Summary of the New Financial Reform Law

Credit and lending practices are revised
The Act requires originators of residential mortgages to disclose any conflicts of interest and compare costs and benefits of mortgages offered to a potential borrower. Lenders also will be required to verify whether, based on income, credit history, and other data, a borrower has a reasonable ability to repay a loan plus its associated taxes, insurance, and other costs. This could mean that self-employed people and others whose income is undocumented or irregular will need better documentation to qualify for a loan.

Lenders will no longer be able to give loan officers financial incentives that induce them to steer customers to a mortgage with a higher interest rate simply to increase their own commission. Their ability to impose prepayment penalties when a borrower repays a loan early also will be more limited, and a holder of a hybrid adjustable rate mortgage must receive notice of any change in the interest rate six months in advance.

Lenders are prohibited from refinancing an existing mortgage unless the new mortgage offers a net benefit to the borrower, and they may not coerce or induce an appraiser to make a faulty appraisal of a property's value. Loan applicants must receive a copy of the appraisal on the property no later than three days prior to the closing.

High-cost mortgages are subject to special regulations. Any balloon payments on high-cost mortgages cannot be more than twice as large as the average of earlier payments, and a borrower must receive qualified counseling on the advisability of a high-cost mortgage before credit can be extended.

Homeowners who are unable to make mortgage payments as a result of losing their jobs or because of a medical condition may now qualify for up to $50,000 in assistance loaned through HUD's existing Emergency Mortgage Assistance Fund.

Increased protection of bank deposits becomes permanent
During the financial crisis, the Federal Deposit Insurance Corp. (FDIC) temporarily increased from $100,000 to $250,000 the amount it will insure on deposit accounts in FDIC-insured banks. The $250,000 limit is now permanent. That means that a couple who each had separate deposit accounts as well as a single joint account could qualify for up to $750,000 worth of protection on those accounts.

Greater transparency and accountability for investments and related services
Institutional investors' inability to determine the amount of global financial exposure to derivatives--investments based on the value of other investments--contributed to the panic at the height of the financial crisis. Over-the-counter derivatives must now be traded on a public exchange, and trades must be cleared through a registered clearinghouse. Nonstandard derivatives can still be traded privately, but must be reported to a central authority in order to increase regulators' ability to monitor the overall level of activity.

Hedge funds and private-equity advisors will be required to register with the Securities and Exchange Commission (SEC) and disclose to the commission information such as investment positions and the amount of leverage involved. Also, the $1 million minimum net worth required to be an accredited investor eligible to invest in such funds will no longer include a principal residence, and that $1 million threshold will be reviewed every four years.

Credit rating firms, which were criticized for being too lax in their evaluations of securities based on subprime mortgages, will be subject to oversight by the SEC, which can fine those that issue too many faulty ratings over time. Also, investors will now have the right to sue an agency for issuing ratings it knew or should have known were flawed.

Shareholders of public companies will have the right to a nonbinding vote on compensation for the company's executives. Also, protections for people reporting securities law violations have been enhanced. Whistle-blowers with information that leads to monetary sanctions of more than $1 million will be eligible for 10 percent to 30 percent of the funds collected from the offender; if an employer retaliates, a whistle-blower can sue without waiting until administrative remedies have been exhausted.

An Investor Advocate office will be established within the SEC to help individual investors resolve significant problems and to promote investor interests.

Risky banking practices are addressed
Banks will be required to hold additional capital to cover potential losses, and some securities are no longer acceptable as vehicles for capital reserves held by large banks. Banks also will be required to retain at least 5 percent of a loan on their books if the loan is sold and/or repackaged with other loans and securitized. (However, some relatively low-risk mortgages, such as fully documented loans with a fixed interest rate, are exempted.)

Banks also will be more limited in their ability to engage in proprietary trading in their own accounts, which could represent a conflict of interest with their responsibility to their clients. They also will have to set up separate operations to handle their most risky derivative trades, such as swaps. A bank will not be permitted to invest more than 3 percent of its core capital in hedge funds and private equity, but it may still organize and offer them as long as certain conditions are met.

