Author Archives: reganinsurance

Is your business protected?

You have decided to make your dreams come alive by opening or expanding your small business? It’s an exciting time, but you should also be thinking about the disasters that can as affect you as a business owner.

Each business faces unique risks. Working with a Trusted Choice® independent insurance agent can provide your business with not only the protection it needs, but also the level confidence every business owner should have in a worst-case scenario . Here are some of the most common issues business owners face when it comes to protecting their businesses.

Property Damage

You have found the ideal location for your new business. Now what? Talk to your insurance agent about your intentions before investing, and ask an inspector to examine electrical, structural and exterior elements of your new building. Beyond this, your insurance policy will reflect protections against damage from fire, storms and other accidents. If you are concerned about any other additional liabilities, don’t be shy—speak up and talk to your agent about your concerns.

Liability

If you sell products or offer professional services, you may be aware of product or malpractice liability when it comes to insurance. While most business owners would not purposely sabotage their business or reputation, mistakes happen—and it’s always better to be safe than sorry. Most small business owners have to rely on other people in order for their businesses to fully operate, and your Trusted Choice independent agent can help to protect you from third-party fault as well.

Fraud and Cyber Crime

It is more common now than ever to do business over the Internet. Email, e-commerce and electronic databases are integral pieces of most business practices. That’s why it’s important to evaluate your business risk factors and make sure you have adequate coverage should anything happen. You may be careful and trustworthy with you customer’s personal information, but in some cases, employees, contractors and your customers themselves may not be as cautious.

Sharing is Caring

Your Trusted Choice agent will ask you questions like “How do you serve your customers?” and “Tell me about the security of your data and intellectual property.” Don’t be alarmed—it’s an insurance agent’s job to get into your “business.” In order to offer you the best insurance policy, your agent needs to know the inner workings of your work. When evaluating your insurance needs, you may forget to think about certain exposures—or you might not even know they exist to begin with! Or maybe you assume certain liabilities are covered under a standard policy—your agent can confirm whether or not that’s true. To end up with the best policy possible, invite your agent to your business location or to come see you in action. Let your agent take care of the heavy insurance lifting so you can focus on serving your own customers.

Prepared for the Worst

When it comes to disaster, Fox Business suggests building an emergency kit for your business location. What are the key ingredients? Water, batteries, flashlights, a fire extinguisher, non-perishable food, a whistle and first-aid items. You can find a complete checklist for your emergency kit on the Red Cross website .

SOURCE:

https://www.trustedchoice.com/business-insurance/

www.smallbusiness.foxbusiness.com

Weekend Warrior: In like a Lion, Out on a Stretcher?

Ah, those first warm breezes of spring! Soon even the most devout winter couch potato’s dreams turn from football on television to those long-harbored visions of a major landscaping project or exterior home refresh. It’s not just baseball where spring hopes spring eternal!

 But sudden activity shifts need to be approached cautiously. “Weekend warrior syndrome” is real — and painful — as discovered every year by sedentary individuals whose New Year’s resolutions cause them to leap full-tilt into gym workouts.

 And who knew that weekend warrior syndrome can also be seasonal? Thousands of injuries are suffered every spring when formerly sedentary folks begin gardening, climbing ladders, using lawn equipment such as mowers, and, in the process, breathing fumes from chemicals.

 Your Trusted Choice® agents understand the emerging warriors of spring, and we would like to offer some simple advice that may help prevent your dreams of gain from all-too-quickly sinking into the depths of pain:

 ·         Warm up before working out. If it’s right for the gym, it’s right for the yard. Those winter muscles need to be loosened up before easing into harder tasks. Just watch baseball teams at spring training — they do plenty of exercise and run many laps before picking up those gloves, balls and bats.

·         Wear proper clothing. You want to be comfortable, but protected from the sun, and your clothing should not be so loose it risks catching on lawnmowers, hedgers, trimmers, or other outdoor equipment.

