Protected you say?
Are you sure? You might be missing something!
As a racer, whether you drive race cars, race motorcycles, pilot speedboats or are involved in any other form of high speed sport you already know that protecting yourself from the dangers of competition is a prerequisite to climbing aboard, on or into your chosen vehicle. There is most likely more than a few dollars worth of safety equipment adorning you ride and your person. You probably spent countless hours preening over catalogs and web sites looking for that set of leathers, that helmet and the myriad of other bits and pieces designed to keep you body in one piece should the worst happen while racing..
So for all that you probably feel pretty invincible strapped in, and covered head to foot like a modern day armored warrior. You pull onto the grid and you feel the power as you wheel away with the pack… but wait a minute! Let’s back up a bit and talk about protection.
So you are all set to go racing but what about your protection if indeed the worst does happens? What have you done prepare you and your family for that possibility? Every competent racing driver or rider out there as a privateer understands there are limits to their skills. We take track days and pay other more experienced riders to show us the best lines and to fine tune our body position. we give our motors, shocks and forks to the pros who know how to put together a package for us that with allow us to be the best riders our skill level permits us to to be.. but what about our financial protection? Are you a loner or are you a team player?
Let’s face facts folks! There are all kinds of racers out there on those grids and every one of them approach racing from a different perspective. So at the risk of being too broad in identifying the kind of competitor you may be I believe each of us would fall into one the following categories….
Though there is no cookie cutter profile you are either……
The racer who has it together. You have a plan and the insurance coverage to handle worst case scenarios
Your the guy who talked with a professional, assessed his entire lifestyle, racing and business needs and together they came up with a plan that would cover any eventuality both on and off the track, a plan for coverage for now and into the future
Or you might be the racer who has some coverage but it is sketchy and there is no real plan. You know that you need protection but your approach is hit or miss on how or when. You have not looked for advice, your coverage is a patch-work of conflicting and duplicate policies. The end result is coverage that is unnecessarily costly and worse they are incomplete. It’s better than nothing… barely!
It could be your the guy who has no coverage because your not really sure what coverage you need or if you even can afford it. So instead of checking it out you just kind of wing it and hope for the best.
You know your really playing with fire. You know you need something but your afraid to take the issue head on. It just might be that you should back out until can actually afford to race AND protect yourself. So maybe you just don’t have the information to make the right choices. Or you can’t afford it. Either way you need to get with it and start getting racing smart or pull over until you can.
And finally we have the racer who has his head in the sand believing bad stuff only happens to others. Pretty much they just flat out don’t care!
If this guy is you then you pretty much have no business being on the track. Your attitude and approach makes you dangerous and just not to yourself. It’s likely that if you are making bad choices off the track then you probably will make bad choices while on track and in traffic. You might be a guy who lives the “Don’t Fear the Reaper” motto but your putting yourself and others at risk.
Racing is supposed to be fun and while we all know of the dangers involved, concentration and focus while racing can be diminished if there is that gnawing thought in the back of our heads that if things go bad it could mean it’s also going to be really bad financially for you and your family because you don’t have proper coverage. But it sucks even more so to be worried if the guy next to you is a fellow who falls into that last category.
So it may not be just the uncovered rider and their family who could be impacted by his poor judgment and bad choices. It just might be you!
The bottom line in my opinion is that clubs really should be drawing the line when it comes to racing and insurance. Clubs and series organizers enforce safety protection for racing using a wide array of physical methods. We are required to wear leathers and fire suits. Our heads, feet and hands must be protected too. The pit techs carefully check out our bikes for safety wire, stabilizers and a host of other safety related items. The rule-books are filled with dozens of stipulations for on track procedures that are there strictly for safety sake.
So why is there not a procedure or rule that would give some certainty to a riders welfare after the worst has occurred? At the least there should be a set minimum of coverage that riders should have proof of carrying before they are allowed to race. It is just smart business. I’m sure people smarter than myself could find a way to make coverage available for all riders, regardless of class, age or skill level. I would imagine that it could be done where a club has automatic blanket group coverage and the costs could be shared across the club membership through additional fees. This is just one possibility. I’m sure there are many other avenues that could be approached in creating a fully protected grid of racers. And in my opinion a grid filled with covered riders makes the entire sport just smarter, better and just maybe a little safer. But until that happens the best you can do is protect yourself.
So after all that you have wonder… what do I really need to be covered for racing? And more importantly what do I do about the upcoming changes to health insurance due to Obamacare and how is that going to affect my choices? While I personally am not a fan of the current administrations involvement in personal health care it is a fact of life and until Congress decides to do something different it’s something we all will have to deal with.