A Consumer Financial Protection Bureau overseen by the Federal Reserve will be created to regulate consumer financial products and services.

Systemic risk will be monitored, and liquidation of large banks will be overseen
A new Financial Stability Oversight Council is charged with assessing and managing risks that could threaten the entire U.S. financial system. Also, the FDIC will manage the liquidation of a bank whose failure the Treasury Secretary determines would disrupt the stability of the nation's financial system. That will include firing corporate management responsible for the failure and prohibiting any payments to shareholders until all other claims are paid. The FDIC may borrow from an Orderly Liquidation Fund to pay for a liquidation, but those costs must be replenished not from taxpayer funds but from claims on the bank and, if necessary, assessments on large financial institutions. The Act does not permit the Federal Reserve or the FDIC to lend to or provide a guarantee for individual or insolvent companies or banks, but both may lend funds to provide liquidity.

This article was provided by Forefield and distributed by Lawrence Sprung.

They're Baaack ... Required Minimum Distributions for 2010

Required minimum distributions, often referred to as RMDs, are amounts the federal government requires you to withdraw annually from traditional IRAs and employer-sponsored retirement plans after you reach age 70½ (or, in some cases, after you retire). RMDs are also required if you inherit an IRA (traditional or Roth) or employer plan account. You can always withdraw more than the minimum amount from your IRA or plan in any year, but if you withdraw less than the required minimum, you'll be subject to a federal penalty tax equal to 50% of the shortfall.

In response to deteriorating economic conditions in 2008, Congress (as part of the Worker, Retiree, and Employer Recovery Act of 2008, or "WRERA") waived RMDs from IRAs and defined contribution employer plans for the 2009 calendar year. This allowed individuals to avoid having to deplete retirement plan assets while the value of those assets was suddenly depressed. But RMDs are back for 2010. Here's how the rules apply.

IRA Owners and Employer Plan Participants
If you turned 70½ before 2009, your RMD for the 2009 calendar year, which was due by December 31, 2009, was waived. You must now resume taking RMDs. Your next RMD (based on your December 31, 2009, account balance) must be taken no later than December 31, 2010.

If you turned 70½ in 2009, your first RMD (for the 2009 calendar year) was due by April 1, 2010. This RMD was waived. You must now take your first RMD (for the 2010 calendar year, based on your account value as of December 31, 2009) no later than December 31, 2010. You'll need to take your second RMD from the account (for the 2011 calendar year) no later than December 31, 2011.

If you turned 70½ in 2010, your RMDs are not impacted by the 2009 waiver at all. Your first RMD (for the 2010 calendar year) is due by April 1, 2011, and is based on the value of your account on December 31, 2009. You'll need to take a second RMD from the account no later than December 31, 2011.

Inherited Accounts
In general, if you inherit an IRA (traditional or Roth) or employer-plan account, you must begin taking RMDs over your life expectancy ("life expectancy" rule) starting with the year following the year of the account owner's death. Alternatively, you may elect, or your plan may require, that you withdraw the entire account by December 31 of the calendar year containing the fifth anniversary of the account owner's death ("five-year" rule).

Per the WRERA, if you inherited an IRA or employer account, and you were using the life expectancy payout rule, then your RMD for the 2009 calendar year was waived. You must take an RMD for the 2010 calendar year no later than December 31, 2010.
If you inherited an IRA or employer account, and you were using the five-year rule for RMDs, you ignore 2009 when determining when your five-year period ends. So, for example, if your original five-year deadline was December 31, 2009, you ignore 2009 and you now have until December 31, 2010, to complete withdrawals from the account. Similarly, if your original five-year deadline was December 31, 2013, your new deadline, ignoring 2009, is December 31, 2014.
If you inherited an employer plan account, you may have been given the right to elect whether to use the five-year rule or the lifetime expectancy payout rule for taking RMDs. This election is generally required no later than December 31 of the year following the year of the account owner's death. Per IRS Notice 2009-82, if your deadline for making the election was December 31, 2009, you now have until December 31, 2010, to make that election.
If you inherited an employer account from someone other than your spouse, and the five-year rule applies to your benefit, you generally have until December 31 of the year following the year of the account owner's death to make a direct rollover of the account to an inherited IRA, and use the lifetime expectancy payout rule for distributions from the IRA. If the account owner died in 2008, you generally would have needed to complete your rollover by December 31, 2009. Per Notice 2009-82, you have until December 31, 2010, to complete the rollover.
As you can see, the 2009 waiver significantly complicates the RMD landscape for 2010. If you're taking RMDs from an IRA or employer-sponsored retirement plan, you may want to consider reviewing your situation with your financial professional.