·         Use proper sunscreen. That spring sun can be hotter than it feels, so remember to reapply the lotion at regular intervals.

·         Use protective gear. If you are performing tasks involving flying debris, paint, chemical sprays, or contact with potentially harmful plants and thorns, always wear proper eye, hand, head and other protective gear.

·         Pace yourself. “No pain, no gain” may be a motivating mantra for top athletes, but it’s terrible advice for us regular folks. Pain is your body’s way of telling you to ease off before things get worse. Especially with sharp or repetitive pains, take the hint and take a break. That tree or walkway has waited all winter; it can wait till tomorrow.

 This spring, your Trusted Choice® agent hopes you remember to take good care of yourself as well as your home and yard. While we enjoy helping our clients with the proper insurance coverages for when things do go wrong, we also believe no pleasant day outdoors should end with a ride to the emergency room. You want to enjoy this great weather in a swing, not a sling!

Winter Newsletter

TheSignal

New Additions to Our Depot

Waltham Highlands Train Depot

To share the historical significance of the Waltham Highlands train station, we have arranged an exhibit of large scale photographs on the depot’s exterior. The images date from the late 1800s to the mid 1900s. These displays of history are a glimpse of what we have to offer. We sincerely enjoy sharing our collection of photographs and postcards. Please continue to stop by for viewings.

Happy 2014

Thank you for making our first Winter Wonderland Open House a big success here at the office. We were delighted to connect with so many of you who came to see the decorations and enjoy warm conversation and food.  Thanks to those who came to share in the fun with us.LoonIceCastle

On a personal note, we celebrated some milestones in the Regan Family. One of the most exciting moments was watching our daughter, Sarah, open up her acceptance letter for the college of her choice on Christmas Eve!  It was truly amazing to see the excitement on her face.  Elizabeth now has her driver’s permit and is confidently learning to drive.   She is also racing for the School Ski team which brings back memories from when I was a kid racing on Prospect Hill. Timothy has been enjoying skiing and rehearsing every day for the upcoming school play.  He also made his first guest appearance as Santa Claus at our Christmas Party. Deborah and I are enjoying our weekends up at Loon Mountain, hiking with our dog Murphy, and visiting the new Ice Castle. We truly hope that this winter has brought you and your family joyous memories as well.

Before we know it spring will be coming, the bulbs surfacing in our yards which signify the immense possibilities awaiting each one of us in 2014. I am grateful to have the opportunity to service your expanding insurance needs. We know we can provide the peace of mind and protection you need to move forward in pursuing your own dreams.

Have a Great Year,

Tim

The Super Bowl Nightmare

Imagine being at the Super Bowl  and receiving a phone call from your spouse that back home, your ceiling has collapsed. A small stain in the ceiling that you noticed weeks ago suddenly became over $100,000 in damages due to an ice dam. Thousands of miles away, you feel helpless.

For our client, Bill, this nightmare became a reality. He contacted Tim in a panic with  the dreaded news. Tim knew he had the correct coverage and immediately called Bill’s wife to set her mind at ease. This was a serious matter that needed to be resolved quickly.  He was able to get in touch with the emergency claims personnel to contain the situation and stop the flow of water, preventing further damage. Tim worked with the insurance company to get Bill’s family into a hotel while their house was under repair. After several months, they were able to move back to their newly renovated home. They were able to enjoy this year’s Super Bowl with no interruptions.

At Regan Insurance, we take your protection very seriously and believe our first duty is to ensure that our clients have the coverage necessary to rebuild their lives after a loss. While we may not be able to predict the unexpected, having a contingency plan and a solid insurance policy in place can offer a great deal of comfort.

Since 2012, we are proud to have helped settle over $3,000,000 in claims. 

Bring on the New Year

What an exciting year 2013 was both personally and professionally. We welcomed Meghan as a new member to our team and she has excelled beyond our expectations. Many of you have already had the pleasure of working with her and for those who haven’t, I’m sure you’ll be hearing from her in the near future.

