Latest news with #USAA
Yahoo
2 days ago
- Business
- Yahoo
Why Parents Should Buy Life Insurance Even if — Especially if — Their Net Worth Is Low
Parents with low net worth may think life insurance isn't necessary because they don't have much in the way of assets to leave to their beneficiaries. However, financial and insurance experts say that's a misconception. Learn More: Check Out: Life insurance can not only protect what you do have — it can help your kids and heirs build wealth over time. Here are seven reasons why parents should buy life insurance, regardless of their net worth. Life insurance is one way for lower-earning individuals to leave their kids a financial cushion far greater in value than their net worth at the time of their death, according to Cynthia Campos Delgado, founder and financial advisor at Campos Wealth Management. 'Many times, [insurance can be] much larger than what they can accumulate on their own,' she said. 'Life insurance is buying a set amount of coverage, or death benefit, usually in a large amount.' When a family doesn't have much set aside in savings, the sudden loss of a loved one can quickly become a financial emergency, according to Amanda Hamala, senior vice president and general manager at USAA Life Insurance. 'Life insurance acts like a safety net — especially when times are tough.' This is especially true if the person who passes away was earning income or contributing to the household in other ways. 'Even a modest policy can keep the family from falling into crisis mode and give loved ones time to grieve without the added pressure of unpaid bills.' Hamala noted that even a $20 monthly policy can mean the difference between stability and a financial tailspin for a family earning $40,000 a year. Read Next: While many people get a low amount of life insurance through their employer, it comes with a problem. '[O]nce employment is terminated,' Delgado said, 'the coverage usually is as well.' Additionally, the cost of insurance increases as the participant gets older. If an employee opted to participate and many years later, chose to stop working, the cost of the same insurance 'would be significantly higher due to age and the loss of the group rate.' While your personal costs end when you pass, your family's don't. Hamala said funeral expenses can range from $8,000 to $15,000, and most families don't have that much sitting in a bank account. Additionally, debts that persist past a loved one's death, along with lost income, 'can ripple through a family for years, affecting rent, food, and children's futures,' Hamala said. Life insurance, she added, 'buys time, dignity, and breathing room — three things every family deserves during a loss.' Life insurance is also a way to provide financial support to your loved ones without getting tied up in probate — the legal process that occurs when there's no will, or when a will is being contested, according to Tyler Livingston, an estate planning and probate attorney at Coker, Robb & Cannon. 'A life insurance policy typically pays out directly to the named beneficiaries,' Livingston said. 'These funds can help cover immediate needs like rent, bills, groceries, or tuition — without waiting for a will to be processed or an estate to be settled.' A life insurance payout can cover immediate costs, but it can also help fund future goals, such as education, a home purchase, or even seed money for a business, depending on how the policy is structured and distributed, Livingston noted. 'When paired with an estate plan or trust, life insurance may offer a way to protect and preserve wealth for children or other heirs, even when the overall estate is modest,' he said. Additionally, Delgado emphasized that life insurance benefits are typically tax-free, which means your beneficiaries could receive a large lump sum they're free to use or invest however they choose. 'The doors to opportunities are open when you have a significant amount to utilize,' she said. If you're considering or going through a divorce, you should still consider life insurance — particularly term life insurance, according to Melissa Murphy Pavone, a certified financial planner and the founder of Mindful Divorce Partners. 'Divorce doesn't eliminate financial obligations. It often cements them in legally binding agreements,' she said. If one parent is ordered to pay child support or maintenance (alimony), term life insurance can be a useful tool to ensure those future payments are protected. 'If the paying spouse were to pass away unexpectedly, the receiving spouse and children could be left without essential financial support, potentially facing serious hardship.' Additionally, many divorcing parents don't realize that group life insurance policies may allow the insured to change beneficiaries at any time — often without notifying the other parent, Pavone explained. 'With an individual term life policy, beneficiary designations can be clearly outlined in the divorce agreement, and steps can be taken to ensure transparency and accountability.' Ultimately, parents with low net worth can't afford not to have life insurance — it creates a financial safety net for today's expenses and helps kids build a more secure financial From GOBankingRates 4 Things You Should Do When Your Salary Hits $100K If a Financial Advisor Doesn't Ask These 5 Questions in Your Consult, Keep Shopping 5 Steps to Take if You Want To Create Generational Wealth Robert Kiyosaki: 5 Money Habits of People Who Retire Early This article originally appeared on Why Parents Should Buy Life Insurance Even if — Especially if — Their Net Worth Is Low
