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What to Do When You Change Addresses

Photo by Tierra Mallorca on Unsplash

Moving to a new place can be a hectic experience. There are a million things to keep an eye on. Updating your change of address is one of them.

Indeed, you should update your address on various documents. For example, you must update your billing and mailing addresses, driver’s license, and employment record.

However, we tend to overlook updating a change of address on insurance policies. That’s right, and it’s crucial to update your change of address on all your policies.

In this article, we will look at the importance of updating a change of address. Moreover, we will discuss how you can do this quickly and easily.

What to Do When you Change Addresses?

It’s important to update your change of address as soon as you confirm your new place. You can begin this process even before you move.

A good rule of thumb is to begin updating your change of address roughly a week before you move.

Why is that important?

Let’s put it this way:

You move to your new place. You are dealing with multiple tasks as you get settled. Then, you have a minor fender-bender as you run some errands. When you file your auto insurance claim, your insurer will verify your personal information. This information includes your home address.

Typically, insurers may give you a pass if you don’t update your information within the first month. However, your insurance may raise an issue if you don’t update your change of address within the first month.

The issue here is that your insurance may deny coverage. You see, parking your car at a different address than the one listed on your policy is technically fraud. By law, you must disclose where you physically keep your vehicle.

So, if you get into an accident, your insurer may deny coverage. End of story.

Also, please remember that you must immediately report a change of address when you move to a new state. In essence, you cannot have insurance from one state and live in another. For example, if you live in New York and move to Michigan, you need a Michigan-issued policy.

Additionally, insurance rates vary from zip code to zip code. As such, your insurer may recalculate your rates based on your new zip code. Therefore, an address update is necessary.

If you move within the same zip code, you still need to disclose where you physically keep your car. In doing so, your insurer can uphold your coverage.

Updating a Change of Address on Life, Home, and Medical Insurance

As for life insurance, insurers attach these policies to the individual. Therefore, your zip code doesn’t play as big a role in auto insurance. Nevertheless, you must disclose a change of address within 30 days of moving.

Please note that your insurer may choose to readjust your premiums if you move to a high-crime area, for instance.

How so?

It makes sense for your insurer to charge you a higher premium. After all, your chances of dying in a high-crime, high-risk area are greater than in a quiet, rural town.

Updating your change of address for home and renter’s insurance is an absolute must. This update is one of the first you must do. After all, you need to have coverage from the first night you sleep in your new place.

If you fail to report your change of address before moving, your insurer will deny coverage on your home or renter’s policy; no questions asked.

You must also update your medical, health, and dental policies right away too. Your coverage approved for doctors, hospitals, and dentists may vary according to your new zip code. Furthermore, your premiums may change depending on your new zip code.

As you can see, it’s essential to update your change of address right away. Otherwise, you risk losing your coverage. Thus, updating a change of address is not something you want to put off for later.

How Can You Update a Change of Address?

The first step is to confirm your new address. You can verify your address as soon as you sign your lease or close on your new home.

Then, you can set about notifying the various services about your new address. In addition to utilities, insurance should be your top priority.

In particular, you ought to notify your insurer as soon as possible if you move out of state. Your insurance carrier will need to reissue your policy (or policies) in your new state of residence.

Also, ask your insurer how your move will affect your rates. While your rate could go up, it could also go down. For instance, if you move from New Mexico to California, your rate might go up. However, if you move from California to New Mexico, you might get a better deal.

When you update your address, it’s also wise to update all of your personal information, including:

Name (in case of a legal change such as marriage or divorce)

  • Name (in case of a legal change such as marriage or divorce)
  • Physical residential address
  • Business address
  • Phone number(s)
  • Email(s)
  • Fax number(s)
  • Emergency contact information
  • Employer name·   Employer address

Your insurer may also ask you for additional information, such as a current driver’s license and social security information, including your new address.

Updating a Change of Address

There are two main ways in which you can update your change of address. You can mail a physical letter (or personally take it in) or go online. You can always update your information over the phone. However, the agent will ask you for a copy of the documentation.

Mailing a Letter

It might seem old-fashioned, but mailing a letter is the ultimate proof you requested your change of address. Your letter should contain all of the relevant information about your new address.

In addition, you ought to request a new quote in the letter. In doing so, your insurer can’t automatically adjust rates on you. They will have first to quote you, and then you can agree to the new rates. You can get a “proof of mailing” to ensure you have notified your insurance carrier. The US Postal Service issues a document stating the time and date of mailing. This approach is your safest bet when updating your change of address.

Going Online

Virtually all insurance carriers have simplified their information processes. As such, you can go online to update your change of address. This process takes a few minutes to do. You will need to fill out a form and provide digital copies of your pertinent documentation.

Typically, there are three ways in which you can update your change of address online:

  • You can make the change directly into your user account. You will get a notification email. Save this email! A customer service agent may contact you later on, to follow up.
  • You can also update your change of address using your insurer’s mobile app. You can then take pictures of your documentation and upload them using the app.
  • Some insurance carriers offer online chat services. You can chat with a customer representative who will guide you through the process.

Nowadays, updating your information online is the most convenient way. Nevertheless, make sure you keep track of emails and notifications proving you requested the change of address.

Updating Your Change of Address in Person

You could take a trip down to your insurer’s office to update your change of address. While more time-consuming, some folks prefer talking to another human being.

If you choose to go in person, please make sure you take your documentation with you. Otherwise, the customer service agent will surely ask you to upload or email your documentation.

What Happens If You Don’t Update Your Change of Address?

Most states require policyholders to notify a change of address within 30 days of the change. During the first 30 days, your insurer may still cover you. However, you may run into some legal trouble if you don’t update your change of address within 30 days.

Please keep in mind that you will have no issues until you need to use your insurance. As such, two things may happen to you.

First, your insurer will deny coverage. For example, suppose you are moving to a new home. In that case, your insurer will automatically deny coverage on your renter’s or home insurance. After all, you’re living in a house that’s not on the policy.

If you file a claim within the first 30 days of your move, your insurer will ask you to prove the date you moved. Proving your date of move will require supporting documentation. Then, your insurer will need to process your change of address. After, the insurer will process your claim.

This process may take days or weeks to complete. Meanwhile, you need your insurance coverage. You could avoid this entire scenario by updating your change of address as soon as possible.

Second, if you’re past 30 days, your insurer may not only deny your coverage but may also charge you with insurance fraud. Your insurer may have no choice but to charge to justify denial of coverage.

There is a simple reason why your insurer may charge you:

If you choose to sue your insurer for denial of coverage, they can fight back by proactively pressing charges. In contrast, you can confidently sue your insurer for denial of coverage by proving you requested the change. It will be on them for not updating your information.

In short, you can avoid a significant legal problem with a timely change of address notification.

Conclusion

Nowadays, insurance carriers have made it simple for the policyholder to update a change of address.

The safest way is to go old-school. Mailing a physical letter with a change of address request, including proof of mailing certificate, provides the best proof. Nevertheless, you can save time and cost by going online.

You can update a change of address by entering your information in your user account, using an online app, or calling customer service. This approach can help you save time, especially during a hectic move.

Please keep in mind that you have 30 days to notify your insurer about your change of address. As a result, you should strive to notify your insurer as soon as you confirm your new address. Updating your address before you move will make a stressful move a little bit easier.

Main Takeaways:

  • The law requires you to notify your insurance carrier when you change your address. Most states give policyholders 30 days to notify their insurer following their move. The best approach is to inform your insurer before you move. In doing so, you can save time and headaches down the road.
  • The best way to notify your insurer of your new address is to mail a physical letter with all relevant information. You can mail the letter and ask the post office to issue a “proof of mailing” certificate. This certificate will prove you mailed your letter requesting your insurer to update your address. However, you may still need to email or fax supporting documentation at a later time.
  • Updating your change of address online is the easiest way to go. You can update your user account, use your insurer’s mobile app, or call their customer service hotline. This approach can save you time and effort. You’ll need digital copies of relevant documentation. Please remember to keep copies of confirmation and notification emails. These emails will prove you updated your information.
  • Take the time to update your change of address as soon as possible. Technically, not notifying your change of address constitutes insurance fraud. While your insurer may deny coverage, they could also charge you with insurance fraud. Thus, you can save a complex legal issue by updating your change of address as soon as you can. Moreover, you can sue your insurance for denial of coverage if you can prove your timely notifications.
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What Are the Best Roadside Assistance Companies?

Roadside assistance is a wonderful thing to have. It can come through in a pinch when you most need it. When you get a flat tire, dead battery, or car breakdown, roadside assistance can come to the rescue.

For millions of Americans, roadside assistance is a must-have. However, there are plenty of options out there. So, it might be hard to figure out which one is the best. You might ask yourself, “what are the best roadside assistance companies?”

We will respond to that question as we explore everything you need to know about choosing the best roadside assistance plan for your needs.

What Is Roadside assistance?

Roadside assistance is a service that offers support to stranded motorists. This coverage can aid you in various ways. For example, roadside assistance will tow your car to a shop in case of a breakdown. Also, roadside assistance can support you if you lock your keys inside your car.

Ultimately, services vary from plan to plan. Basic plans offer essential services like towing and flat tires. Comprehensive plans may even include rental car support while your car is in the shop. As a result, roadside assistance companies and plans may vary.

Generally speaking, roadside assistance is a part of your auto insurance policy. Typically, you pay a few additional dollars a month for this coverage. Nevertheless, you can purchase a standalone plan.

Plans range from $5 to $100 monthly. However, roadside assistance may be a credit card perk. Also, memberships through AAA can get you a hefty discount. Moreover, your cellphone plan or car manufacturer may offer discounted roadside assistance plans.

What Does Roadside Assistance not cover?

Roadside assistance plans do not cover collision or medical bills related to an accident. For instance, roadside assistance won’t tow your car following a collision. Also, roadside assistance won’t cover ambulance transport to a hospital.

Also, please remember that roadside assistance does not cover auto repairs. While it does cover towing your car to a shop, repair claims should go through your auto insurance and not roadside assistance.

Who Does Roadside Assistance Cover?

Roadside assistance generally covers the policyholder, not the car. For example, suppose the policyholder is riding with a friend. In that case, the policyholder can call their roadside assistance to help with their friend’s car.

Additionally, roadside assistance policies extend to other household members. However, this coverage isn’t automatic. Therefore, the policyholder must include household members within the coverage.

In some instances, roadside assistance would cover others even when you’re not there. For example, if a friend calls for roadside assistance using your listed cellphone, they get support.

Do Roadside Assistance Claims Affect your Insurance?

Excessive roadside assistance claims through your auto insurance may affect your auto insurance premiums. Nevertheless, occasional use of roadside assistance (a handful of times a year) should not affect your auto insurance premiums.

You can get roadside assistance through your cellphone plan or credit card. You should have no issues with your auto insurance premiums.

Roadside Assistance Companies

Roadside assistance companies differ from auto insurance companies. Roadside assistance companies may be part of an auto insurance company. However, roadside assistance companies are typically contractors working for insurance companies.

Perhaps the most famous roadside assistance company is the American Automobile Association or AAA. This company has been synonymous with roadside assistance for decades. However, AAA is not the only game in town. There are several other companies in the market.

On the whole, choosing a roadside assistance company boils down to a cost-benefit analysis. As such, you can compare costs versus services offered. Moreover, it’s worth considering the coverage it provides.

If you travel across the country, it makes sense to get a plan with nationwide coverage. In contrast, a local company would do just fine if you don’t travel much outside your state.