Leah+TommyIt’s truly been a pleasure connecting and reconnecting with our clients. Through our newsletter, open houses, Facebook, and one-on-one policy reviews, we’ve been able to understand and help so many more clients than before.  I’m energized to see what 2014 will bring!

As for me personally, 2013 left me with memories I will cherish for the rest of my life. Our long-awaited Disney vacation was as magical as the park itself.  Our children are growing up so fast – it was nice to share that experience with them while the fantasy and magic still lives in their eyes. That is something I hope they will never lose.

This year, I am honored to have been selected as one of the 20 insurance professionals on the MAIA Young Agents Committee. The Massachusetts Association of Insurance Agents created this task force to help shape the future of our industry. There is a lot of work to be done and the MAIA Young Agents Committee has planned some great, high profile events. Please follow Regan Insurance or Young Agents Committee on Facebook to keep yourself apprised of new insurance initiatives in Massachusetts.

All the Best,

Matt

The Importance of Life Insurance

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Meghan’s First Year at Regan Insurance

Last month marked my one year anniversary with Regan Insurance. It has been such a pleasure meeting so many of our clients and neighbors. I hope to continue meeting more of you through our open houses and as you come by to visit our office.

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The year 2013 brought significant change to my life, both personally and professionally. I am happy to be on a new career path with Tim and Matt leading the way. They were very supportive in helping me pass the insurance licensing exam and continue to aide me as I seek special designations.

Over the holiday season I had a wonderful time with family and friends. I am so grateful that most of my family is local and I look forward to spending more time with them throughout this year.

Cheers,

Meghan

3 Tips for Keeping You and Your Family Safe

Whether it is preparing for a natural disaster like Superstorm Sandy or avoiding common causes of everyday disasters like water damage, fires and carbon monoxide poisoning, there are resources for home and business owners that can help protect lives and property.

1) Create a survival kit
2) Have a plan
3) Build an inventory

To download a disaster preparedness checklist visit:
www.reganinsurance.com/safe_tips/

Your Account Review

While your life is consistently changing, it is important to keep your insurance up to date. Call before your policy renews for a complete account review. We will ensure that you have the appropriate coverage and limits and check that you are receiving discounts you may be eligible for.

Call or email Meghan 
meghan@reganinsurance.com
(781) 893-1181 ext. 100

Wedding Insurance

WeddingThat’s right; we offer wedding insurance! Visit our website for more information on why you  should consider having insurance for your special day.

Do You Need Life Insurance?

The most frequently asked question about life insurance is: Do I need it? The answer depends greatly on your situation. So, let’s determine if you need it. Review these statements and check all that apply:

□ I am married.
□ I have children.
□ Our family recently welcomed a new baby.
□ I am single, but I have dependents (a child or an elderly relative) who I support.
□ I am the sole breadwinner in my household.
□ I recently changed jobs.
□ My income has changed.
□ I recently bought a house.
□ I will pay for my children’s college education.
□ I own a business.
□ I am in debt.
□ My family has a history of illness, such as diabetes or heart disease.
□ I have trouble saving/investing money.

If you checked any of these statements, you need life insurance to protect the loved ones who rely on you for their financial support.

Imagine if you died unexpectedly. What would happen to your spouse, your children and other dependents? Would their standard of living or care slip significantly? Who would pay your children’s college tuition? Who would pay your mortgage and other debts? Would your business survive?

With life insurance, these concerns go away. If for no other reason, get life insurance for those most important to you—your family.