Miami Herald
4 days ago
- Business
- Miami Herald
Los Angeles County fire victims sue AAA and USAA, alleging insurance fraud
Los Angeles County fire victims have filed lawsuits against three large home insurers alleging they were systematically underinsured, leaving them without enough money to replace or rebuild their homes after the Jan. 7 blazes. The twin lawsuits, filed Wednesday in Los Angeles County Superior Court, allege that USAA, a Texas-based insurer that serves the military community, and two insurers affiliated with AAA for years underestimated the replacement cost of the homes, lulling the policyholders into buying inadequate coverage. "These families paid their premiums, trusted their insurers, and did everything right," attorney Gregory L. Bentley said in a statement. "But when disaster struck, they learned their coverage was little more than an illusion. These companies promised peace of mind, but instead left their members stranded, homeless, and hopeless." The lawsuits allege fraud, negligence, breach of contract and other causes of action, and seek damages and reform of the insurers' practices. Bekah Nelson, lead communications director for USAA, said that the company was reviewing the lawsuit and could not comment on specifics, but said "USAA's dedication to outstanding member service is widely recognized." "When wildfires struck Southern California, our teams were on the ground within days, working to support our members in their time of need. To date, we have paid nearly $1.4 billion to help members recover from their losses," she said, adding the company has made payments on more than 90% of homeowner claims. A spokesperson for CSAA Insurance Exchange, which primarily serves AAA members in Northern California, said it does not comment on pending litigation. A spokesperson for the Interinsurance Exchange of the Automobile Club, which serves AAA members in Southern California, also declined comment. The lawsuits open a new front in the litigation that has been spawned by the catastrophic fires, which caused at least 29 deaths and damaged or destroyed more than 16,000 homes and businesses in Altadena, Pacific Palisades and other communities. Several lawsuits have been filed against the California Fair Plan Assn., the state's insurer of last resort, alleging that it is not adequately handling smoke-damage claims arising out of the fires. More than 100 of the state's licensed home insurers, including the CSAA, USAA and the Interinsurance Exchange, are defendants in an April lawsuit accusing the companies of colluding to drop policyholders and force them onto the FAIR Plan in order to reduce their claims exposure. The plan's policies typically cost more and offer less coverage than traditional commercial insurance. The lawsuits filed Wednesday, which are virtually identical except for details pertaining to the different defendants, allege that the problem of underinsurance is "pervasive" and stems from "cost estimator software many insurers use to recommend coverage limits to insureds," as well as "poor design choices, perverse profit and commission incentives, volume business, and other shortcomings." The lead plaintiffs in the lawsuit filed against the two AAA insurers, James and Lisa Fulker, bought a three-bedroom, two-bathroom, 1,872-square-foot home on Kingsport Drive in Malibu in 2020, according to the lawsuit. The newly renovated home - which featured a kitchen with a center island, quartz countertops, high ceilings, a fireplace, an entertainment patio and a master suite with a walk-in closet and spa-like bath - had $713,000 in primary dwelling coverage and 125% extended replacement cost coverage, the lawsuit states. After the fires, however, the couple found their coverage was inadequate as they received estimates of at least $800 per square foot or more to rebuild, far exceeding the $380-per-square-foot calculations of their insurer, the lawsuit states. The lead plaintiffs in the USAA lawsuit, Ethan and Marijana Alexander, had a 2,135-square-foot, four-bedroom, three-bathroom, near-custom home on Bienveneda Avenue in Pacific Palisades that they bought in 2018, according to the lawsuit. The home had $584,000 in dwelling coverage and a 25% home protection endorsement of $146,000, the lawsuit states. Even with the additional coverage, the complaint alleges the couple don't have adequate insurance to rebuild, with USAA calculating the cost at $342 per square foot and the couple receiving estimates at more than $850 to $1,000 per square foot, the lawsuit states. Copyright (C) 2025, Tribune Content Agency, LLC. Portions copyrighted by the respective providers.