So, let’s take a look at the best roadside assistance companies in the market today.

The Best Roadside Assistance Companies

We have looked at roadside assistance companies around the country. We have settled on the best roadside assistance companies based on various parameters. In particular, we want to offer several options to make the best choice based on your needs.

Best Overall Roadside Assistance Company: Blink

Blink practically covers the entire country. It boasts coverage in 99.4% of zip codes nationwide. As a result, you can get assistance no matter where your car or truck breaks down. Also, Blink counts roughly 80 million satisfied customers.

Blink’s structure is somewhat unusual. It does not offer a membership plan like most companies. Instead, users can access Blink’s website to get assistance. Users then pay a flat fee every time they use the service.

In general, tire changes, locksmith services, and jumpstarts cost $65. There are no membership fees or monthly payments; just a flat rate every time you use their services.

The downside to Blink’s service is its towing services. Towing services cost an initial $99 for the first five miles. After that, you must pay $5 for every additional mile. Consequently, towing services can get costly.

Blink offers 24/7 service. Thus, Blink’s customer service is above its competition. As a result, Blink earns the nod as the best overall roadside assistance company.

Best Value Roadside Assistance Company: Carchex

Since 2003, Carchex has offered a dependable service at competitive rates. Carchex offers various membership plans to suit individual needs.

Carchex’s first service tier starts at $59.95 a year. This rate includes five service calls and covers one vehicle. However, users can upgrade to the next tier for $79.95 annually. This tier consists of an unlimited call plan for a single car.

Lastly, the highest tier costs $109.95 for an unlimited number of vehicles. This tier covers four household members for five service calls a year per vehicle. Indeed, Carchex offers a plan to suit every kind of household.

Additionally, Carchex offers 25 towing miles instead of the usual five. Moreover, Carchex offers 24/7 emergency service over the phone or website.

Nevertheless, Carchex does have some drawbacks.

Firstly, Carchex’s services are not available in all states. As such, it’s worth checking to see if it’s available in your state. Furthermore, do check if it’s available in a state you’ll be visiting. Carchex does offer coverage in Canada, though.

Secondly, new Carchex customers must wait three business days before they can use the service. During this time, newcomers cannot use the service. Plus, subscribers can only use Carchex’s services once every 72 hours.

Despite its drawbacks, Carchex offers a great combination of value for money. As such, it earns the nods as the best value plan.

Best Motorcycle Roadside Assistance Company: Motorcycle Towing Services

Roadside assistance companies tend to overlook the motorcycle market. Indeed, the motorcycle roadside assistance market is relatively small. After all, not many Americans own motorcycles or drive them regularly.

Nevertheless, motorcycle enthusiasts should consider getting a motorcycle-specific roadside assistance plan.

Motorcycle Towing Services, MTS, offers the best comprehensive plan for motorcycle owners. MTS’s services cover towing battery and fuel delivery services and locksmith support.

Plans start at $30 annually for year-round coverage. An interesting service plan is the “Cold Country” plan. This plan covers users in northern states from April 1st to September 30th. In other words, MTS does not bill for its services during the winter months.

The downside to the basic $30 plan is that it does not include towing services. The upgraded $55 plan covers the first $150 worth of towing. A family plan costs $100.

MTS’s premier plan costs $95 for one user or $180 for a family plan. This plan covers the first $300 of a tow. Additional motorcycles can go into the plan for $5 annually for each motorbike.

Lastly, MTS offers an emergency service upgrade for $75 annually. This plan helps cover assistance over 100 miles away from your home. This service covers the cost of replacing a battery, throttle, fuel pump, or even clutch cables. However, it only covers parts, not labor.

Overall, motorcycle owners can find the best value for their money with MTS’s assistance plans.

Best Long-Distance Roadside Assistance Company: AAA

For decades, AAA has set the standard for roadside assistance services. Since 1902, AAA has offered quality and reliable service. Its various plans provide perks and benefits competitors struggle to match.

AAA’s basic plan starts at $81 annually. This plan includes towing for three miles, fuel delivery, winching, and locksmith services. Moreover, there is travel accident coverage for incidents beyond 50 miles from your home.

Indeed, AAA’s basic coverage, while not the cheapest, is certainly worth its value. However, if you’re planning on a long-distance trip, AAA is your best choice.

For $165 annually, you can get coverage for towing for up to 100 miles, free fuel delivery, and winch services. For $215, you can include an RV or motorcycle. There are additional benefits such as trip interruption support and theft reward.

AAA’s Premier plan is the best plan on the market. For $225 annually, you get 200 miles’ worth of towing, lockout coverage for up to $150, $25 off a battery purchase, and $1,500 in trip interruption coverage. AAA also offers home locksmith services with this plan.

Signing up with AAA is easy. All you need to do is go to their website or use their phone. Their nationwide coverage is available 24/7.

Best RV Roadside Assistance Company: Good Sam

RV owners can get specific roadside assistance coverage for their vehicles. Good Sam offers roadside assistance plans to cover several vehicles. In particular, their RV plans are ideal for long-distance travel.

The best part of Good Sam’s plans is their towing service. Their plans will tow your RV to the nearest repair shop. This unlimited towing plan is great, especially if you’re stuck in the middle of nowhere. Moreover, plans include 24/7 support throughout North America and locksmith services.

Good Sam’s plans start at $64.95 for the first year. This plan includes cars, trucks, motorcycles, and even boat trailers. Coverage extends to campers, trailers, and haulers. After the first year, the plan costs $129.95 annually.

The Platinum plan includes coverage for leased, rented, and borrowed vehicles. The plan costs $79.95 and has additional perks, such as support from dedicated RV technicians. Additionally, the Platinum plan covers towing and locksmith services. This plan’s highlight is discounts on rental vehicles and hotels. After the first year, the plan costs $159.95 annually.

The top-of-the-line plan is the Platinum Complete package. In addition to the previous benefits, this plan includes medical emergency coverage. The plan covers returning your vehicle to you following a medical emergency. The Platinum Complete plan starts at $119.95 for the first year. Then, it’s $239.95 after the first year.

Good Sam’s plan is well worth the cost for folks who get the most out of their RV’s. Family members with other vehicles can also be part of the plan. So, it’s a good all-around option if you own an RV along with other vehicles.

Best Pay-As-You-Go Roadside Assistance Company: Allstate

If you’re not looking for a subscription service, Allstate offers the best pay-as-you-go plan. You don’t need to be an Allstate customer to sign on for this plan.

In this plan, you get Allstate’s outstanding service without the commitment to an annual subscription. Indeed, you can use this service whenever you truly need it.

Please bear in mind that this plan is not the cheapest on the list. To begin with, towing services start at $119 for the first five miles. Then, it’s $4.25 for every additional mile. Locksmith services, jumpstarts, and fuel delivery cost $79. Tire changes will cost you $84.

On the whole, these prices are higher than most other companies. Nevertheless, Allstate is a good option for a “just in case” situation. Also, some folks consider Allstate’s plan as a good backup option. Ultimately, it’s better to have it than not to have it.

Please note this service is not available for California residents.

Conclusion

Choosing the best roadside assistance company boils down to your specific needs. There are roadside assistance plans specific to your needs. While our best all-around choice is Blink, the other alternatives on this list also provide excellent coverage.

For specific needs, plans from Good Sam or MTS can cover you easily and affordably. Also, Allstate is a great option if you don’t want a subscription service. Moreover, AAA is still the best option if you plan on taking a long road trip.

Ultimately, there are various options to suit your needs and budget. It’s always a good idea to have a solid roadside assistance plan. Doing so will give you the peace of mind you seek for yourself and your family.

Main Takeaways

  • Roadside assistance companies offer various services at different price points. Most companies offer annual subscription service plans. You can get roadside assistance plans through your auto insurance, cellphone plan, or credit card. These plans generally range from $20 to $100 a year. However, you may have to pay an additional fee for services such as towing.
  • The best roadside assistance plan is Blink. Blink offers the best all-around roadside assistance plan. Also, Allstate offers the best pay-as-you-go plan. If you’re not keen on a subscription, Allstate is the best choice. Both companies offer great 24/7 customer service throughout North America.
  • AAA continues to be an industry leader. It is the best choice for long-distance travel. Coverage plans include several benefits. However, AAA’s plans are pricier than other providers. Nevertheless, AAA is a recognized brand you can trust.
  • Good Sam and MTS towing offer vehicle-specific roadside assistance. If you own an RV or a motorcycle, do check out these companies. They offer comprehensive plans to suit vehicles beyond passenger cars and pickup trucks.
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How Do Taxes Work with Life Insurance?

The decision to purchase life insurance is an essential one. Appropriate life insurance coverage provides peace of mind and security. Nevertheless, there are several factors involved during the decision-making process. One such factor is taxes on life insurance premiums.

On the whole, various rules apply to life insurance. Therefore, this article will focus on discussing life insurance taxes. Moreover, this article will discuss how the Internal Revenue Service (IRS) taxes life insurance policy returns.

What is Life Insurance?

There are two main types of life insurance. As such, it’s crucial to recognize the difference before choosing the best policy for your needs.

Term Life Insurance

Firstly, term life insurance provides coverage for a specified timeframe. Generally speaking, term life insurance lasts for ten-year blocks. Most term life insurance policies last for ten years, with the option for renewal after that.

Term life insurance often carried a fixed premium based on the policy’s total value. If the policyholder dies while the policy is valid, the beneficiaries receive the full payout. If the policy expires, its renewal will imply a recalculation of premiums.

Please keep in mind that term life insurance doesn’t generally have any additional benefits. Consequently, it only pays out its cash value. If the policy expires, there is no cash payout. Additionally, term life insurance payouts to beneficiaries are not taxable.

Whole Life Insurance

Secondly, whole life insurance policies cover the policyholder until their death. Whole life insurance does not generally have a fixed timeframe and does not require policy renewal. The policy pays out to beneficiaries at the time of the policyholder’s death.

However, whole life insurance varies significantly from term life coverage. In particular, whole life insurance accrues a savings component. In other words, insurers credit premium payments toward a savings plan. Naturally, younger policyholders can contribute more toward their policy’s savings.

Insurers may attach an interest rate to the policy’s saving component. This interest rate compounds over time, thereby leading to the policy’s cash value. These policies don’t generally pay out interest. Interests roll over until the policyholder cashes out the policy.

In some instances, policyholders use whole life insurance as an investment. As they get older, they sell their policy for its cash value. Afterward, the policyholder can purchase term life insurance if they desire. Insurers may choose to buy back the policy and payout interests.

Please bear in mind that accrued interest is taxable. Nevertheless, this interest is tax-deferred. Thus, the tax bill only comes until the policyholder cashes out.

How do I Choose the Best Policy for My Needs?

Generally speaking, older individuals prefer term life insurance, especially if they have chronic medical conditions. Plus, the fixed premium allows policyholders to plan their finances accordingly. In contrast, younger individuals prefer whole life insurance since they can accrue interest over time.

Additionally, premiums are an important consideration. For instance, term life insurance policies are cheaper than whole life. A term life policy for $250,000 may cost around $20 to $30 monthly. Conversely, a whole life policy may cost up to $100 a month.

Fortunately, whole life insurance premiums often decrease over time. Nevertheless, some whole life policies may expire at a specific age. For example, the policy automatically expires at 65 or 70. At that point, the policyholder would need not receive the death benefit. They would only receive their interest payout.