This article was provided by Forefield and distributed by Lawrence Sprung.

Implementing Other Creative Solutions to Cover Higher Education Costs

What are creative solutions to help pay for college?
Saving money, borrowing money, and financial aid are the most obvious ways to pay for college. But none of these methods attempt to lower the actual cost of college. Yet as college costs continue to grow, it is imperative for many families to find ways to lower the actual cost of college. There are several creative ways to lower the cost of college, which, in turn, will lower your own costs. In some cases, these solutions may mean the difference between your child being able to attend college and not being able to attend at all.

What are the specific creative solutions I can implement to lower the cost of college?

Deferred enrollment plans
Many colleges will accept your child for admission in the future--maybe in a year or two. Instead of heading straight to college after his or her high school graduation, your child can work full-time to earn money to apply to the future college bill.

Consider accelerated programs
If the college allows it, your child may be able to obtain a bachelor's degree in three years instead of four or a five year bachelor's-master's degree. This way, you'll save a year's worth of expenses. The drawback is that your child will have to take a heavier course load each semester and may have to forgo summer breaks.

Enroll in a community college, then transfer to a four-year institution
Many students live at home to attend a local two-year community college for basic level courses and then transfer to a four-year school for their final two years. In nearly all cases, the community college will be less expensive than the four-year college and can save you money for two years. The benefit is that your child receives a diploma from the four-year college that does not announce that your child spent the first two years at a community college. Of course, you should make sure that the four-year college will accept for credit the community college courses.

Take special academic exams
Your child may be able to earn college credits for basic courses before he or she even gets to college. This is accomplished by taking courses or tests designated as advanced placement (AP) or as college level exam program (CLEP). This saves money by cutting down on the required college course load. Make sure the college accepts the test before your child takes it.

Consider a co-op education
Some 900 colleges now allow students to alternate semesters of education with semesters of full-time work in a field related to their majors. A co-op degree usually takes about five years, a full year longer than the typical college education. However, not only will your child have a history of relevant work experience to present to potential employers after graduation, but also he or she will earn a paycheck while working. For a listing of such programs, go to www.co-op.edu.

Find part-time work
Part-time work can help your child defray some costs while in college, reducing the amount necessary to borrow. However, working during school can be both a physical and an emotional strain. One option might be for your child to focus on school for the freshman and sophomore years and to find a part-time job for the remaining years.

Live at home
This may not be every child's dream of the college experience, but living at home, even for a year or two, can save a significant amount of money on room and board expenses. However, depending on how far you live from the college, commuting costs may become a factor.

Buy real estate for child's housing
Rather than pay room and board to a college for four years, some parents may decide to purchase a condominium or small house for their child's living quarters during the college years (and possibly for graduate school). If the property has more than one bedroom and the parents and child are comfortable with the idea, they may consider renting out the spare bedroom(s) and applying the rents to the monthly mortgage payment.

Of course, parents need extra cash up front to purchase such a property. In addition, they may be confronted with a sagging real estate market when and if they try to sell the property. Yet, oftentimes parents are able to recoup their purchase price, and some lucky parents may even be able to turn a profit. Moreover, while the property is held, parents may be eligible for certain tax deductions.

