After four hurricanes, we Floridians have learned what's really important in life: ice and air conditioning. (That's after the safety of our families, of course.) There is nothing like being forced to do without something we take for granted to make us realize its importance. Hurricane season has prompted many of us to think about lots of things that ordinarily escape our notice. Some of these thoughts are about small things, like keeping the flashlight where we can find it, but others have the potential to make a big difference in our financial security.
Here are four things the hurricanes brought to my attention:
1. We need to know what our homeowners insurance policy covers. Before Charley plunged us into hurricane hysteria, did you have any idea what your hurricane deductible was? If you haven't already done so, review your policy and find out whether you have enough coverage to replace your house if a storm destroyed it. Check for lower coverage limits on items such as debris removal. Consider flood insurance even if it's not required. If you need more insurance, get it now.
2. Emergency reserves are life savers. All of us should have an easily accessible account we can tap if we have to buy supplies, evacuate or find temporary living quarters after a storm. If you say "charge it" when you don't have the money to pay the bill in full, you will add to your post-storm woes. Ideally, you also should have enough in your account to cover uninsured repairs you might have to make. Start saving now for next year's hurricane season.
3. Home equity is valuable in a storm. Open a home equity line of credit but don't use it. The available credit can serve as a second-level emergency reserve to meet your hurricane deductible and allow you to make needed repairs right away by borrowing at a reasonable interest rate.
4. Storms can teach us something about our priorities. What did you take with you if you evacuated? What did you really miss if you lost power? Have you spent a lot of money acquiring possessions that don't really matter to you? If so, stop!
Something good can come from this series of storms if it makes us better prepared to face the next disaster that comes our way.
Q. Who owns Ditech.com that advertises on so many broadcast and cable TV channels? A "normal" company could not afford the costs. Besides the number of ads, it is disturbing to me to listen to the contents of the ads.
A. Ditech.com is part of General Motors Corp., so you are right that it's not just a small company with a big ad budget. Checking the Internet usually provides a quick answer to questions like this. I always try the company's Web site first, and in fact, the answer was right on www.ditech.com The reference desk of the public library is also a good source.
Q. In March I went to see about purchasing a certificate of deposit. I ended up investing $80,000 in viatical investments from Mutual Benefits Corp., which the state shut down in May. The man talked so glowingly about buying viaticals, what a sure investment it is. What can I do? I asked the man I dealt with if I needed a lawyer. He said their lawyers are working on it. I am an 85-year-old widow.
A. Talk to a lawyer (not theirs) about the possibility of bringing a case against the company and the sales person who sold you this investment. A viatical is not a suitable investment for anyone, certainly not for an 85-year-old widow.
Viatical investors buy life insurance policies on people who supposedly have short life expectancies. The policies pay off when the person dies. One of many things wrong with viaticals as an investment is that life expectancies frequently are misrepresented. This means investors pay more than the investments are worth and wait years for their money, if they get it at all.
Currently Mutual Benefits is in receivership and the case could be tied up in the courts for years.
Clearwater lawyer Joel Goodman said he has been successful in recovering money for some investors who bought their viaticals through companies affiliated with brokerage firms. Those cases are eligible for securities arbitration, which may be your best chance for recovery.
- Helen Huntley writes about investing and markets for the Times. If you have a question about investments or personal finance, send it to On Money. We'll try to answer those we think are of greatest reader interest. All questions must be submitted in writing, but readers' names will not be published. Send questions to huntley@sptimes.com or Helen Huntley, Times, P.O. Box 1121, St. Petersburg, FL 33731.