The reason above explains why older policyholders choose to sell their policies before the age of expiration. Consequently, you must double-check your policy before signing on. In doing so, you can avoid unpleasant surprises after signing on.

Do You Pay Taxes on Life Insurance Premiums?

Taxes on life insurance boil down to taxable income. Policyholders don’t need to pay taxes until they profit from their policy. In other words, the “policy basis” or the policy payout amount is not subject to taxes.

However, policyholders must pay taxes when they generate income from their policy.

Consider this situation:

A policyholder no longer wishes to keep their coverage. As such, the policyholder surrenders their coverage. In this situation, the insurer ends the contract and returns the premium payments to the policyholder.

This transaction does not generate any taxes unless the policyholder receives an amount greater than their premium payments. For instance, the policyholder paid $10,000 in premiums. As such, those $10,000 are not taxable.

In contrast, if the policyholder receives $10,000 plus $1,000 in accrued interest, the policyholder would need to pay taxes on the $1,000. After all, the IRS considers interest payments as income. Therefore, the policyholder would need to pay the corresponding income taxes.

Withdrawing from the Policy’s Cash Value

Some policies allow policyholders to make loans on their policy’s cash value. Typically, this type of loan is tax-free as long as it’s within the policy limits.

For example, if the policy has a $250,000 cash value, the policyholder can borrow up to $250,000. The IRS does not consider this loan as income. Therefore, the policyholder is not liable for taxes on it.

Conversely, if the policyholder takes out the $250,000 as a loan plus $1,000 worth of interest, the $1,000 may be taxable. The $1,000 would not technically be a loan as it constitutes earned interest. Thus, the IRS considers it income and not a loan.

Selling your Life Insurance Policy

In some instances, you might consider selling your life insurance policy. Selling policies is relatively common, especially for ill patients who need to cover medical bills. There are investment firms that specialize in purchasing life insurance policies.

The good news is that the IRA does not tax “viatical settlements.” A viatical settlement consists of a terminally ill individual selling their policy to cover outstanding bills. In such cases, the proceeds from the sale are not taxable.

Please bear in mind that the IRS treats viatical settlements as death benefits. However, if the policyholder is not terminally ill, proceeds from the sale of the policy may be taxable. The IRS considers this transaction as a “life settlement.” The taxable portion would correspond to any value above the policy’s cash value.

Policy Payouts Go into a Taxable Estate

Insurance payouts go into the policyholders ‘ estate when the policyholder names no beneficiaries or is already deceased. As such, the policyholder’s estate receives the payout and is therefore liable for a sizeable tax bill.

In contrast, named beneficiaries do not have to pay taxes on the death benefit received. Consequently, it’s to name beneficiaries to claim the policy. In doing so, beneficiaries can avoid paying state and federal taxes.

Is There a Life Insurance Tax?

No, there isn’t a “life insurance tax.”

In short, life insurance premiums are not subject to regular sales taxes. As such, you don’t need to add the sales tax on top of your monthly. So, if your payment is $25 monthly, you pay $25. Nevertheless, there are situations in which you may need to pay taxes on your premiums.

So, let’s take a look at when you would need to pay taxes on your premiums.

Life Insurance as Compensation

When your employer offers life insurance as part of your compensation, you must pay taxes. Technically, the IRS calculates employer-paid premiums as part of your income. As a result, you would be on the hook for income tax.

There is a catch, though. You’re liable for taxes only if your employer offers more than $50,000. As such, you wouldn’t need to pay taxes on coverage under $50,000. You would need to pay coverage on anything over $50,000.

In contrast, if the employer offers a $100,000 with a $50 monthly premium, you would need to pay taxes on half of the policy ($50,000). Consequently, you would need to pay taxes on half of the monthly premium ($25).

Pre-paid Life Insurance

In some instances, policyholders need to make a lump sum, upfront payment. This payment goes toward the policy’s premium. Moreover, this upfront payment may generate interest. Consequently, the IRS considers interest as income.

Please bear in mind that you don’t have to pay the taxes until you collect the interest. Therefore, your interest payment becomes taxable income every time you cash out.

Whole Life Insurance Cash Plans

The interest that whole life insurance policies accrue is generally tax-deferred. As such, the policyholder isn’t liable for the tax payment until they cash out the policy. However, the policyholder would need to pay taxes on the premium if it is part of their compensation.

Are Life Insurance Premiums Tax-Deductible?

The short answer to this question is no.

The IRS considers life insurance premiums as personal expenses. As a result, life insurance premiums are not tax-deductible. Moreover, the IRS does not consider life insurance premiums as a business expense.

After all, the policy benefits belong to the policyholder and not the business. Therefore, you cannot claim your life insurance premiums as a business expense.

Bringing It All Together

There are various circumstances surrounding life insurance taxes. As such, the following table summarizes the scenarios in which you may or may not have to pay taxes on a life insurance policy.

ConditionTax Liability
The policyholder withdraws money from the policy’s cash value.Any amount over the policy’s cash value would become taxable income.
The policyholder surrenders the policy in exchange for a cash payout.Any amount over the policy’s cash value would become taxable income.
The policyholder takes out a loan based on the policy’s cash value.There is no tax liability as long as the policy is current. If the coverage ends, the IRS may consider the outstanding balance as taxable income.
The policyholder sells the policy in a viatical settlement.There is no tax liability as long as the policyholder is terminally ill.
The policyholder sells the policy in a life settlement.Any amount over the policy’s cash value would become taxable income.
The policy’s payout goes into the policyholder’s estate.There is tax liability on the overall estate, including the life insurance payout.
The policy’s beneficiaries receive the policy’s payout.There is no tax liability for the death benefits. However, the beneficiaries do have a tax liability on accrued interest payments.

Conclusion

On the whole, life insurance is not taxable. Nevertheless, there are various situations in which life insurance policies are taxable. Therefore, policyholders must be aware of these circumstances.

Life insurance policy premiums are not taxable. Additionally, premiums are not tax-deductible as the IRS considers their personal expenses. Furthermore, life insurance premiums are taxable when they are part of a compensation package.

Please remember that life insurance payouts are not tax-deductible when they are death benefits. However, interest payments on life insurance policies constitute taxable income. The good news is that taxes are due only when policyholders cash out interest.

Lastly, it’s important to note that policyholders may have a tax bill due upon selling their policy. Thus, it’s crucial to double-check before selling the policy. In doing so, there won’t be any unexpected tax bills down the road.

Main Takeaways

  • Life insurance premiums are not taxable. Premiums are not subject to sales tax. However, life insurance premiums are not tax-deductible. The IRS considers life insurance premiums as personal expenses. Consequently, policyholders cannot claim premiums on their return.
  • Premiums may become taxable income when employers pay them as part of employee compensation. Employees would need to pay taxes on their premiums when the policy’s value is over $50,000. The IRS considers these premiums as part of an employee’s taxable income.
  • Accrued interest on a policy’s premiums constitutes taxable income. Consequently, the policyholder would need to pay taxes on the earned interest. However, earned interest is tax-deferred. Therefore, the policyholder needs to pay taxes only when they collect the interest payment.
  • Beneficiaries do not need to pay taxes on the policy’s payout. The policy’s cash value is tax-free. Nevertheless, any amount above the policy’s cash value constitutes taxable income. Moreover, suppose the policy’s payout goes into the policyholder’s estate. In that case, there may be state and federal taxes due on the entire estate, including the policy payout.
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The Most Popular Employee Benefits for Service Industry Businesses

Employees laughing

Attracting and retaining talent is an important part of any successful business. For businesses in the service industry, hiring and keeping valuable human talent is paramount. However, it’s not always easy during trying times.

Savvy companies utilize employee benefits as a way of holding onto valuable talent. Thus, business owners need to have a clear strategy concerning the most popular employee benefits for service industry businesses.

In particular, this article will focus on the most popular employee benefits for service industry companies such as HVAC professionals, plumbers, home contractors, and landscapers.

Current Landscape of Service Industry Businesses

The onset of the COVID19 pandemic significantly changed the playing field for all businesses. In the service industry, many companies saw a dramatic shift in their operations.

For starters, service industry companies such as HVAC professionals, landscapers, plumbers, or general home contractors needed to adjust to the new safety concerns brought about by the pandemic.

For instance, common house calls became increasingly challenging as customers looked to avoid outside contact. As a result, businesses needed to reassure their customers whenever possible. According to the president of Bluefrog Plumbing and Drain Thomas Dougherty:

“All of our plumbing professionals have been fitted with gloves, shoe covers, and respiratory masks. We are also making sure our employees are building confidence with all homeowners and communicating that our focus is on fixing plumbing concerns while also keeping their well-being and our team safe.”

Indeed, a serious commitment to employee and customer safety is a core tenet of any successful business. During the current COVID19 pandemic, safety is more important than ever.

As Eric Carter of Bluefrog Plumbing and Drain in San Antonio, “As plumbing professionals, we have an obligation to take every precaution we can to protect our employees and customers and their family members. Their health and safety is our priority.”

Despite the evident need to prioritize health and safety, this concern is not the biggest issue affecting service industry businesses.

As per Peterman Heating, Cooling, & Plumbing of Indianapolis president Chad Peterman, “The biggest impact has been overall uncertainty with our team and with our customers.” Scott A. Cooper of New England Sales echoes this assessment. Mr. Cooper states, “Without a doubt, the biggest problem facing all of us right now is the uncertainty.”

Undoubtedly, the COVID19 pandemic has bred a high degree of uncertainty among service industry professionals despite advances in public policies aimed at reducing public health dangers.

The shift from the pre-pandemic business model to today’s “new normal” model has yielded benefits. A recent report by the National Kitchen and Bath Association (NKBA) indicates an 11% increase in 2021 second-quarter sales.

According to NKBA CEO Bill Darcy, “We’re encouraged by the findings from our report on the kitchen and bath industry, which reaffirms the longer outlook of the field as one of growth and strong earnings.”

Moreover, the same report indicates that roughly 60% of designers surveyed stated they have a three-month backlog. Additionally, 55% of businesses in the building and construction industry have reported no cancelations during the second quarter.

These data seem to indicate that confidence in service industry companies has regained momentum. Despite the uncertainty, the positive outlook is due to the business’s commitment to prioritizing safety.

Parthiv Amin, chief sales and marketing officer at Sloan, sums up this attitude by stating, “The health and safety of all of our employees is our top priority, and we are very proud of the proactive steps we’re taking to maintain their well-being.”

When attracting and retaining top talent, ensuring employee well-being is a must during these uncertain times. Therefore, successful companies in the service industry have taken employee well-being seriously.

Moving forward, prioritizing employee safety will become an essential part of maintaining a profitable business.

Best Practices for Service Employee Benefits

Acquiring the best talent in the service industry is a highly competitive endeavor. Businesses like HVAC professionals, landscapers, plumbers, or general home contractors know this situation very well.

In the past, companies could entice top talent with a competitive salary. Nowadays, a competitive salary isn’t enough.

How so?

A competitive salary isn’t enough to entice top talent. After all, anyone who’s in it for the money may not strive to serve customers. Therefore, attracting great employees must go beyond money.

Bruce Krinkie of Krinkie’s Heating, Air, and Plumbing believes that finding employees keen on making customers happy was more important than technical know-how. After all, he could train employees in technical skills. However, he believes that teaching employees how to make people happy is “next to impossible.”

The key to Krinkie’s success is his direct communication with employees. He puts his employees first. Thus, constant training and support are the foremost elements in his company’s approach.