Life insurance tips

Now that you’ve determined that you need life protection, here are 10 suggestions to help you look for the best life policy for your family’s needs:

1. Get the right amount. Remember that the amount of life insurance you need is directly related to the dependency of your family. An eight-year-old child is more dependent than a 20-year-old already is in college. Plus, knowing how much coverage you need prevents you from paying for unnecessary insurance.
2. Start young. Get your life insurance while you’re young. Generally, premiums are cheaper for younger people because they are healthier than the rest of the population. Also, buying young will enable a cash-value policy to grow in value.
3. Live healthy. Don’t smoke. Tobacco users pay more than twice the premium as non-smokers. Also, don’t cheat because benefits can be denied if someone who claims to be a non-smoker dies of a smoking-related illness. Also, you can improve your insurability and get a better rate by routinely visiting your doctor and improving medical conditions, like high blood pressure.
4. Know what life policy you need. Learn the difference between term life and whole life policies, as well as that of a cash-value policy versus an annuity. There are products that serve several purposes and those that serve a single purpose. Know what your needs are first. Then you’ll know which coverage you should purchase.
5. Dual incomes? If you and your spouse are breadwinners, get life insurance for both of you. That way, if either of you passes away, the family’s standard of living will not suffer.
6. Prepay the premium. Ask the insurance company if you can pay your premium in advance, instead of monthly. This approach will save money on administrative or handling fees. Not all companies do this, but it never hurts to check.
7. Want to save money, too? Some life insurance products—known as “cash-value policies”—are both a savings tool and a death benefit. These polices are ideal if you cannot save money. The cash value accumulates and can be borrowed or used for other purposes.
8. Buy ‘bulk.’ Some insurance companies charge less for buying more. For example, it may be cheaper to purchase a $250,000 policy rather than the $230,000 you need.
9. Don’t rely on employer-provided coverage. Many group plans limit the amount of coverage offered, which may not be enough for your needs. Additionally, you likely cannot take the life insurance with you if leave your job.
10. Keep your coverage current. Major life events will impact the amount of coverage you need. Many events—such as having a child, getting married or buying a big house—will increase the amount of coverage you need. Others—such as children leaving the roost—may decrease the coverage you need.

Losing you would be painful enough for your family. The right life insurance can at least alleviate concerns about the financial implications of your death.

Regan Insurance Agency is a local Trusted Choice® agency that represents multiple insurance companies, so it offers you a variety of personal and business coverage choices and can customize an insurance plan to meet your specialized needs. You can visit Regan Insurance Agency online at www.reganinsurance.com or call it at (781) 893-1181.

Does Volunteering Your Time Mean Volunteering Your Insurance?

Millions of Americans donate time—their most valuable asset—to serve as a volunteer board member on non-profits, booster clubs, churches, PTAs and civic organizations, just to name a few. The decisions these folks make can have a dramatic impact on their respective organization—and not always for the better. If a volunteer endeavor goes bad, would a volunteer board member have coverage against a lawsuit under his or her homeowner’s policy?

Homeowners’ Insurance
The last thing volunteers want to consider is what would happen if their favored organization file suit against them as a result of their efforts. But it happens, and not infrequently. This does happen, especially when volunteers make decisions that directly influence the finances of an organization. Often, the only insurance these volunteers have to back their efforts is a homeowner’s policy. Unfortunately, this policy may be of little assistance.

The reason homeowners’ policies do not usually cover liability stemming from actions as a volunteer is the nature of the claim. The policy is designed to cover claims of “bodily injury,” such as someone slipping on cracked pavement in your driveway; and/or “property damage,” such as accidentally setting your neighbor’s house ablaze when burning some brush on a windy day.

Claims against board members do not usually involve bodily injury or property damage. Rather, they involve bad decision making that results in financial loss to the organization, such as the decision to invest in an IT system that turns out to be a debacle, costing the organization tremendous time and money.

There is another problem. Homeowners policies do not cover “professional services.” This is important to note, because board members are often asked to serve in a capacity consistent with their profession. For example, a church member who is a CPA may be asked to serve on the church’s board as finance chairman. Even though he is not paid for his services, the “professional services” exclusion under his homeowner’s policy would still apply.

In addition to the above, homeowners policies do not cover claims of personal injury unless this coverage is specifically added. Personal injury insurance is added to the homeowner’s policy to cover claims such as libel, slander, wrongful eviction, and false advertising.

