insurance policy is generally limited to 50% of your adjusted gross income (AGI). Any deduction amount above this AGI limit may be carried forward for up to five additional tax years, subject to AGI limits in each year.

3. Qualified appraisal requirement rules may apply.

To claim a charitable income tax deduction for during-life contributions of permanent life insurance policies, you must not only itemize income tax deductions, but also must obtain a qualified appraisal from a qualified appraiser if the claimed deduction is greater than $5,000. You also must file IRS Form 8283 with your taxes for the tax year that the life insurance gift is made.

4. You may potentially minimize your gross estate’s tax exposure.

Your life insurance is included in your gross estate after your lifetime. By donating your policy during your lifetime or by retaining your policy’s ownership and naming a charity as a policy beneficiary, you can reduce the value of your gross estate, potentially minimizing its eventual tax exposure.

5. Donors must work directly with their policy administrator to update ownership and/or beneficiary information.

It can take time to finalize the policy ownership transfer through your policy administrator (insurance company), which could result in a delay in making the gift. If you’re planning to make your contribution near year-end, consider starting the process early to avoid any deadlines for yearly tax deduction eligibility. Please note that most charities want to know if you are planning to donate a life insurance policy, whether during or at the end of your lifetime. Some due diligence review before acceptance may be required by the recipient charity.

It’s simple to contribute to your donor-advised fund account, but life insurance and other non-cash assets can be nuanced. Refer to online resources, or experts, such as the Charitable Strategies Group at Schwab Charitable for specialized knowledge on contributing complex assets to charities.

Please be aware that gifts of appreciated non-cash assets can involve complicated tax analysis and advanced planning.

A donor's ability to claim itemized deductions is subject to a variety of limitations depending on the donor's specific tax situation. Consult a tax adviser for more information.

Contributions of certain real estate, private equity, or other illiquid assets may be accepted via a charitable intermediary, with proceeds transferred to a Schwab Charitable donor-advised account upon liquidation. Call Schwab Charitable for more information at 800-746-6216.

Schwab Charitable Fund™ is recognized as a tax-exempt public charity as described in Sections 501(c)(3), 509(a)(1), and 170(b)(1)(A)(vi) of the Internal Revenue Code. Contributions made to Schwab Charitable Fund™ are considered an irrevocable gift and are not refundable. Once contributed, Schwab Charitable has exclusive legal control over the contributed assets.

Schwab Charitable does not provide specific individualized legal or tax advice. Please consult a qualified legal or tax adviser where such advice is necessary or appropriate.

Schwab Charitable™ is the name used for the combined programs and services of Schwab Charitable Fund™, an independent nonprofit organization. Schwab Charitable Fund has entered into service agreements with certain subsidiaries of The Charles Schwab Corporation. (0624-7PJ3)

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PMI, which is arranged through a third-party insurance company, is designed to protect the lender if you’re unable to make payments. PMI doesn’t protect you against loss — if you don’t make payments, you could still face foreclosure — and it won’t prevent your credit score from dropping if your mortgage payments are late. 

The annual cost of PMI usually ranges from 0.22% to 2.25% of the total amount of your mortgage, depending on your credit score. If your FICO score is higher than 740, your PMI payment on a $300,000 mortgage will likely be about $660 a year, or $55 a month. The lower your credit score, the higher your PMI will be.

If you have to pay PMI, there are several ways to do it. With borrower-paid PMI, your premium is added to your monthly mortgage payment. Alternatively, you can pay PMI in a lump sum at closing. It may be less expensive to pay the annual cost up front, but the premiums aren’t refundable if you sell your home before you reach 20% equity.

How to avoid private mortgage insurance

Even if you can’t afford a 20% down payment, there are several ways to avoid PMI. One option is lender-paid PMI, in which your lender pays your premiums as a lump sum, and in exchange you pay a higher interest rate than you would pay otherwise. Lender-paid PMI may be a good choice if it would cost you less overall than monthly PMI payments and you itemize on your tax return, which would allow you to deduct interest on your mortgage. 