Indeed, Krinkie’s mission is to care for his employees because they will care for his customers. This philosophy underscores the importance of putting employees ahead of the executives.

Nevertheless, Krinkie’s care for employees doesn’t stop there. The company offers many benefits such as paid training, 401(k) contributions, medical and dental insurance. The firm aims to incentivize employees through thoughtful benefits.

Joe DeWaele, a service technician at Krikie’s, had this to say about paid training benefits, “When you enroll in classes, you submit your invoice to the office, and you get reimbursed for the class as long as it is trade-related and benefits you in your job.”

Krinkie’s commitment to its employees also includes annual raises. Employees receive pay increases based on performance reviews. Additionally, employees get an extra pay raise for specific certifications.

Perhaps the most valuable benefit Krinkie’s offers is a sense of community. Employees feel valued and trusted. As a result, there is a feeling of family among the staff. Naturally, this feeling fosters a positive attitude among staff. Ultimately, customers get great service from satisfied employees.

Krinkie’s underscores how successful companies utilize employee benefits to build a positive work environment. Moreover, this example highlights how keeping top talent isn’t about making the most money.

Service industry companies may offer standard benefits such as workers’ compensation. Nonetheless, companies need to go beyond the industry norm.

Then, some companies believe attracting top talent costs money. Art Plumbing, AC & Electric of South Florida offers a $25,000 hiring bonus. This bonus aims to attract the best in the business.

Art Plumbing seeks to bring in the best in HVAC technicians, electricians, and plumbing professionals. The company’s ethos is to create a worthwhile career in the service industry. By offering a competitive salary, Art Plumbing can ensure this philosophy.

However, Art Plumbing isn’t just about money. Gregg D’Attile, Art Plumbin’s President and CEO, has this to say, “Our continued investment in our employees has led to phenomenal growth that has created immediate opportunities for adding additional technicians to the Art family.”

Indeed, investing in employees is pivotal in bringing in the best. D’Attile goes on to say:

“We’re proud to offer an unprecedented, generous hiring bonus as well as a referral program to attract the industry’s top talent. This will help all our employees grow both personally and professionally while allowing us to continue to offer the exceptional service Art Plumbing, AC & Electric has always been known for.”

This statement encapsulates the importance of valuing employees. Employee benefits should reflect a company’s core ethos. Companies that strive to serve their customers should focus on helping their employees grow and develop, too.

Employee Benefits and COVID19

The COVID19 pandemic has morphed the nature of employee benefits. Pre-pandemic benefits focused on personal and professional growth. However, the pandemic has now shifted the focus to employee safety and well-being.

Now, more than ever, employees focus on protecting themselves and their families. Thus, service industry companies must also concentrate on offering relevant health benefits.

Companies in the service industry have responded swiftly to ensure employee and customer safety. Mainly, safety measures such as protective equipment have enabled service industry employees to perform in-person visits.

Despite protective equipment and appropriate safety measures, employees may still be vulnerable. As a result, companies must understand what they can do to help their employees.

Generally speaking, workers’ compensation does not cover COVID-related illnesses. Specifically, workers’ compensation claims cover work-related illnesses and accidents. Thus, workers’ compensation doesn’t cover conditions such as the flu since these illnesses don’t count as work-related.

COVID19, however, poses an entirely different situation.

First of all, essential workers such as public transit drivers or grocery store clerks are now highly vulnerable individuals. The same goes for HVAC, plumbing, electrical, and home contracting professionals.

A total of 17 states have included COVID-related coverage into workers’ compensation claims. This addition is significant since COVID-related hospitalizations and treatments may represent a considerable expense.

Additionally, regular medical insurance doesn’t automatically cover COVID-related expenses. As a result, it’s important to distinguish between private health insurance plans and Medicare.

Medicare plans typically cover COVID-related expenses. Both states and the Federal Government have taken steps to ensure folks on Medicare receive COVID-related coverage. This coverage includes doctor visits, diagnostic tests, and emergency room coverage.

As for hospitalizations, Medicare beneficiaries can get coverage under the Affordable Care Act (ACA). Nevertheless, it’s worth double-checking to ensure coverage.

Private health insurance plans may vary in coverage. Generally speaking, private insurance plans, particularly those acquired through employers, provide COVID-related coverage. Nevertheless, basic plans may not cover long-term hospitalizations.

On the flip side, most health insurance plans cover preventive treatments. These treatments include diagnostic exams and medication. Furthermore, Federal and state governments have assured free access to vaccines.

However, one question remains: what can service-industry companies do to help their employees further?

Besides providing health insurance, businesses can offer various alternatives.

Firstly, companies can focus on supporting their employees’ mental and emotional health. These trying times have taken their toll on employees. W—activities employees work from home or not, stress is a serious concern.

Businesses can offer counseling sessions at their employees’ convenience. These sessions can help staff find ways of coping with unusually high levels of stress.

Secondly, service industry companies can foster their staff’s physical health. Activities such as paid online memberships to fitness clubs. If possible, memberships to in-person gyms are a great way to provide additional benefits.

Physical exercise is a great way to help staff boost their well-being, particularly if they are recovering from a COVID experience.

Thirdly, plenty of companies now offer time off following vaccination. For some folks, vaccination leads to mild side effects. As a result, they may need a couple of days to recover. As such, businesses now offer additional sick days following vaccinations.

Lastly, service industry companies continue to invest in their employees. Providing ample training opportunities is a great way to help staff continue building their skills.

Some businesses have extended their training support to other non-business areas such as art, languages, cooking, or other areas of interest. The aim is to provide ongoing support while coping with the pandemic’s effects.

Conclusion

Service industry companies, now more than ever, need to support their employees. However, this support must go beyond the traditional benefits such as performance bonuses and training opportunities.

There are various alternatives in which companies can support their staff. In addition to health insurance, companies can focus on ensuring employee wellness. Therefore, companies must continue investing in their team.

Ultimately, companies such as Krinkie’s Heating, Air, and Plumbing demonstrate the importance of putting employees first. Their approach highlights their appreciation for staff. Thus, service industry companies must strive to manifest their gratitude to their staff’s hard work.

Attracting top talent is much more than merely paying a good salary. The COVID19 pandemic has illustrated how important valuing employees is. Consequently, successful businesses need to embrace this ethos.

Main takeaways

  • Attracting and retaining top talent in the service industry is not only about paying a competitive wage. HVAC, plumbing, electrical, landscaping, and home contracting professionals must offer additional benefits to their best employees. If companies take care of their employees, their employees will take care of their customers. Beyond health benefits, ongoing training and development opportunities are the most appealing.
  • The service industry is on the rebound following a tough 2020. The 2021 second quarter indicates growth across various sectors in the service industry. Plumbers, contractors, and retailers show increases in their sales data. Additionally, these professionals report a consistent client base.  As a result, professionals in the service industry seem to be optimistic about their industry’s outlook.
  • The COVID19 pandemic has placed considerable attention on health care benefits. As a result, service industry companies such as HVAC, plumbing, electrical, landscaping, and home contracting professionals have taken steps to ensure their employees have adequate health insurance coverage. Furthermore, the Federal and state governments have taken steps to safeguard COVID-related treatment and access to vaccines.
  • Service industry companies such as HVAC, plumbing, electrical, landscaping, and home contracting professionals must consider offering various benefit alternatives to top talent. Beyond a competitive wage, service industry companies must ensure they support their staff as they recover from the pandemic. As a result, businesses must get creative with their employee benefits packages.
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Famous Data Breaches and What Your Business Could Learn From Them

Data breach visual

A data breach can be a costly incident for any company. As IT expert Stephane Nappo once put it, “It takes 20 years to build a reputation and a few minutes of cyber-incident to ruin it.” Indeed, years of hard work can wash away due to a data breach.

Thus, it’s important to protect your clients’ information and your company’s name. This article will analyze ten famous data breaches and what your business can learn from them. In particular, we will discuss the lessons learned so your business can prevent such unfortunate events.

Data Breach #10: NetEase

In October 2015, NetEase, an email supplier, suffered a cyber attack in which 235 million of its user accounts leaked into the public. The attack revealed real usernames and passwords on the dark web. The hackers commercialized the data on the dark web marketplace DoubleFlag.

To this day, the Chinese firm denies the breach ever happened. According to the company, the data is “unverified.” Nevertheless, DoubleFlag commercialized other company’s user data as well. This situation has received the moniker “The Big Asian Leak.”

The Lesson:

Stonewalling a data breach is a dangerous approach. Of course, no company wants to admit a data breach occurred. Nevertheless, denying it only magnifies the problem.

Companies should acknowledge the possibility of an attack. Then, firms must reassure their users by outlining the steps they are taking to solve the matter.

Please keep in mind that trust can evaporate instantly.

Data Brach #9: MySpace

Before Facebook, MySpace was the go-to social media site around the world. However, its power slowly dwindled with the rise of other social media conglomerates. By 2016, MySpace was a shell of its once-dominant self.

Back in 2013, MySpace underwent a serious cyber attack. Information on roughly 360 million users hit a website called LeakedSource.com. Additionally, the user information went on sale on the dark web. The reported asking price was six Bitcoin (approximately $3,000 at that time).

MySpace executives later acknowledged the breach. They stated that the account information belonged to accounts created before June 2013. These accounts were part of a previous MySpace platform that lacked specific security protocols.

The company deactivated affected users’ accounts and passwords. Users would then need to authenticate their usernames and passwords before re-entering the site.

The Lesson:

In this situation, MySpace was upfront about the situation. The company explained what happened and how it happened. It also took immediate action to remedy the situation.

It’s always a good practice to be transparent about a data breach. Most importantly, companies should take steps to explain what happened and how it affects its users. Ultimately, remedial measures can help restore confidence in the company.

Data Breach #8: Adult Friend Finder

Adult Friend Finder has become notorious as a casual hookup site. It quickly gained popularity, adding millions of users monthly—thecybercriminals site advertised across various adult-content sites and platforms.

In all, hackers stole more than 20 years of user information in 2016 using the rudimentary SHA-1 algorithm. The breach occurred in six different databases totaling 414 million user accounts.

The information breach exposed names and passwords, thereby compromising users’ true identities. The data found its way to LeakedSource.com. The weak algorithm broke through the site’s firewall to compound the issue, exposing the site’s flawed security system.

In November 2016, Adult Friend Finder’s vice-president Diana Lynn Ballou told the media that the company was investigating the breach and would notify affected users.

The company never did.

Users found out through the third-party site LeakedSource.com about the breach’s confirmation.

The Lesson:

Adult Friend Finder failed to disclose the possible breach to its users. As such, users found out about the breach through third-party sites. As a result, all trust in the company evaporated. The generic response offered did little to reassure users.

Companies should immediately communicate with users as soon as there is reasonable suspicion of a breach. It’s always best to call a false alarm than to fall asleep at the wheel. Sites that collect user data must reassure their users before word gets out.

Ultimately, taking a proactive approach is the best way to maintain users’ trust despite a data breach.

Data Breach #7: Equifax

Credit rating agency Equifax handles millions of customers’ information daily. As such, that makes it a target for cybercriminals. In 2017, Equifax fell victim to hackers leading to a now-famous data breach case.

In September 2017, Equifax stated that it had suffered a data breach. The information of about 147 million users leaked into the public.

Following the breach, Equifax pledged to clear up the message. Former Equifax CEO Rick Smith publicly apologized in a video message. He vowed to “build a stronger company.” However, those actions remain unclear.