Enroll in government military programs
There are three different options for the military route:

· Your child can attend a service academy (e.g., Air Force Academy, Naval Academy). Not only is the education free, but your child will also earn a salary each year he or she is in school. Admissions standards at these service academies are among the most competitive in the country. Upon graduation your child must serve a minimum of five years of active duty.

· Your child can serve in the military first and then attend college under the Government Issue (GI) Bill. The GI Bill is a program designed for people who choose to enlist in one of the branches of the armed forces first and pursue a college degree later. To qualify for these educational benefits, your child must serve at least three continuous years of active duty or two years of active duty followed by four years in the reserves.

· Your child can train for the military while in school under the Reserve Officers' Training Corps (ROTC). This is a scholarship program that lets students go to college full-time and participate in a part-time or summer officer-training program. ROTC scholarships offer recipients free tuition, fees, and books in exchange for up to four years of active duty following graduation. Students also receive a salary in the last two years of school, a travel allowance, and paid summer training. Your child can apply for a ROTC scholarship at a military recruiting office during his or her junior or senior year of high school.

Have grandparents pay tuition directly to college or university
Another option for lowering the cost of college is for grandparents (or any other generous relative, for that matter) to pay college tuition directly to an educational institution. Such payments are not considered gifts for federal gift tax purposes. To qualify for this tax exclusion, however, the payment must be for tuition only and made directly to the college; grandparents cannot give the money directly to the student or to a trust on behalf of the student.

Consider a Canadian college
Families after deals might want to look in Canada. The best schools in Canada often equate to just under the Ivy League schools in the United States, but come at a fraction of the price (e.g., McGill University in Montreal costs less than half of New York University). The cultural difference can make life interesting for four years and may reap other rewards as well. With the age of the global economy, prospective employers in the United States tend to look with favor on graduates of Canadian schools.


Reduce your out-of-pocket costs for college
When you attempt to cut college costs by implementing various creative solutions, you have the potential to lower the amount of savings or borrowings you will need to apply to college costs.

Possibly enjoy other incidental benefits
Some creative solutions can offer nonfinancial benefits that were unforeseeable at the time they were implemented. For example, your child may pursue a co-op education strictly for the monetary savings but then discover that working in his or her chosen field was not the experience he or she expected. Similarly, your child may choose part-time work solely for the income and then realize it gives him or her a welcome break from daily studies and dorm life.


Your child may not receive the typical four-year college experience
Many of the creative solutions to lower college costs put a spin on the typical four-year college experience. For example, by living at home, your daughter may find herself left out of many dorm-related events. Similarly, if your son participates in an accelerated program and graduates in three years, he may feel he's missed out on his senior year of college.

Your child may experience other unforeseen problems
Perhaps you encouraged your daughter to live at home, and now you can't stand it when she's out all night. Perhaps your son thought he could deal with a part-time job, but now he's too exhausted to study. Maybe your child started off at a local community college, planning to transfer, but the transfer application was just rejected by the college of his or her choice. In sum, simply selecting a creative solution doesn't mean it will work out to your liking.

This article was provided by Forefield and distributed by Lawrence Sprung.

Will You Outlive Your Money?

Will you outlive your money?
Before you retire, take the time to figure out just how much money you'll need for retirement. One of the biggest concerns for retirees is whether their retirement savings will last the rest of their lives-- will they run out of money? Social Security is not the guaranteed source of retirement income it once was, and people generally don't want to depend on public assistance or their children during their retirement years. Whether you might run out of money hinges upon several factors; how much money you've saved, how long you need your savings to last, and how quickly you spend your money, to name a few. You'll be better off if you can tackle these issues before retirement by maximizing your retirement nest egg. But, if you are entering retirement and you still have concerns about making your savings last, there are several steps you can take even at this late date. The following are tips and ideas to help make sure you don't outlive your money.

Tips to help make your savings last longer
You may be able to stretch your retirement savings by adjusting your spending habits. You might be able to get by with only minor changes to your spending habits, but if your retirement savings are far below your projected needs, drastic changes may be necessary. Saving even a little money can really add up if you do it consistently and earn a reasonable rate of return.