A “piggyback mortgage” is another way to bypass PMI. With this strategy, you take out a second mortgage — usually a home equity line of credit — and finance the home with 10% from a down payment, 80% from the primary mortgage and 10% from the second mortgage. You’re borrowing 90% of the value of the home, but the primary mortgage accounts for only 80% of the value, allowing you to skip PMI. However, you’ll likely pay a higher interest rate for the second mortgage, and the rate may be adjustable. 

This strategy could make sense if you can pay off the second mortgage relatively quickly, in which case the cost could be lower than paying PMI. Before agreeing to a piggyback, ask your lender to provide a quote for the same loan structured as a single mortgage with PMI so you can compare costs. 

Another option is to seek out government home loans that don’t charge PMI. Mortgages from the FHA (Federal Housing Administration), USDA (U.S. Department of Agriculture) and VA (Department of Veterans Affairs) allow borrowers to make down payments as low as 0% to 3.5% without paying PMI. However, you may be required to pay up-front fees, and the loans have stringent eligibility requirements. 

If none of these strategies is available to you, or the benefits don’t outweigh the costs, your best bet is to make mortgage payments on time until you reduce your loan balance to 80% of the home’s value. Your loan servicer is required to terminate PMI when your principal balance is scheduled to reach 78% of the original value of your home. However, you can ask your servicer to cancel PMI before that date, when payments have reduced the principal to 80% of the original value.

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

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If you’re in the process of calculating how much home you can afford, you might need to rework your budget. Affordability is one of the biggest challenges first-time homebuyers face, and less obvious expenses can have you paying a lot more money each month in addition to your expected mortgage payment. If you fail to take into account ancillary expenses when buying a home, you could be stuck paying more than you can afford.  

The average annual cost of owning and maintaining a single-family home in the U.S. is $18,118 a year, or an additional $1,510 per month on top of a mortgage payment, according to a recent study from Bankrate. That's 26% higher than it was four years ago. Homeowners spent an average of $14,000 on hidden expenses in 2023, according to a Zillow study, an additional $1,180 per month. 

Hidden costs of homeownership

Clearly, there’s a lot more to consider when buying a home beyond its sticker price and mortgage rate. Utility costs, property taxes, insurance and home maintenance can tack on a hefty bill each month. Here’s a look at some of the most common hidden expenses you should anticipate and plan for. 

• Closing costs: These are the fees you'll pay when finalizing your home purchase. Typically, this will cost between 2% to 5% of the home’s purchase price. For a $300,000 home, this works out to a range of $6,000 to $15,000 in closing costs alone.
• Home inspection: Before buying a home, it’s a good idea to get a home inspection. If not, you could end up paying thousands of dollars in repairs later on down the road due to defects in the house’s structure. However, a home inspection will set you back $342 on average, according to Angi. 
• Moving costs and fees: So you bought the home of your dreams! Great, now comes the dreaded part — packing up your entire life into boxes and moving. The average cost to move a three-bedroom home locally is $2,200, according to Forbes. A long-distance move for a home that size? $4,400 on average. 
• Homeowners insurance: Home insurance isn’t one size fits all. How much you’ll pay depends on a number of factors, including location, credit history, size of the home, and level of coverage needed. Insurance rates can also vary widely between cities, so it’s important to consider these costs when determining how much home you can afford. On average, homeowners insurance costs $2,230 per year for a policy with $300,000 in dwelling coverage, reports Bankrate.
• Property taxes: Another important cost to remember — property taxes. As a homeowner, you’ll need to make sure to budget for this ongoing expense. And property taxes “will continue to rise rather than drop” in most instances, according to Citizens Bank,.
• New furnishings: Don’t forget about the added cost of new furnishings, especially if you’re moving into a larger home. The average cost to furnish a three-bedroom house is $10,000 to $40,000 with moderately priced furnishings, according to Home Guide, while the average cost to furnish a four-bedroom home is $15,000 to $60,000.
• Repairs and maintenance: Standard home repairs and routine maintenance, like pest control, lawn care, trash fees, roof maintenance, plumbing repairs, appliance replacement, heating costs and cleaning expenses all add up.
• HOA fees: There's a good chance the home you're buying is part of either a homeowner’s association (HOA) or condo association. If so, you'll need to budget for a monthly or quarterly fee, which covers the cost of maintaining common areas and amenities in the community.