Equifax’s critics have blasted the company. Senator Elizabeth Warren stated, “Equifax and other big credit reporting agencies keep profiting off a business model that rewards their failure to protect personal information.”

In the end, Equifax settled with the Federal Trade Commission on restitution to affected users. In all, Equifax agreed to pay $425 million to users in the United States.

The Lesson:

Equifax paid dearly for its lack of data security. Upon learning of the breach, they failed to take swift action. While the company issued an apology, it did little to rectify the situation. Ultimately, Equifax had to pay a sizeable settlement.

Companies must ensure to make amends for any damage resulting from a data breach. These actions should strive to protect users. Additionally, firms must approach their customers with clear measures following the breach. In doing so, businesses can avoid extremely costly mistakes.

Data Breach #6: Marriot International

In November 2018, the hotel chain Marriot International announced a breach on its database. Specifically, the company indicated that about 500 million of its Starwood clients’ information suffered an attack.

The chain stated, “On September 8, 2018, Marriot received an alert from an internal security tool regarding an attempt to access the Starwood guest reservation database. Marriott quickly engaged leading security experts to determine what occurred.”

Marriot would later disclose that it suffered an actual breach in 2014. However, the company had not learned of it until 2018 during its investigation. The New York Times attributed the attack to Chinese cybercriminals looking to get information on US citizens.

The Lesson:

Marriot got it right by being forthcoming with the public. Moreover, the chain announced it had dropped the Starwood program and replaced it with a safer version. Most importantly, Marriot admitted its mistakes and laid out a plan to remedy the situation.

In the business world, there is nothing wrong with admitting a mistake. The problem lies in trying to cover it up or stand by idly. Instead, Marriot was transparent and publicly took the steps necessary to avoid another breach.

Data Breach #5: Facebook

Even corporate giants are susceptible to data breaches. In April 2019, reports surfaced indicating that two separate Facebook datasets were publicly available. These datasets included users’ personal information such as names and phone numbers.

In 2021, this information hit the web, posted for free.

Initially, Facebook did not disclose any information on the data breach. However, the company had no choice when rumors gained momentum on various sites. It became evident that Facebook was slow to react.

Since admitting the breach, Facebook has taken action to remedy the faulty apps responsible for the breach. Nevertheless, Facebook tried its best to ignore the problem hoping it would go away.

The Lesson:

Large corporations often react slowly. Usually, their size makes it difficult to implement a quick response. Other times, massive firms believe they have the right systems in place. As a result, a data breach is the last thing they suspect.

It is crucial for all companies, big and small, to take data security seriously. Anyone can be vulnerable to a data leak. The Facebook hack proves that cybercriminals will find any means to exploit vulnerabilities. Therefore, routine surveillance is necessary to ensure appropriate data security.

Data Breach #4: Sina Weibo

Sina Weibo, with more than 600 million users, is a major social media company in China. This status also makes it a prime target for hackers.

In March 2020, the firm revealed that hackers had taken a large chunk of their database. In all, the usernames, passwords, real names, and phone numbers of some 538 million users became public. The cybercriminals sold the information for $250 on the dark web.

The firm acknowledged the hack in a statement. The company also indicated that their engineers noticed users uploading large batches of information attempting to match user accounts with phone numbers.

Later, Sina Weibo indicated it doesn’t store user passwords in plaintext format. Therefore, users should not worry about their accounts. Nevertheless, the second statement did not show how hackers got personal user information (gender, location, or real names).

Security experts criticized the company’s response. Experts claimed Sina Weibo sent mixed messages, particularly after users confirmed the data’s accuracy.

The Lesson:

Admitting the data breach is a great first step. Nevertheless, the message must be consistent throughout the process. Conflicting messages may lead experts and the public to lose confidence in the company quickly.

In this case study, Sina Weibo failed to keep a constant narrative. As a result, security experts believed the firm didn’t have a clear picture of what truly happened.

Please bear in mind that confidence relies on consistent communication. Hence, firms must always communicate the truth as much as possible.

Communicating truthfully requires maintaining a consistent narrative. Nevertheless, future information updates should provide greater details. In doing so, the public can perceive the firm’s professionalism.

Data Breach #3: LinkedIn

One of the most recent, high-profile data breaches occurred to LinkedIn in June 2021. A reported 700 million user account information appeared on a dark web forum. This data corresponded to approximately 90% of its user base.

Reportedly, a hacker named “God User” employed scraping to exploit the site’s vulnerabilities. This approach led to 500 million users’ information going public. Then, the hacker leaked the remaining user information totaling 700 million users.

In response, LinkedIn stated that no sensitive information had leaked. However, the information obtained through the dark web forum revealed personal information such as gender, location, social media accounts, among other personal data.

 An official statement from LinkedIn read, “this was not a LinkedIn data breach, and our investigation has determined that no private LinkedIn member data was exposed.” The result is an ongoing government investigation into the incident.

The Lesson:

LinkedIn did not openly admit a data breach. Instead, the company attempted to pin the data leak on a malicious user who violated its service terms. Technically, no illegal activity took place. However, denying a data breach is never a good idea.

Companies should go as far as they can to expose the true cause of a data breach. In this situation, LinkedIn failed to hold the cyber attacker publicly accountable. Ultimately, it only makes LinkedIn seem like a sloppy operation.

Additionally, LinkedIn has done little to address the breach publicly. Legal action is not enough to restore confidence in a company. As such, it’s important to address the matter publicly whenever appropriate openly.

Data Breach #2: Alibaba (Taobao)

Chinese e-commerce giant Alibaba faced a serious data breach on its Taobao shopping site. In November 2019, a total of 1.1 billion bits of user data leaked.

Like LinkedIn, Taobao suffered a scraping attack perpetrated by an affiliate marketer. Ultimately, the cyber attacker did not commercialize the data or publicly post it. Nevertheless, they received a three-year prison sentence.

Taobao released the following statement, “Taobao devotes substantial resources to combat unauthorized scraping on our platform, as data privacy and security is of utmost importance. We have proactively discovered and addressed this unauthorized scraping. We will continue to work with law enforcement to defend and protect the interests of our users and partners.”

The Lesson:

Taobao got it right by bringing the responsible party to justice. They were swift in identifying the source of the breach and those responsible. Then, the company publicly exposed the case. Moreover, the firm was forthright with its investigation.

Ultimately, having a conviction in connection to the case provides public closure. While the sentence does not remedy the site’s vulnerabilities, it shows the company takes data security seriously.

Data Breach #1: Yahoo

Unfortunately, Yahoo has made this top ten twice. In August 2013, Yahoo suffered a data breach leading to three billion customers’ account information exposure.

As with its 2014 hack, Yahoo didn’t make the details public until 2016. At the team, Yahoo was negotiating its sale to Verizon. As a result, Yahoo tried its best to cover up any news of the hack.

The sale went through. Verizon was aware of the situation. As a result, Verizon’s CISO Chandra McMahon stated, “Verizon is committed to the highest standards of accountability and transparency.” She would go on to say, “Our investment in Yahoo is allowing that team to continue to take a significant step to enhance their security, as well as benefit from Verizon’s experience and resources.”

Ultimately, the investigation should that hackers did not access sensitive information such as passwords, bank, or credit card details.

The Lesson:

While Yahoo failed gloriously, Verizon got it right. Verizon publicly acknowledged the situation and announced steps to remedy the situation. Moreover, Verizon stepped in to take control of the problem.

Often, companies need to bring in third-party consultants and experts to help quell public concerns. Naturally, external experts provide security and reassurance. After all, if the company itself made a mistake, enlisting competent third-party support makes sense.

Conclusion

Data breaches can easily destroy a company’s reputation. However, attempting to hide the fact can make matters worse. Throughout this article, companies have gotten it wrong by dismissing a data breach.

In contrast, companies have gotten it right by addressing the issue directly. Moreover, admitting a data breach and announcing steps to remedy the situation can help restore confidence.

Additionally, firms that take legal action to prosecute cybercriminals show they take data security seriously. Nevertheless, some companies may need to hire third-party experts to investigate the breach. In the end, external experts allow companies to begin rebuilding their public data security image.

Main Takeaways

  • Companies must be transparent about data breaches. Attempting to deny or dismiss a data breach can lead customers and the public to lose confidence in the company. As a result, the firm’s reputation may suffer irreparable damage.

  • Admitting a data breach is necessary to ensure transparency. Additionally, companies must provide publicly disclose remedial measures to rectify vulnerabilities. These corrective measures may include hiring external experts to help secure faulty security systems.

  • Affected companies should try their best to expose cybercriminals. Often, this approach implies prosecuting hackers. Taking legal action is an important step in reassuring customers and investors.

  • Companies must strive to be as forthcoming as possible. This approach often calls for notifying users of a potential data breach. Ultimately, it’s better to call a suspicious event a false alarm than to execute damage control after disregarding or ignoring a data breach.
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How Much Does Business Insurance Cost?

Business building in the shape of a circle

Congratulations! Your business is growing. Your hard work and dedication are paying off. Your vision is coming to fruition.

While a growing business is a wonderful thing, it can also come with its share of unexpected issues. Naturally, an expanding enterprise requires more working capital, employees, and equipment. As a result, your commercial business insurance requirements will also change.

Your flourishing endeavor now will have different insurance needs. Therefore, we will discuss the question, how much does business insurance cost? Moreover, we will discuss how your premiums will change as your coverages change along with your business.

Required Commercial Business Insurance

Small companies need commercial business insurance. There is no question about that. For most companies, General Liability Insurance (GLI) provides sufficient coverage. GLI covers a company’s third-party liability. For instance, GLI protects shops if a customer suffers an accident on its premises.

Individual professionals such as doctors, lawyers, accountants, or contractors need Professional Liability Insurance (PLI). PLI covers professionals’ responsibilities stemming from their professional activities.

Also, commercial auto insurance is a must when small companies use vehicles for business purposes such as delivery or staff transport. Commercial auto insurance can save businesses from costly traffic accidents.

Business insurance costs are relatively affordable for more businesses. A standard GLI policy costs about $300 a year for a $250,000 policy. However, your premiums might be higher depending on your business’ size and risk level.

A PLI policy can cost less than $50 a month for about $250,000 in coverage. Naturally, this cost can increase based on the risk level associated with the profession. For instance, doctors and lawyers may have a higher premium than a plumber or auto mechanic.

As for commercial auto insurance, a small business can expect to pay between $900 and $1,200 a year for roughly $250,000 in coverage. Nevertheless, commercial auto premiums may go up depending on the number and type of vehicles.

Commercial Business Insurance Coverage Changes for Growing Businesses

A growing business leads to changes in insurance coverages. Mainly, coverage limits should increase as the company expands. Additionally, companies may need to consider additional coverages as it continues to grow. However, the question remains, how much does business insurance cost?

Firstly, let’s consider expanding current coverage.

Most GLI policies cost about $300 a year for about $250,000 in coverage. However, your business may have a larger sales area or perhaps have opened other locations. Therefore, you may need to increase your policy coverage to $500,000 or even $1 million.

Expanded GLI coverage may run up to $600 a year. Naturally, this premium may increase specifically if the business’s risk also increases. For instance, a contractor that takes on larger projects would logically represent greater risk.

Also, PLI coverages may need to increase. Generally speaking, PLI coverages increase in $250,000 to $1 million increments. For example, a doctor with a growing private practice may need to purchase more coverage. PLI policies in $1 million chunks can cost around $100 to $200 a month.