Yahoo
5 days ago
- Yahoo
Los Angeles County fire victims sue AAA and USAA, alleging insurance fraud
Los Angeles County fire victims have filed lawsuits against three large home insurers alleging they were systematically underinsured, leaving them without enough money to replace or rebuild their homes after the Jan. 7 blazes. The twin lawsuits, filed Wednesday in Los Angeles County Superior Court, allege that USAA, a Texas-based insurer that serves the military community, and two insurers affiliated with AAA for years underestimated the replacement cost of the homes, lulling the policyholders into buying inadequate coverage. 'These families paid their premiums, trusted their insurers, and did everything right,' attorney Gregory L. Bentley said in a statement. 'But when disaster struck, they learned their coverage was little more than an illusion. These companies promised peace of mind, but instead left their members stranded, homeless, and hopeless.' The lawsuits allege fraud, negligence, breach of contract and other causes of action, and seek damages and reform of the insurers' practices. Read more: Did insurers collude to force homeowners onto state insurance plan? What to know from two blockbuster lawsuits A spokesperson for CSAA Insurance Exchange, which primarily serves AAA members in Northern California, said it does not comment on pending litigation. A spokesperson for the Interinsurance Exchange of the Automobile Club, which serves AAA members in Southern California, also declined comment. USAA did not respond to a request for comment. The lawsuits open a new front in the litigation that has been spawned by the catastrophic fires, which caused at least 29 deaths and damaged or destroyed more than 16,000 homes and businesses in Altadena, Pacific Palisades and other communities. Several lawsuits have been filed against the California Fair Plan Assn., the state's insurer of last resort, alleging that it is not adequately handling smoke-damage claims arising out of the fires. Read more: Palisades fire victims seek court order forcing FAIR Plan to turn over claims documents More than 100 of the state's licensed home insurers, including the CSAA, USAA and the Interinsurance Exchange, are defendants in an April lawsuit accusing the companies of colluding to drop policyholders and force them onto the FAIR Plan in order to reduce their claims exposure. The plan's policies typically cost more and offer less coverage than traditional commercial insurance. The lawsuits filed Wednesday, which are virtually identical except for details pertaining to the different defendants, allege that the problem of underinsurance is "pervasive" and stems from "cost estimator software many insurers use to recommend coverage limits to insureds," as well as "poor design choices, perverse profit and commission incentives, volume business, and other shortcomings." The lead plaintiffs in the lawsuit filed against the two AAA insurers, James and Lisa Fulker, bought a three-bedroom, two-bathroom, 1,872-square-foot home on Kingsport Drive in Malibu in 2020, according to the lawsuit. The newly renovated home — which featured a kitchen with a center island, quartz countertops, high ceilings, a fireplace, an entertainment patio and a master suite with a walk-in closet and spa-like bath — had $713,000 in primary dwelling coverage and 125% extended replacement cost coverage, the lawsuit states. Read more: Ten victims of the Jan. 7 fires sue the California Fair Plan over smoke damages After the fires, however, the couple found their coverage was inadequate as they received estimates of at least $800 per square foot or more to rebuild, far exceeding the $380-per-square-foot calculations of their insurer, the lawsuit states. The lead plaintiffs in the USAA lawsuit, Ethan and Marijana Alexander, had a 2,135-square-foot, four-bedroom, three-bathroom, near-custom home on Bienveneda Avenue in Pacific Palisades that they bought in 2018, according to the lawsuit. The home had $584,000 in dwelling coverage and a 25% home protection endorsement of $146,000, the lawsuit states. Even with the additional coverage, the complaint alleges the couple don't have adequate insurance to rebuild, with USAA calculating the cost at $342 per square foot and the couple receiving estimates at more than $850 to $1,000 per square foot, the lawsuit states. Sign up for our Wide Shot newsletter to get the latest entertainment business news, analysis and insights. This story originally appeared in Los Angeles Times.