What to Do
Events causing claims are unpredictable. While the reasons shown above prove it’s unlikely, not all claims against volunteer board members are excluded by a homeowners policy. Decisions to purchase personal injury coverage and a personal umbrella policy will increase your ability to find coverage for a suit against you.

The best method for insuring the actions of board members is for the organization to purchase a directors and officers (D&O) liability policy. These policies are relatively inexpensive for most non-profits. Before volunteering, request information on the organization’s D&O policy. The absence of this insurance leaves you at risk of having no personal insurance to defend a suit brought against you by the organization and should influence your decision to serve.

Regan Insurance is a local Trusted Choice® agency that represents multiple insurance companies, so it offers you a variety of personal and business coverage choices and can customize an insurance plan to meet your specialized needs. You can visit Regan Insurance online at www.reganinsurance.com or call it at (781) 893- 1181.

Answers to This Season’s Trivia Questions

Where did the first Thanksgiving meal take place?
Plymouth, Massachusetts in 1621; It was spelled Plimoth at the time.

When was the first Macy’s Thanksgiving Day Parade held?
Answer: The first Macy’s Day Thanksgiving Parade took place in New York City in 1924 and featured the animals from Central Park Zoo.

What does the term “Cornucopia” mean?
Answer: Horn of Plenty

What American President did not like the idea of a National Thanksgiving Day?
Answer: Thomas Jefferson

What was the name of the ship the Pilgrims sailed over on?
Answer: The Mayflower

Which Native American tribe celebrated the Thanksgiving feast with the Pilgrims?
Answer: Wampanoag

Business Use of Your Personal Auto

Business Use of My Personal Vehicle: Will My Insurance Work?

There are over 240 million registered motor vehicles in the U.S., according to the Census Bureau. At a given time, as many as a third of those clutter American roadways, and it is estimated that one-fourth of those are being used in the course of work.

Running errands, making deliveries, visiting customers. Even for those whose employment is not based on driving, it’s fair to say that your vehicle is an essential part of your employment. This presents an important question: If you are involved in an accident in the course of employment, are you covered by your personal auto insurance policy (PAP)?

Like most insurance questions, the answer depends on circumstance. For example, what kind of car are you driving? Does the car belong to you or someone else? What type of business are you in?

Consider the language found in the typical PAP. At a glance, many policyholders are shocked to see that the PAP appears to exclude coverage for the use of any vehicle in the course of business other than farming or ranching. However, a very broad exception to this exclusion allows coverage for the business use of a vehicle provided it is one of three types: 1) a private passenger auto, 2) a pickup or van, or 3) trailer while used with the aforementioned. This exception suggests that as long as the vehicle is one of these three types, coverage remains intact after the accident.

But policyholders should proceed with caution, since some PAPs are not as generous. For example, some versions may be more restrictive towards pickups or vans, possibly including a gross vehicle weight (GVW) limitation or a clause that restricts coverage to owned pickups or vans only. Be sure to consult your policy before driving any pickup or van for work.

Further, policyholders should understand that any coverage permitted for business use of personal vehicles by the PAP is not intended for these three vehicle categories:

Commercial-type vehicles. The PAP restricts business use to private passenger autos, pickups and vans. While they can be purchased personally, box trucks, tractor trailers, shuttle busses and other commercial-type vehicles do not fit this description; such vehicles require a commercial auto policy.

Furnished or available for regular use. Often called the “company car” exclusion, this provision is dangerous and must be remedied if the exposure exists. The reason is that a typical PAP will exclude coverage for a vehicle that is regularly available to the policyholder but is not specifically insured under the PAP. For example, if you are furnished a company car as a benefit to your employment, make certain that you are covered by your employer’s auto insurance policy. If not, specific action is required to extend coverage under your PAP; it will not do so automatically. The good news is that this coverage change is usually inexpensive and can be done easily; just be sure to request the change now, before the accident happens. While the definition of furnished or available for regular use varies by case, err on the side of caution. Don’t assume that because you don’t take it home with you each night or that you only drive it occasionally you’re in the clear. Regardless, a vehicle owned by your employer could be considered available for your regular use. This exclusion presents a potential gap that is too risky to ignore; your Trusted Choice® agent can help you take the appropriate steps to close it.