Commercial auto insurance would most likely need to increase as the business expands. Your business would need to purchase more coverage as it adds more vehicles and drivers. Consequently, you may find your company paying upwards of $1,200 a year.

On the whole, a small business may initially pay around $25 to $30 a month for GLI coverage. However, changing requirements may lead the company to pay more than $50. Additionally, commercial auto and PLI may significantly drive up insurance premiums.

Purchasing Additional Commercial Business Insurance Coverages

In addition to GLI, PLI, and commercial auto, you may need to add other coverages to protect your business. These coverages also represent an increase in your monthly insurance premiums. Nevertheless, they may be necessary for your peace of mind.

Let’s take a look at these additional coverages:

Workers’ Compensation

Every state requires some workers’ compensation coverage. Please remember that states generally mandate workers’ compensation coverage for businesses with three or more employees.

Your business needs workers’ compensation since GLI will not cover any accidents or injuries your employees suffer. For example, GLI covers a customer that falls in your store. However, GLI does not cover an employee that sustains an injury in your store.

Insurers calculate workers’ compensation premiums based on your company’s payroll. The rate is 1% to 2% of your total payroll. For example, a $1,000 monthly payroll would pay between $10 and $20 a month.

However, your business won’t need to pay workers’ compensation if it hires contractors instead of employees. Contractors must have personal insurance coverage. Consequently, your company isn’t liable for any injuries they sustain.

A common question pertains to remote workers. Specifically, does your business need to pay workers’ compensation coverage if it employs remote workers?

The short answer is yes.

For instance, if an employee working at home suffers back pain from sitting at their desk for too long, they could file a workers’ compensation claim. Without workers’ compensation coverage, your business would have to pay for the employee’s treatment.

Also, workers’ compensation may apply to delivery drivers. If a driver suffers injuries in an accident, they could file a workers’ compensation claim. Therefore, it is wise to list them on your policy.

Business Owner’s Policy

As mentioned, GLI covers third-party liability. However, GLI does not cover damage to your business’s property. For example, GLI does not cover the cost to replace stolen or damaged tools. Therefore, your company needs additional coverage to protect your tools and equipment.

A Business Owner’s Policy or BOP covers your business’s tools, equipment, and buildings. This coverage is highly useful, particularly when your company invests inexpensive assets. Moreover, BOP covers you in case of natural disasters such as floods, hurricanes, or earthquakes.

Some business owners like to bundle their GLI with BOP. For instance, they include third-party liability protection (GLI) in their BOP policy. Consequently, there are two coverages in a single policy. This approach is useful as it can help you save money.

Many factors influence the cost of a BOP. Most businesses can expect to pay about $500 annually. Nonetheless, some BOP coverages can easily surpass $2,000 a year.

Specifically, your BOP’s coverage limit determines your premium. Consequently, policies covering costly equipment will come with a higher premium.

Please keep in mind that BOPs come with a deductible. A deductible is an amount you must pay upfront every time you use your policy. As such, policies with a higher deductible come with a lower monthly premium. In contrast, a lower deductible means a higher monthly payment.

Commercial Renter’s Insurance

Rapidly expanding businesses often need to rent an office, production, or warehousing space. As a result, commercial renter’s insurance may become a significant priority.

Commercial renter’s insurance covers your business from paying for damage to the rental property. For instance, a renter’s insurance covers damages to the rental property stemming from a fire or flood. Without this coverage, your business would need to foot the bill for their repairs.

Additionally, most landlords require a renter’s insurance before or at the signing of the lease contract. Therefore, you may have no choice but to get coverage.

On the whole, commercial renter’s insurance can cost between $250 and $450 a year. However, you can save by including commercial renter’s insurance into a BOP. Of course, a separate policy might be a good idea if you plan for a short-term rental or lease.

Commercial Umbrella Insurance

Your expanding business may need additional insurance coverages in case of a rainy day. Rainy days are what commercial umbrella insurance covers. Commercial umbrella insurance is a type of coverage that serves as additional coverage in case of unexpected events.

Consider this situation:

A delivery van gets into a serious accident. The damages exceed your commercial auto policy’s coverage limits. As a result, your business would have to pay for the difference out of pocket.

However, your business has a commercial umbrella policy. As such, you won’t have to pay for anything out of pocket. Your commercial umbrella policy will cover the difference.

Some business owners may feel that a commercial umbrella policy is an unnecessary expense. However, a commercial umbrella policy doesn’t become useful until you truly need it. Consequently, it’s better to have it, just in case.

Commercial umbrella insurance generally starts at around $200 annually for a $250,000 coverage limit. However, larger coverage limits such as $1 million cost around $1,500 a year.

You can always bundle commercial umbrella insurance with GLI or BOP to save on your premiums. Nevertheless, some business owners opt to get their commercial insurance policy with a separate insurer. After all, it never hurts to shop around for a better deal.

Cybersecurity Insurance

Nowadays, virtually every aspect of business happens online. Even if your company has physical locations, much of the administrative work happens on electronic devices. Consequently, your business may be vulnerable to cyberattacks.

Cybersecurity insurance is a relatively new product designed to protect your business from intrusions. For example, doctors manage highly confidential electronic patient records. As such, an information breach could prove costly.

Please bear in mind that information breaches can cost tens of thousands of dollars to repair. Also, legal fees stemming from lawsuits can seriously affect your company’s finances. Consequently, cybersecurity insurance is worth considering as your business expands.

Cybersecurity coverage typically starts at approximately $650 a year. This coverage assists your business with repairing information breaches or hacks and covering legal fees if any.

How You Can Save on Insurance Premiums as Your Business Expands

As your business grows, you may feel burdened by the thought of increasing insurance premiums. Indeed, paying more for your insurance can affect your company’s bottom line. Therefore, it’s worth looking into the ways you can save money on your premiums.

Bundling Policies

The more straightforward way to save money on premiums is by bundling various policies. Please keep in mind that your insurer will be willing to work with you to find the best deal for your business.

When looking to bundle, look for insurance carriers that offer multiple types of coverages. Smaller carriers may offer lower premiums, but they may not provide every type of coverage you need. As a result, you may need to shop around for additional coverages.

A common practice is to add multiple coverages to your GLI. Additional coverages may include workers’ compensation, BOP, and commercial auto insurance.

Another approach is, to begin with, a BOP and includes additional coverages such as third-party liability (GLI), commercial auto, and workers’ compensation.

Shop Around

It never hurts to shop around. Looking around to see what other insurers offer is a good way of finding great deals. Specifically, take advantage of competing for insurance carriers’ offers to switch. You may get discounts on comparable coverages.

Also, check out specialized insurance carriers. For example, some insurers specialize in commercial auto or cybersecurity. These insurers can provide you with comprehensive coverage at a reasonable premium. 

Leverage Policy Renewals

Policy renewable time is always a great opportunity to renegotiate your premiums or add new coverages. You can ask your insurer to review your premiums, especially if you have a clean record. For instance, you can renegotiate your commercial auto premiums and deductibles, particularly if your drivers have clean records.

Additionally, adding new coverage to your existing policy, such as workers’ compensation to a GLI policy, can be a great way to lump your premiums into a monthly payment. Your insurer stands to benefit by giving you a break. So, don’t be afraid to have this conversation.

Conclusion

Expanding businesses need to pay close attention to their insurance premiums. After all, a larger company means greater risk. Therefore, business owners must be mindful of the need to increase their existing coverage.

Additionally, business owners should consider adding more coverages for compliance and practical reasons. Ultimately, greater coverage needs mean higher monthly insurance payments. Nevertheless, business owners can find ways to save on their monthly premiums.

You can work with your insurer to find a better deal for your insurance needs. Mainly, bundling coverages can help you save on your monthly payments. However, check out the competition. They might offer a better deal on individual policies.

Lastly, leveraging policy renewals can be a great way to reduce your insurance bill. If your insurer wants to keep your business, they will be willing to work out a deal for you!

Main Takeaways     

  • Expanding businesses also have growing insurance needs. Some needs are due to compliance issues such as worker’s compensation. Other needs may be stem from requirements such as renter’s insurance when leasing a property. These needs often exceed the coverage in a standard General Liability Insurance policy.

  • Growing companies also invest invaluable assets. Consequently, purchasing a Business Owners’ Policy may be necessary. Also, adding commercial vehicles will require getting commercial auto insurance. Commercial auto coverage is a legal requirement and a good way to protect both cars and drivers.

  • Commercial umbrella insurance provides helpful coverage in case of unexpected situations. As a result, business owners should consider this coverage for a rainy day. Car accidents and data breaches can become quite costly to address.

  • Business owners should work with their insurance carriers to get the best possible deal. Your insurer can help you by offering a discount on bundle coverages. Also, take advantage of policy renewals. You can always renegotiate your premiums, especially if you purchase additional coverages. 
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Why You Should Use a Password Vault for Your Business

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Why You Should Use a Password Vault for Your Business

Vault

Ask any cybersecurity expert. They will tell you that the most important cybersecurity measure your business can take is a strong password management protocol. However, there is always room for human error.

Many businesses are now turning to password vaults to protect their network’s integrity. Password vaults provide an automated level of security that can reduce the likelihood of network compromise through human error.

Let’s take a closer look at how an automated password vault can help your business steer clear of trouble.

1. Staff Don’t Always Follow the Protocols

Common cybersecurity protocols ask staff members to change their passwords often. Moreover, protocols typically dictate the use of strong passwords. However, this task can prove time-consuming. Therefore, staff members usually try to find an easy way around it.

Consequently, staff members generally try to use passwords that are easy to remember. After all, a long 16-digit code intermingled with letters and symbols is quite complex to do monthly.

Of course, it’s not that staff members are lazy. It’s just that staff have other things on their minds. Therefore, coming up with robust passwords isn’t always their top priority.

Often, staff use one password and modify it every time they need to update it. Generally speaking, this approach simplifies the entire password management process. Nevertheless, it makes it easier for bots and hackers to figure out possible combinations.

A password manager vault, as provided by an automated password manager solution, can remedy this problem. Password managers randomly generate an extremely complex password. Then, the password is securely recorded.

Also, password managers can automatically update passwords as you choose. For example, some automated systems can change passwords every minute. This level of security makes it virtually impossible for hackers or bots to crack your network’s passwords.

Password vaults use the power of artificial intelligence (AI). As such, these programs strive to stay one step ahead of cybercriminals. Password vaults learn to detect specific portions of code. Thus, they can stop hack attempts by altering the algorithms used to generate passwords.

Using AI makes password management much easier for your company’s staff!

2. Passwords Are Often Recorded

When someone changes their password, it can be quite difficult to remember it. In particular, long and complex passwords are hard to remember. As a result, staff members may simply jot them down on a piece of paper somewhere.

Now, you might ask, why would staff write down passwords?

Firstly, using the autosave function on a web browser or login screen can be dangerous. After all, an unattended computer is a prime target for unwanted snoops.

Secondly, frequent password changes can be quite confusing. It usually takes some time to memorize a new password. In the meantime, it may be necessary to write it down. The problem lies in leaving notes lying around.

Furthermore, staff members may forget to destroy notes containing passwords. It is not enough to merely throw notes away in the trash. A malicious individual can go through trash cans to find notes containing password information.

Thirdly, staff members may choose to take pictures of their passwords with their phones. This practice also opens the door to security breaches. There is always the possibility of breaking into a staff member’s phone. Consequently, passwords may become compromised.

Password vaults address this issue by safely storing passwords on their third-party locations. As such, passwords are never stored on the local computer itself. Moreover, password vaults eliminate the need to jot down passwords.