Los Angeles Times
5 days ago
- Business
- Los Angeles Times
Los Angeles County fire victims sue AAA and USAA alleging insurance fraud
Los Angeles County fire victims have filed lawsuits against three large home insurers alleging they were systematically underinsured, leaving them without enough money to replace or rebuild their homes after the Jan. 7 blazes. The twin lawsuits, filed Wednesday in Los Angeles County Superior Court, allege that USAA, a Texas-based insurer that serves the military community, and two insurers affiliated with AAA for years underestimated the replacement cost of the homes, lulling the policyholders into buying inadequate coverage. 'These families paid their premiums, trusted their insurers, and did everything right,' said attorney Gregory L. Bentley in a statement. 'But when disaster struck, they learned their coverage was little more than an illusion. These companies promised peace of mind, but instead left their members stranded, homeless, and hopeless.' The lawsuits allege fraud, negligence, breach of contract and other causes of action, and seek damages and reform of the insurers' practices. A spokesperson for CSAA Insurance Exchange, which primarily serves AAA members in Northern California, said it does not comment on pending litigation. USAA and the Interinsurance Exchange of the Automobile Club, which serves AAA members in Southern California, did not immediately respond to requests for comment. The lawsuits open a new front in the litigation that has been spawned by the catastrophic fires, which caused at least 29 deaths and damaged or destroyed more than 16,000 homes and businesses in Altadena, Pacific Palisades and other communities. Several lawsuits have been filed against the California Fair Plan Association, the state's insurer of last resort, alleging that it is not adequately handling smoke-damage claims arising out of the fires. More than 100 of the state's licensed home insurers, including the CSAA, USAA and the Interinsurance Exchange, are defendants in an April lawsuit accusing the companies of colluding to drop policyholders and force them onto the FAIR Plan in order to reduce their claims exposure. The plan's policies typically cost more and offer less coverage than traditional commercial insurance. The lawsuits filed Wednesday, which are virtually identical except for details pertaining to the different defendants, allege that the problem of underinsurance is 'pervasive' and stems from 'cost estimator software many insurers use to recommend coverage limits to insureds,' as well as 'poor design choices, perverse profit and commission incentives, volume business, and other shortcomings.' The lead plaintiffs in the lawsuit filed against the two AAA insurers, James and Lisa Fulker, bought a three-bedroom, two-bathroom 1,872-square-foot home on Kingsport Drive in Malibu in 2020, according to the lawsuit. The newly renovated home — which featured a kitchen with a center island, quartz countertops, high celings, a fireplace, an entertainment patio and a master suite with a walk-in closet and spa-like bath — had $713,000 in primary dwelling coverage and 125% extended replacement cost coverage, the lawsuit states. After the fires, however, the couple found their coverage was inadequate as they received estimates of $800 per-square-foot or more to rebuild, far exceeding the $380 per-square-foot calculations of their insurer, the lawsuit states. The lead plaintiffs in the USAA lawsuit, Ethan and Marijana Alexander, had a 2,135-square-foot, four-bedroom, three-bathroom near-custom home on Bienveneda Avenue in Pacific Palisades that they bought in 2018, according to the lawsuit. The home had $584,000 in dwelling coverage and a 25% home protection endorsement of $146,000, the lawsuit states. Even with the additional coverage, the complaint alleges the couple don't have adequate insurance to rebuild, with USAA calculating the cost at $342 per square foot and the couple receiving estimates at more than $850-to-$1,000 per square foot, the lawsuit states.