Vehicles that are the business. A PAP will not cover your vehicle if you use it to carry people for a fee, such as a taxi, limo or shuttle. The only exception is a share-the-expense car pool. And if you’re planning to make a few extra bucks delivering pizzas, auto parts, newspapers or other goods, proceed with caution. Many PAPs also remove coverage for vehicles that are used to deliver food or other types of property for a fee.

While in most cases the PAP will cover you for business use of a personal vehicle, there are situations where it will not. Such situations are not uncommon and, if not remedied, could result in significant financial detriment for you and your family. Consult your Trusted Choice® agent for advice on how to close potentially devastating gaps in your PAP today.

Regan Insurance Agency is a local Trusted Choice® agency that represents multiple insurance companies, so it offers you a variety of personal and business coverage choices and can customize an insurance plan to meet your specialized needs. You can visit Regan Insurance Agency online at www.reganinsurance.com.

Business Insurance

Small Businesses: Don’t Let Business Risk Share Your Home

The diversification of the U.S. economy over the past generation has meant that millions of Americans have started their own businesses. Americans still chase the dream of being their own boss by starting their own business—and the trend may pick up during the economic slump of 2009 because of hiring slowdowns and spikes in corporate layoffs.

Small businesses are the biggest driver of job growth, generating 60 to 80 percent of net new jobs annually over the last decade, according to the U.S. Department of Commerce. Small firms employ half of U.S. workers.

And the sole proprietor is alive and well: In 2005, there were six million firms with employees but a whopping 20.4 million firms who had no employees other than the owner, according to the Small Business Administration.

Of all small businesses, 52 percent are home-based. That means millions of Americans are earning their business income where they live. But business owner beware: Don’t expect homeowners insurance to cover business risks.

Business insurance offers protection from liability and property risks. Often these coverages are combined into a package policy called a BOP or business owner’s policy. Millions of small and mid-sized business owners purchase or renew their BOP every year.

Typically, a BOP includes the following coverages:

Property insurance for buildings and contents of the business. Home-based business might not need coverage for their property, since it’s already insured against risks of fire, lightning and windstorm. But if there are additional risks to the structure because of the presence of business operations, those won’t necessarily be covered by homeowners insurance. Your Trusted Choice® insurance agent can help determine if a special endorsement or a separate policy are most appropriate.

Home-based businesses might not have adequate coverage through homeowners insurance because homeowners policies often have “sublimits” restricting coverage for business property. For instance, the homeowners policy may cover business property, but typically only up to $2,500 while it is “on premises” and up to $500 while the property is “off premises.”

One example of inadequate coverage was a home-based retail cosmetics/personal care business that kept $20,000 of inventory in a garage that caught fire. The inventory was covered only up to the sublimits of the homeowners policy. Another instance: Coverage would be limited to the “off premises” limit of $500 if a laptop computer valued at $1,500 that is stolen while the business owner has it away from home.

Property insurance for buildings and contents of the business. Home-based businesses might not need coverage for their property, since it’s already insured against risks of fire, lightning and windstorm.

If there are additional structures on a residential property where the homeowner operates a business, those won’t necessarily be covered by homeowners insurance. For example, a detached garage that serves as a small-engine repair shop would not be covered by homeowners insurance; that business owner would need a policy endorsement to gain coverage.

Business interruption insurance. This protects against loss of income resulting from a fire or other covered event that disrupts the business. This coverage can also include the extra costs a business shoulders while it works from a temporary location. A fire in a home can be double trouble for a home-based business.