If a staff member forgets their password, the system can easily generate a new one. Best of all, the staff member won’t need to memorize it. The software takes care of that situation for them.

3. Password Vaults Save Your IT Department Time

Let’s suppose that your company does not allow staff members to set passwords themselves. As such, it would be the IT department’s responsibility to set new passwords and update them accordingly.

This practice suggests that staff members receive a password they must remember. But what happens when a staff member forgets their password?

Moreover, what happens if a staff member cannot access their computer due to security concerns?

In these cases, staff members have no choice but to file a ticket with their IT help desk.

An IT help desk’s role is to support your organization’s computer network. Often, the help desk monitors suspicious network activity. Consequently, multiple failed attempts to access a user account triggers a lockdown.

Now, the IT help desk must field the user’s request to reset their password. This action poses two specific problems.

First of all, the IT help desk wastes time resetting passwords and then ensuring they can log in again. This process takes time away from other valuable activities.

Next, the staff member wastes work time and lose productivity. This situation is the result of dead time waiting for the password reset. Thus, the longer the IT help desk reset the password, the more productive the staff member loses.

A solid password manager program can take care of this situation without needing the IT help desk. The system can automatically field the password reset request. The IT help desk receives a notification of the transaction. Afterward, the help desk can follow up.

4. Browsers’ Password Management Functions Are Not Good Enough

Internet browsers often offer a password recall function. This function remembers a users’ credentials. As a result, users only need to click on a button to log in.

There is one major flaw with this function.

The password recall function is not intended to provide security. Instead, it’s meant to offer convenience. Therefore, this function eliminates staff members’ need to remember usernames and passwords. After all, all they need to do is one click to log in.

This flaw leads to a larger problem. Browsers do very little to protect login credentials. As a result, a sophisticated hacker can swoop in and snatch this information easily.

How is this possible?

For starters, a clever phishing attack can target vulnerable staff members. Phishing attacks often masquerade as legitimate information requests. Unwary users willingly provide their information. Then, hackers use that login information to access accounts.

Sounds simple, right?

Phishing attacks have gotten more and more elaborate over time. Nowadays, it can be quite difficult to spot a true phishing attack. Many times, users don’t recognize a phishing attack until it’s too late.

Of course, not all hope is lost. A prompt notification can avoid a network breach despite a successful phishing attack. Nevertheless, this situation requires the IT help desk to work quickly to prevent any breaches.

Automated password vaults essentially eliminate this situation. Their encryption and security measures quickly detect suspicious activity. But other security features make password vaults a great option for your company.

5. Password Vaults Stop Hackers

Thus far, we’ve talked about how well password vaults can stop hackers from getting inside your network. But what about hackers that are already inside your network?

Yes, that’s right!

According to Verizon, 34% of data breaches stemmed from internal perpetrators (2018).

This is certainly a startling figure. While we try hard to ward off cybercriminals, we may overlook malicious individuals inside our organizations.

It can be hard to judge why one of your staff would purposely cause a data breach. Nevertheless, it’s a possibility you must account for.

Additionally, ransomware and denial-of-service (DOS) attacks are becoming more and more prevalent. Automated password managers make it extremely difficult for hackers to steal user credentials. However, password managers are not perfect.

Malware, such as keylogging viruses, can capture username information if typed by the user. Therefore, a password vault works effectively as long as users don’t type any user credentials.

Here is how it works:

The password vault automatically inserts user credentials. Therefore, the user does not have to type anything at all. This approach allows password management software to foil keyloggers.

Nevertheless, it’s a good practice to avoid downloading any unknown software. Whenever in doubt, always check with your IT help desk to avoid downloading potentially harmful software.

6. Password Vaults Live on the Cloud

Remember the previous point about keylogger software?

Indeed, the malware attempts to track your keystrokes by literally copying everything you type. Moreover, other types of malware sneak into your files and soften through your information. There, they can extract your user credentials from Windows system files.

As a result, password vaults don’t store anything on your computer. They keep everything on the cloud. In doing so, password manager software ensures that malware should not steal any credentials should it infect your computer.

Please keep in mind that password vaults need an internet connection to work. Since they sync to the cloud, the devices need to have an internet connection. As a result, it is essential to maintain robust network security.

As such, there are two important elements you need to ensure network security.

First, a reputable firewall software system will help prevent hackers from intercepting data traffic to and from your network. Firewall software uses encryption technology to prevent hackers from accessing your network.

Second, a good antivirus program will detect malware either on your computer or in files such as email attachments. Solid antivirus programs can scour your computer to ensure that no malware is present.

A good option is to purchase a full suite of security products. These suites offer firewall and antivirus protection along with a password vault system.

The biggest advantage of a full-service suite is like having a one-stop solution. Thus, there is a single point of accountability if you encounter any problems.

7. Password Vaults Use Two-Factor Authentication

Modern security practices generally call for two-factor authentication. Two-factor authentication consists of login credentials verified on two separate devices.

For instance, when a user logs into their computer, a one-time-use digital code is sent to their cellphone. The user must then enter this code to gain full access to the computer.

Consequently, the user must have both devices on hand to log in successfully. . This type of authentication makes it extremely hard for unauthorized users to gain access to a network. Such users would need both devices to log into the network.

Of course, there is a possibility that a cybercriminal may have access to both devices. Nevertheless, that possibility is quite low. Specifically, if staff members take appropriate measures, it would be nearly impossible for cybercriminals to successfully log into your network.

Two-factor authentication is a good practice your staff must implement. It’s quite easy to set up and can save your network from unwanted intruders. Best of all, it won’t cost your company a penny extra to implement.

Conclusion

Undoubtedly, your business needs a password vault. Having one can save your staff members time and effort. It can also reduce your IT help desk’s overall workload.

Password vaults offer several advantages. Particularly, a solid password management system can keep intruders at bay. With two-factor authentication, you can keep unauthorized users out of your network.

Nevertheless, your staff members must be sure to follow appropriate cybersecurity measures. For instance, leaving a computer unattended may open the door to an intrusion.

Ultimately, password vaults are not perfect. Therefore, your staff members should be careful with cyberattacks. For example, phishing attacks have become more and more commonplace.

Also, your staff must be wary of suspicious emails and attachments. If your staff members have any questions, your IT help desk should support them.

Main Takeaways

  • Staff members generally don’t create strong passwords. They try to find the easiest password to remember. This practice can lead to vulnerable passwords. Hackers can exploit weak passwords, especially if malware is installed on a computer or mobile device. Password management software can create strong passwords that are extremely difficult to hack.
  • Frequent password changes can be complicated for staff members. Also, IT help desks can waste time helping their colleagues retrieve forgotten passwords. Password vaults safely store passwords, thereby eliminating the need for IT help desk support to reset or update passwords.
  • Internet browsers don’t offer the same level of security as a password Vault. Browsers’ password recall functions serve as a convenience to users. As a result, browsers don’t offer the same level of security that a password vault does. Therefore, it’s best to trust your passwords to a vault rather than your internet browser.
  • Password vaults don’t store information locally. In other words, they don’t store user credentials on a computer. Instead, password vaults sync data to the cloud. This practice bypasses malware such as keyloggers. Additionally, password vaults use two-factor authentication. As such, users must have a second device on hand to successfully log in to their accounts. This practice thwarts cybercriminals every time.
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Is My Business Considered “High Risk”? Why?

B&W view from high

Risk is a normal part of any business. All businesses face one type of risk or another. Some enterprises face greater risk than others.

Common risk factors include workplace accidents, theft, and even traffic incidents. But there’s one risk that’s virtually all companies must deal with: payment processing.

Payment processors, such as credit card companies, view businesses in terms of the risk they represent. These payment processors may view your business as “high risk.” As a result, there are eight important things you need to know about a so-called “high risk” business.

1.    Understanding Risk

Payment processing companies may make transactions between customers and businesses. In short, the greater the number of successful transactions, the more money they make.

Ideally, payment processors want customers to be happy with their purchases.

Why?

It’s a simple thought. Happy customers don’t dispute transactions. An unhappy customer, for whatever reason, is likely to file a claim. That costs payment processors money.

When a customer is unhappy with their purchases, they generally request a refund. This is the risk payment processors assess.

In general, if your business has a track record of low chargebacks, it should be a “high-risk” company. However, a history of disputes may leave your business with a label on it.

Please bear in mind that payment processors view claim history in two ways.

First, payment processing companies view for consistency. If your business records consistent disputes, claims, and chargebacks, they may deny serving you.

Second, suppose you have several claims stemming from a specific period. In that case, payment processors may not hold it against you.

Ultimately, please keep in mind that payment processing firms want to reduce the likelihood of customer disputes. Therefore, these payment processors categorize companies into high, mid, and low risk.

If your business falls under the “high risk” group, you may not get an account. Mid and low-risk designations will most likely get accounts.

As such, let’s take a look at what constitutes high, mid, and low risk.

2.    The Red and Grey Zone

Payment processors generally lump high, mid-risk businesses into two large groups, the so-called “red” and “grey” zones. Low-risk companies don’t necessarily get a label. However, your business’s history may get it labeled into one of these two groups.

Typically, high-risk companies fall into the red zone, whereas mid and low-risk businesses fall under the grey one.

Let’s start by looking at the red zone.

The red zone often has nothing to do with your company. The red zone label often comes with the type of industry you’re in. So, even if your company has a great track record, your specific industry will affect this designation.

The grey zone groups mid-risk businesses. These businesses don’t usually operate in high-risk industries. However, their track record may lead payment processors to view them a risky.

Please keep in mind that new businesses with little or no history generally go into the grey zone. After all, payment processors have no way of accurately predicting a new business’s performance. Therefore, new companies may have some trouble opening an account.

As a result, documenting business practices, in particular customer claims, can help businesses prove their performance. In particular, appropriate documentation is important if your business has been a victim of fraud.

Moreover, good customer feedback will always help prove your company’s performance. Payment processors always check various sources of information. A long list of negative customer reviews may cause your business to fall in the red or grey zones.

3.    Red Zone Risk Factors

There are specific factors payment processors include in the red zone. The two biggest ones are your particular industry and track record. If your business has a history of high chargebacks, it will fall into the red zone.

Here are the most relevant red zone risk factors:

  • Your company operates in a high-risk industry.
  • Your business is non-compliant with regulations and laws.
  • Your industry has high chargeback ratios.
  • Your industry shows a high rate of employee turnover.
  • Your company does business in risk countries such as Mexico, Brazil, Russia, among others.

It’s crucial to ensure that your business is in good standing with all local laws and regulations. Unlicensed companies will surely get into the red zone.

Furthermore, payment processors will most certainly deny accounts to unlicensed companies. The same goes for companies that sell unlicensed products. As a result, please ensure your business complies with all regulations, including products and services.

If your company serves foreign customers or markets, please bear in mind this will affect your designation. Countries with high chargeback rates or fraud history will set off red flags.

Additionally, your business’s practices may also serve as a risk factor. For instance, if your company has a history of lawsuits, it will most likely fall in the red zone category.

4.   High-Risk Industries

Despite the various factors at play, the biggest risk payment processors assess your company’s specific industry.