Make major changes to your spending patterns
If you have major concerns about running out of money, you may need to change your spending patterns drastically in order to make your savings last. The following are some suggested changes you may choose to implement:

  • Consolidate any outstanding loans to reduce your interest rate or monthly payment. Consider using home equity financing for this purpose.
  •  If your home mortgage is paid in full, weigh the pros and cons of a reverse mortgage to increase your cash flow.
  • Reduce your housing expenses by moving to a less expensive home or apartment.
  • If you are still paying off your home mortgage, consider refinancing your mortgage if interest rates have dropped since you took the loan.
  • Sell your second car, especially if it is only used occasionally.
  • Shop around for less expensive insurance. You'd be amazed how much you can save in a year (and even more over a period of years) by switching to insurance policies that have lower premiums, but that still provide the coverage you need. Life and health insurance are the two areas where you probably stand to save the most, since premiums can go up dramatically with age and declining health. Consult your insurance professional.
  • Have your child enroll in or transfer to a less expensive college (a state university as opposed to a private one, for example). This can be a particularly good idea if the cheaper college has a strong reputation and can provide a quality education. You could save significantly over the course of just two or three years.

Make minor changes to your spending patterns
Minor changes can also make a difference. You'd be surprised how quickly your savings add up when you implement a written budget and make several small changes to your spending patterns. If you have only minor concerns about making your retirement savings last, small changes to your spending habits may be enough to correct this problem. The following are several ideas you might consider when adjusting your spending patterns:

  • Buy only the auto and homeowners insurance you really need. For example, consider canceling collision insurance on an older vehicle and self-insure instead. This may not save you a bundle, but every little bit helps. Of course, if you do have an accident, the amount you saved on your premium could be wiped out very quickly.
  • Shop for the best interest rate whenever you need a loan.
  • Switch to a lower interest credit card. Transfer your balances from higher interest cards and then cancel the old accounts.
  • Eat dinner at home, and carry "brown-bag" lunches instead of eating out.
  • Consider buying a well-maintained used car instead of a new car.
  • Subscribe to the magazines and newspapers you read instead of paying full price at the newsstand.
  • Where possible, cut down on utility costs and other household expenses.
  • Get books and movies from your local library instead of buying or renting them.
  • Plan your expenditures and avoid impulse buying.

Manage IRA distributions carefully
If you're trying to stretch your savings, you'll want to withdraw money from your IRA as slowly as possible. Not only will this conserve the principal balance, but it will also give your IRA funds the opportunity to continue growing tax deferred during your retirement years. However, bear in mind that you must start taking required minimum distributions (RMDs) from traditional IRAs (but not Roth IRAs) after age 70½.

Caution: The Worker, Retiree, and Employer Recovery Act of 2008 waives required minimum distributions for the 2009 calendar year.

Use caution when spending down your investment principal
Don't assume you'll be able to live on the earnings from your investment portfolio and your retirement account for the rest of your life. At some point, you will probably have to start drawing on the principal. You'll want to be careful not to spend too much too soon. This can be a great temptation particularly early in your retirement, because the tendency is to travel extensively and buy the things you couldn't afford during your working years. A good guideline is to make sure you don't spend more than 5 percent of your principal during the first five years of retirement. If you whittle away your principal too quickly, you won't be able to earn enough on the remaining principal to carry you through the later years.

Portfolio review
Your investment portfolio will likely be one of your major sources of retirement income. As such, it is important to make sure that your level of risk, your choice of investment vehicles, and your asset allocation are appropriate considering your long-term objectives. While you don't want to lose your investment principal, you also don't want to lose out to inflation. A review of your investment portfolio is essential in determining whether your money will last.