“While homeowners are typically aware they'll have to pay for utilities every month, these other costs not directly related to purchasing the home itself can easily slip from one's mind,” Claudia Phillips, who works with This Old House Reviews tells Kiplinger. “When purchasing a home, buyers should outline these costs ahead of time to make sure they can budget on a monthly or annual basis. These expenses will vary depending on a home's age, location, material and construction. Homeowners should consider purchasing a home warranty policy to offset these costs, which can reach an average of $600 annually.”

What is the cost of homeownership by state?

What States have the most and least expensive homeownership costs? A recent study from Bankrate took a look. Here’s what it found.

States with the highest average hidden homeownership costs:

• 1. Hawaii: $29,015
• 2. California: $28,790
• 3. Massachusetts: $26,313
• 4. New Jersey: $25,573
• 5. Connecticut: $23,515

States with the lowest average hidden homeownership costs:

• 1. Kentucky: $11,559
• 2. Arkansas: $11,692
• 3. Mississippi: $11,881
• 4. Alabama: $12,258
• 5. Indiana: $12,259

Bankrate Analyst Jeff Ostrowski states in the study, “No matter where you live, make sure you include some cushion in your monthly budget to absorb the shock of unplanned expenses. After you achieve homeownership, you need to fatten up your emergency savings account for all those surprise repairs.”

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Before you hire someone, determine what kind of care your loved one needs. If he or she is mostly independent and primarily needs assistance with shopping and running errands, consider hiring a companion caregiver. While formal training isn’t required, some agencies require that the companions they employ have a high school diploma. 

If your loved one needs help with basic hygiene tasks, such as bathing and using the bathroom, you may need a personal care aide. Standards for PCAs vary by state, with some states requiring up to 100 hours of training. You can find your own state’s PCA requirements here. 

A home health aide performs simple medical tasks, such as taking blood pressure. A home health aide may also report on your loved one’s medical condition to a health care professional. Requirements for home health aides vary by state. You can check your state’s rules here. 

A certified nursing assistant can perform some medical procedures, such as wound care and emptying catheter bags. Check your state’s CNA certification requirements here. 

Once you determine what kind of caregiver your loved one needs, the next decision is whether you want to hire one independently or through a home health care agency. Start by asking your loved one’s doctor for recommendations or resources. Friends and family members who have hired a caregiver may also be able to provide a reference. 

If you decide to place an ad on a job search site, specify the needed skills, experience and hours. Ask candidates for their caregiver certifications and for two references from former employers. If your loved one needs to be driven to doctors’ appointments, ask to see job candidates’ driver’s licenses. 

Once you’ve selected a caregiver, you’ll need to negotiate an hourly wage. According to the Bureau of Labor Statistics, the median pay for a home health care aide in 2023 was $16.12 an hour, but depending on your loved one’s needs and the cost of living in your area, you may have to pay a much higher hourly wage. 

Using a home health care agency

Hiring a caregiver through a home health care agency will cost up to 30% more than hiring one on your own, but an agency will vet caregivers and manage the administrative responsibilities, says Linda Abbit, a caregiving expert and author of The Conscious Caregiver. An agency can provide a backup if your caregiver is unavailable, too.

Paying for home health care

If your loved one has long-term-care insurance, it may cover caregiving costs. Similarly, if your loved one has a life insurance policy or annuity with a long-term-care component, you may be able to use those funds. Medicaid covers some home health care for low-income seniors; eligibility and services covered vary by state. Go here for details on your state.

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

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