FLM Step 26: The Debt Advisor on protecting your financial future

In honor of Financial Literacy Month, we created a microsite that offers 30 simple steps to financial wellness–one for each day of the month. To enrich the experience, we asked some amazing people to guest post during the month on a topic that is related to the day’s step. Their dedication to financial literacy is truly inspiring! Today, book author and financial advice columnist Steve Bucci talks about protecting your financial future.

Why Kim asked me to write to you about insurance must be because she doesn’t like me! Just the name can kill a good conversation. “Question: What do you do for a living? Answer: I sell insurance. Response: silence.” You get my drift.

Still, insurance plays an important role in all our lives if we are to be successful; whether we like to admit it or not. And it’s not just Life Insurance anymore. There are other types like, Mortgage Insurance, Pet Insurance, Flood, Home Owners, Renters and of course Auto.

I want to take a minute to talk about two lesser known types: Credit Insurance and ID Theft Insurance.

Credit Insurance: Generally this is insurance that pays your credit card bill if you get disabled, loose your job or buy the farm. You pay a fee base on the balance you have on your card. The devil is, as they say, in the details. If you are unemployed or disabled you may have a waiting period. If you qualify, they may only make you interest payment or a minimum payment that would be spelled out in your policy. Yes, you get a policy and I suggest you read it. I think they write these things on Swiss cheese because they tend to have a lot of holes. My take is that they are not good bets. I’d rather see you take the money you’d spend and add it to your emergency savings account. An emergency savings account can be used for all sorts of emergencies, not just for a credit issue and you are paying money to yourself, not a credit card company.

ID Theft Insurance: This covers some of your expenses in recovering from having your identity stolen. Some ID theft insurance comes with a service that notifies your credit bureaus and lenders; while others have a staff that tries to unravel any mess or phony bills charged in your name or to your accounts by the thief. None of them pay for time lost from work to file documents, make police reports or attend court hearings if you are sued. Identify theft insurance is included in some homeowners policies, comes for free with some credit cards or may be purchased separately.

Steve Bucci is the author of Credit Repair Kit For Dummies, a book in the popular Dummies series that deals with all aspects of credit and how to keep yours healthy. He also is the Debt Advisor for Bankrate.com and answers question through the Advice Team at MoneyManagement.org.

Kim McGrigg is the former Manager of Community and Media Relations for MMI.

  • The Consumer Federation of America (CFA) is an association of nonprofit consumer organizations that was established in 1968 to advance the consumer interest through research, advocacy, and education. Today, nearly 300 of these groups participate in the federation and govern it through their representatives on the organization's Board of Directors.
  • The National Council of Higher Education Resources (NCHER) is the nation’s oldest and largest higher education finance trade association. NCHER’s membership includes state, nonprofit, and for-profit higher education service organizations, including lenders, servicers, guaranty agencies, collection agencies, financial literacy providers, and schools, interested and involved in increasing college access and success. It assists its members in shaping policies governing federal and private student loan and state grant programs on behalf of students, parents, borrowers, and families.

  • Since 2007, the Homeownership Preservation Foundation (HPF) has served as a trusted, neutral source of information for more than eight million homeowners. They are partnered with, and endorsed by, numerous major government agencies, including the U.S. Department of Housing and Urban Development and the Department of the Treasury.

  • The mission of the U.S. Department of Housing and Urban Development (HUD) is to create strong, sustainable, inclusive communities and quality affordable homes for all. HUD works to strengthen the housing market in order to bolster the economy and protect consumers; meet the need for quality affordable rental homes; utilize housing as a platform for improving quality of life; and build inclusive and sustainable communities free from discrimination.

  • The Council on Accreditation (COA) is an international, independent, nonprofit, human service accrediting organization. Their mission is to partner with human service organizations worldwide to improve service delivery outcomes by developing, applying, and promoting accreditation standards.

  • The National Foundation for Credit Counseling® (NFCC®), founded in 1951, is the nation’s largest and longest-serving nonprofit financial counseling organization. The NFCC’s mission is to promote the national agenda for financially responsible behavior, and build capacity for its members to deliver the highest-quality financial education and counseling services.