Continue to invest for growth
Traditional wisdom holds that retirees should value the safety of their principal above all else. For this reason, some people totally shift their investment portfolio to fixed-income investments, such as bonds and money market accounts, as they approach retirement. The problem with this approach is that it completely ignores the effects of inflation. You will actually lose money if the return on your investments does not keep up with inflation. The allocation of your portfolio should generally become progressively more conservative as you grow older, but it is wise to consider maintaining at least a portion of your portfolio in growth investments. Many financial professionals recommend that you follow this simple rule of thumb: The percentage of stocks or stock mutual funds in your portfolio should equal approximately 100 percent minus your age. So, for example, at age 60 your portfolio should contain 40 percent stocks and stock funds (100% - 60% = 40%). Obviously, you should adjust this rule according to your risk tolerance and other personal factors.

Basic rules of investment still apply during retirement
Although you will undoubtedly make changes to your investment portfolio as you reach retirement age, you should still bear in mind the basic rules of investing. Diversification and asset allocation remain important as you make the transition from accumulation to utilization.

Laddering investments
Laddering investments is a method of controlling your investments to avoid having them all mature at the same time. The principle of laddering is simple: Stagger the maturity dates of the associated deposits or investments so that they mature in different time periods. You can apply laddering to any type of deposit, loan, or security having a specified maturity date, such as bonds.

Laddering can reduce interest rate risk
Interest rates rise and fall in response to many factors. Consequently, they are largely unpredictable. Whether you apply laddering to a cash reserve or use it in portfolio investing, minimizing interest rate risk is one of its most important benefits. Laddering investments minimizes interest rate risk because you will be investing at various times and under various interest rates. Thus, you are unlikely to be consistently locked into lower-than-market interest rates.

A single large deposit or investment that matures during an interest rate slump will leave you with two undesirable choices regarding reinvestment. You can hold the money in a low-interest savings account until rates improve or roll it over at the now low rate. However, a later rebound of interest rates can catch you locked into the prior low rate for an extended period. Breaking your investment into smaller pieces and laddering maturity dates allows you to avoid this situation.

How do you do it?
When you first begin your laddering strategy, you will need to acquire several term deposits (e.g., certificates of deposit) or securities with specified maturity dates. Initially, your individual investments should have terms of varying lengths, and you should intend to hold them until maturity. This will set up your staggered maturity dates. For example, you might purchase three separate certificates of deposit--one with a three-month term, one with a six-month term, and one with a nine-month term. When you reinvest as your CDs mature, your new investments should each be of the same length to perpetuate the staggering, or laddering, of maturity dates. Keep your laddering strategy intact by promptly redepositing each maturing investment for a new term.

Long-term care insurance
A catastrophic injury or debilitating disease that requires you to enter a nursing home can destroy your best-laid financial plans. You will need to decide whether to take out a long-term care insurance policy that may cover nursing home care, home health care, adult day care, respite care, and residential care. If you decide to purchase such a policy, you'll need to choose the best time to do so. Typically, unless you have a chronic condition that makes you more likely to require long-term care, there is generally no reason to begin thinking about this issue before age 50. Usually, there is no reason to purchase such a policy before age 60.

Won't Medicare pay for any long-term care expenses you might incur?
Contrary to popular belief, Medicare will not pay for most long-term care expenses, and neither will any health insurance you may have through your employer. Medicare benefits are only available if you enter a nursing home within 30 days after a hospital stay of three days or more. Even then, Medicare typically will only provide full coverage for 20 days of skilled nursing home care in Medicare-approved facilities. After 20 days, Medicare will cover part of the cost of care. You will pay $133.50 per day in 2009, and Medicare will cover the rest through day 100. No further coverage is available after 100 days.

What about Medicaid?
Medicaid is sponsored jointly by federal and state governments. Each state's Medicaid program is required to provide certain minimum medical benefits to qualified persons, including inpatient hospital services, nursing home care, and physicians' services. States also have the option of providing additional services. All states require proof of financial need. However, each state has different rules regarding benefits and eligibility, so it is essential that you understand your state's Medicaid program before you decide that Medicaid will provide adequate long-term care coverage.