If your company operates in the following industries, it will most likely fall into the red zone:

  • Online gaming (gambling, casinos, lotteries)
  • Sports betting and booking
  • Travel and hotel booking
  • Businesses selling subscriptions and subscription-based products
  • Telemarketing (TV and online sales)
  • Cryptocurrency mining services
  • Forex and stock trading
  • Head shops
  • Pharmaceuticals and medications
  • Online dating
  • Adult sites and services
  • Tobacco and alcohol sales

These industries fall under the red zone designation due to the likelihood of disputes. For example, travel booking sites often receive chargeback requests when customers cancel or change their travel plans. Also, online gambling sites typically face conflicts regularly.

Please note that fraud is the biggest risk factor in these industries. For instance, customers order products and then claim they never received them. Fraudsters use this practice to get their money back after receiving their products.

Naturally, an industry with a high degree of fraud constitutes a significant risk for payment processors. As such, your business will fall into the red zone even if it has a great track record.

Of course, being in a red-zone industry does not mean your business won’t get an account. As a result, your business’s individual practices will make improve its standing.

5.    What Can You Do If You’re in the Red Zone?

Being in the red zone is not a death sentence. Many businesses are successful despite getting shoved into the red zone. Nevertheless, most mainstream payment processors shy away from companies in red zone industries.

There are payment processors that specialize in red zone industries. These companies offer virtual POS services. However, they do tend to charge higher rates. Furthermore, they may have stricter requirements as far as compliance, licensing, and business processes.

Additionally, solving client issues directly without resorting to chargebacks or claims is a great way to keep your business on the right track. Most importantly, you can gradually build your business’s reputation.

Over time, you can always try to work with other payment processors. After all, having a great track record is the best way to showcase your responsible management practices.

6.   Grey Zone Risk Factors

Grey zone companies pose a lower risk to payment processors. Generally speaking, payment processors are willing to work with these companies. Nonetheless, payment processors have strict requirements.

The most significant factor for grey-zone businesses is their history. For new companies, it’s their lack of history that affects them. Businesses with a poor track record often receive the “grey zone” designation.  This designation usually stems from a high number of claims or chargebacks.

Also, grey-zone companies typically have compliance or licensing issues. For instance, operating with a soon-to-expire license will constitute a red flag.

Moreover, businesses with online payment portals will also get the “grey zone” designation. In particular, card-not-present transactions have a higher risk of fraud. Therefore, online merchants especially need to ensure they have proper security protocols.

The best practice new businesses can implement is to keep good financial records. Appropriate financial records can go a long way toward proving your company’s reliability. As such, you can ensure your business gets a chance to conduct online payments despite being in the grey zone.

7.    Mid-Risk Factors

Like the red zone, there are risk factors specific to the grey zone. These factors may not necessarily disqualify your business outright. Nevertheless, it might make it difficult for you to find a willing payment processor.

Here is a look at the various factors that constitute a mid-risk company.

  • Your business has received the “Terminated Merchant” (TMF) before. This designation means that other payment processors have terminated your account in the past. Usually, the TMF designation is the result of high chargebacks or fraudulent claims.
  • You have a new business with very little or no credit-card processing experience. The lack of history has nothing to do with your business’s profitability or even creditworthiness. It simply means that you have no payment processing history.
  • Your business has a bad credit record, such as late payments, or has a history of high-risk loans. Defaulting on loans or credit cards will get your business into the red zone.
  • Your business shows a large number of chargebacks. Generally speaking, a chargeback rate over 1% will constitute a red flag.
  • International merchants conducting operations in various currencies across several countries at especially at risk of fraud or claims.
  • A high number of returns and refunds also constitute a red flag for payment processors.

Please bear in mind that these factors will not exclude your business. However, they might make it harder for your company to get an account. Also, payment processors may charge your business a higher processing fee.

The good news is that you can always renegotiate as you build your payment processing history and good reputation. With time, you can shop around for a better payment processing partner.

8.   Your Chargeback Ratio

Chargebacks are any type of claim or dispute that customers file after doing business with your company. There are many reasons why a customer would file a chargeback request.

For instance, a customer may not recognize a purchase on their statement. Consequently, they will file a claim even though it was a legitimate purchase.

Then, there are fraudulent claims. These are claims in which customers purposely attempt to get a refund following a purchase. Industries such as travel and betting sites often get these types of fraudulent claims.

There is no way that you can reduce your chargeback rate to absolute zero. Payment processors understand this. Nonetheless, they don’t offer much leeway. The golden number is 1%. A chargeback rate below 1% will keep you in good standing.

Please keep in mind that anything above 1% will not get your account terminated. However, a chargeback rate exceeding 1% will raise a red flag. Businesses with a high chargeback rate first go on a MATCH list.

For example, Mastercard uses its MATCH list to show businesses in the grey and red zones. As such, payment processors can go to the MATCH list to see if your business is listed there. If you’re already there, the best way to get off is to reduce your chargeback rate as much as possible.

The best way to reduce your chargeback rate is to implement strict controls. For example, some high-risk companies require ID verification before accepting online credit card payments.

Other businesses use third-party gateways to protect themselves. In doing so, a customer claim goes through the third-party processor and not the company itself. Amazon and eBay are good examples of this practice.

Most importantly, please ensure to make your customers aware of their purchases on your site. Offer them as many ways as possible to solve disputes internally. In doing so, you can keep your chargeback rate as low as possible.

Conclusion

Processing payments is an essential part of most modern businesses. Consequently, finding a reliable payment partner is crucial. However, your business may face some challenges along the way.

Please keep in mind that your business’s industry will initially determine is red-zone or grey-zone designation. Of course, other factors apply here as well. Therefore, you must ensure that your business focuses on keeping customer disputes and claims to a minimum.

In particular, your business should strive to keep its chargeback rate at or below 1%. In doing so, you can ensure that payment processors will see you as a reliable business regardless of your industry.

Main Takeaways

  • Payment processing companies assess risk based on a number of factors. These factors include a business’s industry, payment processing history, compliance, customer reviews, employee turnover rate, and chargeback ratio. Businesses deemed as low risk often have no trouble getting payment processing accounts. Companies labeled as high risk may find it difficult to get a payment processing account.
  • Payment processors use the “red zone” designation for high-risk companies. These companies include businesses in risky industries such as booking, travel, and gambling. Also, businesses with a high chargeback rate receive the red zone designation.
  • Payment processors use the “grey zone” designation for mid-risk businesses. The mid-risk label often refers to new companies with very little payment processing history. Moreover, companies with a bad credit record (such as making late payments on loans and credit cards) generally get the grey zone label.
  • The most significant risk factor is a high chargeback rate. Customer claims and disputes through credit card processors constitute a chargeback. When a business exceeds the 1% mark, it goes on a MATCH list. This list shows companies considered as “high risk.” As a result, payment processors are wary of these businesses. If a business continues to show a high chargeback rate, it can become a “Terminated Merchant” or TMF. TMFs have an extremely hard time finding a payment processing partner. Therefore, keeping your business’s chargeback ratio below 1% is crucial to keeping it in good standing.
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Battle of the Cards: Amex Business Platinum v. Chase Ink Business Preferred

Chase bank

In the competitive world of credit cards, some offer better perks than others. Of course, not all cards live up to their hype. Nevertheless, some cards do live up to expectations.

Such is the case of the American Express Business Platinum and Chase Ink Business cards. Nevertheless, there are some important differences to consider. 

So, let’s take a deep look at their features before declaring a winner.

Overview

Both cards receive top marks in the business card realm. However, there are some clear differences in terms of benefits such as welcome offers, annual free, and rewards.

Here is an overview of the Amex Business Platinum:

  • 100,000 intro bonus points
  • $595 yearly fee
  • Average APR ranging from 14.24% to 22.24%
  • Credit score required: 670-850 (good – excellent)

Now, let’s take a look at the Chase Ink Business Preferred:

  • 100,000 intro bonus points
  • $95 yearly fee
  • Average APR ranging from 15.99% to 20.99%
  • Credit score required: 670-850 (good – excellent)

As you can see, both cards stack up similarly. However, there is a significant difference regarding annual fees. In fact, it is a $500-difference. That element alone begins to build a compelling case for the Chase Ink card.

Now, let’s take a look at the benefits each card has to offer:

BenefitAMEX PlatinumChase Ink
Welcome Offer100,000 points following $15,000 in spending on qualifying items within three months of opening account.100,000 points following $15,000 in spending on qualifying items within three months of opening account.
RewardsFive times the points on flights and hotel bookings through Amex-travel.com. 1.5 times more points on participating purchases with a yearly cap of 1 million points.Three times point on travel, shipping, services (cable, phone, internet), and other sites such as on social media capping at $150,000 annually. One point on all other types of purchases.
Additional BenefitsBonuses on purchases from brands such as Dell, Hilton, Marriot, and airlines. Useful for TSA PreCheck and Global Entry. Insurance on trip delay and cancelation, rental auto insurance, and baggage losses. No international fees.Free employee cards. No international transaction fees. Insurance for trip delay and cancelation. Cell phone insurance.Rental car collision damage waiver.

The Verdict

Both cards offer similar perks. As such, it is hard to make a clear call for either one. Both cards have excellent benefits. Nevertheless, there are two main deciding factors.

The first factor pertains to the annual fee. A $500-difference is significant enough to give the Chase Ink card the edge. If you’re serious about saving as much as you can, then this condition puts a big check in the win column for the Chase Ink card.

The second factor refers to benefits. The Amex Platinum’s comprehensive travel offers give it the nod over the Chase Ink. If you travel frequently, the Amex Platinum can make up the $500-fee in other areas.

The winner of this battle is the Chase Ink card. Unless you travel extensively, the Chase Ink card offers a balanced cost-benefit approach. However, if you do travel frequently, the Amex Platinum would make the most sense for you. Ultimately, a $500-difference in annual charges, with similar benefits, makes the Chase Ink card the winner.

Original source: Time

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Four Great Tools to Help You Save on Your Next Flight

Airplane wing in the sky

Now that travel is getting safer, you might be preparing for your next trip. As such, you might be looking to book your next flight. So, it makes sense to stay within your budget.

Here are four great tools you can use to uncover great deals on your next trip.

Predicting Flights with Hopper

Savvy travelers use Hopper to predict flight prices. Hopper bases these predictions on multiple variables. Consequently, this tool can tell you if it’s the best time to book. 

Hopper’s calendar view uses a color-coded system to alert you of good deals. As such, green days mean good deals, whereas red ones indicate high prices.

You can set up a notification to alert you of prices changes if you’re ready to book yet.

Seeking Adventure with Skyscanner

Adventurous folks will love Skyscanner. This tool allows you to compare flight prices for virtually any destination. All you need to do is enter your destination, and you are good to go.

Skyscanner’s most compelling feature is its “search everywhere” function. With this feature, all you need to do is enter your departure area. Skyscanner then looks through available prices to find the cheapest ones. Indeed, Skyscanner is the tool for you if the price is the most important factor.

Getting Details with Google Flights

Google Flights is another wonderful price comparison tool. It can list multiple destinations in seconds. It’s also easy to use.

In addition, Google Flights displays all essential information related to flights. This feature makes Google Flights highly useful in planning your next trip. For example, you’ll get information on baggage rules, fare rate change policies, and even specific details such as access to Wi-Fi and USB charge points on the plane.

Saving with Scott’s Cheap Flights

Scott’s Cheap Flights is a tool used to scour for deals and pricing errors. As such, wise travelers have come to trust this tool to search for great deals.

With Scott’s Cheap Flights, you can simplify your searches. You’ll be alerted every time a great deal comes up. Plus, you can get rewards every time you use your credit card.

So, if you’re ready to hit the road, take a look at these tools and save!

Original source: Fool

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