San Francisco Chronicle
5 days ago
- Business
- San Francisco Chronicle
Three major California insurers accused of systematically underinsuring L.A. fire survivors in new lawsuits
A pair of new lawsuits accuse three of California's largest insurance companies of 'systematically' underinsuring homeowners via flawed cost estimation software, leaving survivors of the Los Angeles wildfires unable to rebuild. The suits, which followed a Chronicle investigation into the issue, were filed Thursday in Los Angeles Superior Court against USAA as well as the Interinsurance Exchange of the Automobile Club and CSAA, the two AAA-affiliated home insurers for California. They allege the three companies knowingly insured homeowners for far less than the rebuild value of their homes through their use of computer programs they'd known for decades were faulty, making it difficult if not impossible for those homeowners to rebuild. 'The carriers are not telling insureds that the number they're giving them is not even close to the ballpark,' attorney, Gregory Bentley, told the Chronicle Thursday. His firm, Bentley & More, filed the suit and represents the families in both cases. 'It's misrepresentation. It's fraud,' Bentley said. The allegations come months after the Chronicle published an investigation into how flaws in the software, called 360Value, and the way insurance companies use it have left many homeowners underinsured after wildfires. The story reported on examinations by the California Department of Insurance, including one into USAA, that found widespread underinsurance following 2015 and 2017 California wildfires related to the insurers' use of the tool. In response to the department's report, USAA agreed to pay more than $11 million back to homeowners and implement procedures to prevent future mistakes. Another investigation into CSAA, the AAA-affiliated insurer for northern and central California, led to more than $40 million in additional payments. USAA is the sixth largest home insurer in California as of 2023. CSAA is the third-largest, and the Interinsurance Exchange the eighth-largest. No insurer responded to a request for comment. Verisk, the creator of 360Value, is not a named party in either suit. A Verisk representative also did not respond to a request for comment. Industry representatives previously told the Chronicle that homeowners are responsible for selecting their own coverage limits and sometimes choose insufficient limits due to poor research or a desire to keep their premiums low. But the lawsuits allege that the homeowners relied on USAA and AAA's recommendations and the insurers' advice that the numbers were adequate. In one case, the complaint specifically alleges that AAA refused to allow a defendant to buy more insurance beyond what 360Value recommended. The Chronicle's investigation found that the 360Value tool can underestimate rebuilding costs and rely on incorrect information about a home, such as the wrong number of stories, leaving homeowners with coverage limits that are at times hundreds of thousands of dollars too low. Verisk representatives previously told the Chronicle that 360Value is simply 'an advisory tool' for insurers that attempts to make an objective analysis based off of millions of pricing data points. They noted there are many factors that can unexpectedly influence the cost of building, such as rapid inflation. The case against USAA alleges three families in the Pacific Palisades and one in Altadena were each signed up for policies ranging between $264 to $538 per square foot to rebuild their homes. However, initial estimates after the fire have put the true cost of rebuilding at $800 to $1,400 per square foot, according to the complaint. The two families suing AAA — one in Malibu and the other in the Pacific Palisades — claim their homes were insured for $278 and $342 per square foot, respectively, leaving both 'drastically underinsured.' Speaking generally, Dan Veroff, a San Francisco-based lawyer specializing in insurance cases, said it's typically difficult to hold an insurer legally responsible if policyholders find themselves underinsured after losing their home. California courts have ruled homeowners are mainly responsible for choosing their coverage limits and making sure they are adequate. However, exceptions exist — for example, if an agent explicitly promises that a homeowner is fully insured, or signs a homeowner up for less coverage than they requested. The Los Angeles fires could reveal a uniquely devastating level of underinsurance. After wildfires, high demand for labor and materials typically causes the cost of rebuilding to rise 15% to 30%, according to research from the data analytics firm Cotality. In Los Angeles, building costs are also rising due to the Trump administration's tariffs on materials such as Canadian lumber and its crackdown on illegal immigration, impacting the local labor market. Most home insurance policies provide a buffer for these types of unexpected costs known as 'extended replacement cost' which typically provides an extra 10% to 50% of coverage. But if a homeowner's base coverage limit is too low, then even extended coverage can't prevent underinsurance. Late last month, the California Board of Equalization held a two-hour hearing into the causes and consequences of underinsurance, citing the Chronicle's investigation. Multiple experts recommended potential legislation to require insurance companies to offer 50% extended replacement cost coverage as a means to combat underinsurance. The board is expected to issue a report with recommendations for legislative and regulatory actions later this month. Bentley said every single one of his firm's clients in the Los Angeles wildfires is 'woefully underinsured.' He said his firm will soon file underinsurance lawsuits against additional carriers in response to the L.A. wildfires.