How much does long-term care insurance cost?
Unfortunately, long-term care insurance can be quite expensive. If you begin coverage when you are younger, premiums will be more reasonable, but you will likely be paying for the insurance for a much longer period of time. The cost of LTCI will vary depending on your age, the benefits, and the insurer you choose.

This article was provided by Forefield and distributed by Lawrence Sprung.

Handling a Dispute with Your Insurance Company

Know your rights
The insurance industry is highly regulated. Your state has laws that dictate what insurance companies can and cannot do when it comes to bill collecting, settling claims, and other matters. The law may be called the Unfair Insurance Practices Act, the Unfair Claims Settlement Practices Act, or something similar. To learn about the laws in your state, call your state insurance department or check its website. Most states have the following regulations in place:

  • An insurance company cannot misrepresent your policy. In other words, the company cannot knowingly tell you that the policy means something that it doesn't actually mean. In addition, the company cannot change the policy without informing you in writing ahead of time.
  • The company cannot withhold payment on a claim against one part of your policy in order to force an issue on a claim against another part of your policy. For example, your insurer cannot withhold payment on a claim against the collision portion of your auto policy to force you to settle on the liability portion.
  • Companies must acknowledge and process claims promptly. In some states, companies have to acknowledge within 15 days that they received notice of a claim. After receiving the claim, they must investigate, process, and settle it quickly.
  • Companies cannot ask you for unnecessary forms in an effort to delay an investigation or payment of a claim.
  • Companies cannot make it a practice to appeal most court awards that favor their policyholders. Companies are allowed to appeal decisions they truly believe are unfair, but they cannot use the appeal process to force their policyholders to settle for less than they are due.
  • A company has to have a good reason to deny or delay a claim and must explain the reason to the policyholder. In most cases, lack of coverage or nonpayment of premiums is the reason for a denied claim. Or, the company could be misinformed about the details or circumstances of the claim.

Use your insurance agent or broker
If you have an insurance agent or broker, he or she can be a valuable resource in resolving disagreements amicably. Your agent or broker has an established relationship with the insurance company and knows where to go for help. An agent or broker can usually resolve the problem over the phone right from his or her office. Give him or her your policy number, copies of disputed bills, canceled checks, any written correspondence, and records of any phone conversations. If you don't have an insurance agent or broker, discuss the problem with a customer service representative from the company.
Write a letter

If you've had no luck resolving the problem through your agent or broker or by calling the company, write a letter to the appropriate manager at the company. For example, address letters regarding disputed bills to the accounting or finance manager. If possible, obtain the manager's name before writing the letter. Your letter should clearly state the problem and what you think would be a fair resolution. Include information about phone conversations you had with customer service representatives, such as dates of the calls and the names of the people you spoke with. Your letter should also include your policy number and your daytime telephone number. Finally, include copies of written correspondence, bills, canceled checks, or bank statements.

Get a third party involved
Complaints rarely come to this point, but if your company still hasn't resolved the problem to your satisfaction, there are a number of options you can pursue. Calling your state's insurance department is one such option--there are state insurance regulators who investigate policyholder complaints. In fact, if the state finds that the company is violating any state laws or regulations, the state could fine or otherwise reprimand the company. You might also consider contacting your state's consumer protection division or the Better Business Bureau. Another option is to seek an out-of-court settlement through arbitration or mediation. There are independent organizations that will provide this service when you have a dispute with your insurer.

Take legal action
As a last resort, you can take the insurance company to court. If the amount in question is below a certain threshold (this amount varies by state), small-claims court may be an option for you. You do not need an attorney in small-claims court.

If the amount is too big for small-claims court, you can hire an attorney. It is in the insurance company's best interest to settle disputes quickly, especially if they involve expensive litigation. Chances are good that once you hire an attorney and he or she contacts the insurance company, the dispute will be settled out of court.

If you educate yourself, have all the information at your fingertips, stay organized, and be persistent, you should be able to resolve your problem quickly.

This article was provided by Forefield and distributed by Lawrence Sprung.

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