Liability insurance. This protects the small business for legal responsibility for the damage it causes to other people or entities. Liability insurance is usually priced according to the risk of the industry in which the business operates. A business that manufactures toys, for example, faces different risks than a consulting firm. Liability insurance shields a business and its employees if they cause bodily injury or property damage.

Not included in a BOP are professional liability coverage, automobile insurance, workers compensation, medical insurance and disability insurance. All can be covered with separate policies.

Insurance: 3 Questions Consumers Want Answered

Insurance comes in a wide array of choices for a variety of consumer and business needs. Even the best-educated consumer who spends time researching insurance issues will come across a topic he or she doesn’t understand.

Let’s take a look at what consumers say when asked: “What’s one thing you don’t understand about insurance?” Here are three common questions that Trusted Choice® insurance agents and brokers hear:

Q: Why do I need insurance?

Insurance is for the uncertainties of life. Accidents and catastrophes happen. What can’t be predicted is when they will occur, and whom they will affect. Most people understand they’ll get sick at some point in their lives, but they can’t predict the severity and extent of the illness nor the cost of the treatment.

Catastrophes strike: In 2005, there were 24 weather-related or other disasters causing a total of $61 billion of insured losses. Hurricane Katrina alone caused $41 billion in damage from 1.75 million insurance claims.

Even the safest drivers face the risk of an accident, and even the safest homes can catch fire. In 2006, about 5 percent of insured homes had a claim, according to the Insurance Services Office. About 94 percent of these homeowners insurance claims were for property damage, including theft.

Lawsuits are another uncertainty that businesses and homeowners face. They’re costly: In the 56-year period from 1950-2006, the costs of the tort lawsuit system in the U.S. increased an average of 9.2% each year, reported Tillinghast-Towers Perrin. While most lawsuits are settled before they reach the courtroom, Jury Verdict Research data show that the median plaintiff award in personal injury cases was $45,000 in 2005, compared with $32,000 in 2002. Insurance provides two benefits to those who are sued: It pays for the cost of defending the lawsuit and pays for any liability payments for which the insured is found responsible.

Q: How do you define what insurance is … or does?

Insurance is simply a vehicle for transferring risk from one party to another. You need insurance if you have financial risk (and everyone does) and you want to reduce that risk. To do so, you pay someone else (e.g., the insurance company) to assume much of the risk for you, in return for a payment known as a “premium.”

Because American consumers hold a tremendous amount of wealth in property—ranging from homes and cars to collections of baseball cards and Christmas ornaments—they have a basic need to protect themselves from losing that value.

Insurance is designed to “make people whole” after their property or assets are damaged or stolen, or if they are responsible for harm caused to another party. An insurance policy is a contract under which an insurance company agrees to pay a certain amount of money to the policyholder if certain events happen (and their property is damaged or they cause harm to someone else or someone else’s property).

Q: Is life insurance an investment or purely insurance?

A: Life insurance for centuries has been first and foremost insurance: it provides a death benefit to the family or business partners of an insured person.

Beginning about 30 years ago, the attractive returns in stock investments led insurance companies to bring investment elements into life insurance policies. For example, agents and companies offered consumers the choice of placing life insurance premiums into mutual funds, stocks, and bonds within the life insurance contract—known as “variable” life insurance. The term “variable” implies that the investment returns on these premiums vary with market performance.

With these types of life insurance policies, the insurance carrier takes the policyholder’s premium dollars and places them in the investment account(s) chosen by the policyholder. These types of life insurance policies are subject to state insurance regulation and federal and state securities regulations.

While investment-oriented life insurance has grown popular over the past generation, traditional life insurance (both permanent and term) continues to be purchased in large amounts. Americans purchased $3 trillion of new life insurance coverage in 2006, according to the American Council of Life Insurers.

If you’re not sure whether a life insurance policy includes investment elements, you can check the disclosure information on a life insurance application or policy, which must discuss whether securities are part of the life insurance contract.