Which brings me to this.
I would like to share with you the following post. I find most if not all of the information found in it will touch on issues we as racers ultimately will face at one time or another..
You may or may not agree with all of the commentary but you can bank on all of it figuring into what eventually will be your coverage, both on and off the track.
This post is from current CMRA racer Brandon Cleland.
Brandon is a very knowledgeable rider and currently he works in the financial and risk management business.
He has first hand experience with worst case track incidents and knows what he’s talking about.
His comments in the post below are very insightful and you should read them closely… it could mean the difference in how your “incident” turns out. Not only does he touch on racing specific risk management but he talks about the broad spectrum of personal wealth and how you should consider constructing a full coverage plan that approaches risk management based not solely on “event” protection but also as a means to grow your wealth. A comprehensive approach can absolutely bring peace of mind and allow you to focus on having fun while racing!
I offer this posting from Brandon with the following advice….
When entering into an agreement with any agent or broker make certain the policy you are purchasing actually covers motorsport incidents. Most policies exclude this coverage.
Shop around… there are cheap… and not so cheap plans available from a multitude of companies. But as with any other item the cheapest usually is not the best and in the world of finances relationships can be more important than policy prices. It pays to have a broker who knows you, knows about racing and understands the peculiar nuances that racers have to deal with.
The following originated from a posting on the CMRA forum board. Brandon was kind enough to update the post with more details and information for Soonerbillz.com
From Brandon Cleland…..
“Several CMRA members have recently come to me with questions regarding the Affordable Care Act (better known as Obama Care) and how it will affect them. I thought I’d take a moment and share my $.02 regarding the changes that are about to take place and some other useful insurance knowledge that I feel every road racer should have.
The Affordable Care Act (Obama Care, ACA) IS going to happen. There are several things left to be determined so I will update this as the law makers make it available. Big changes are in the works and the media outlets will start to cover the ACA the closer we get to the enrollment date. If you have questions regarding your current policy feel free to contact me.
First, let’s address the good things that are going to come out of the ACA:
-All pre-existing conditions are set to be covered. Example…Currently, if you are type 1 diabetic you cannot get coverage through the big insurance carriers. You have to pay 4x the cost of a normal policy and are thrown into the Texas Risk Pool carrier. Coverage for your pre-existing condition is excluded from your policy for the first 6 months. The ACA eliminates this. The application will not include health questions but rather strict financial questions to determine your premium.
-All children under the age of 26 will remain on the policy without stipulations (no more cobra)
-A policy can only be cancelled by the insurance carrier due to fraud.
-Same cost sharing in/out of network. This eliminates the “it cost this for this doctor and this for that doctor”
-ACA allows for coverage without preauthorization
-There will be 10 essential health benefits covered under ACA including 3 that are not normally covered; maternity coverage, full preventative care, and pediatric dental and orthodontics.
Now, for the bad…
-Premiums are going to go up 50-100% and will continue to increase until 2016 where they are hoping to level off.
-Penalty for non-enrollment. There is a $75 OR 1% of income penalty for those who are not enrolled. However, this penalty is delayed until Jan 2015.
-The only way you are able to keep your existing plan is if you have not made ANY material changes to it post March of 2010. You are considered “grandfathered” if the policy dates before then.
Just some info:
Where to buy?
The enrollment date for ACA is October 1 2013. The effective date is January of 2014. The best place to buy is an ACA certified insurance agent (like my agency). The reason for that is you can speak with a consultant team to find out which insurance carrier is best for you. It also gives you personable attention and the ability to build a relationship with the team as opposed to long wait times and being just a number in the system.
What are the options for coverage?
There will be four different types of plans to choose from ranging in different actuarial values. There will also be a “catastrophic” plan for the invisibles (age 30 and younger) with a 50% AV.
How is price determined?
Price will be determined based on your income level. There are 6 income tables to determine the price of coverage. The size of your family also determines what table you fall in. The table is based on the federal poverty level and household size. There are six levels of income. Those that are 400% or above the FDL will NOT recieve federal subsidy dollars.
Household size and 100% of FDL:
1 – $11,490
2 – $15,510
3 – $19,530
4 – $23,550
5 – $27,570
6 – $31,590
7 – $39,630
The income brackets are 100%, 133%, 150%, 200%, 300% and 400%. To find your number, multiple your family size by the percentage. Example- Household size: 4= $23,550 x 400% = $94,200 … This means that if you are a family of 4 and bring in over $94,200 you will not receive any subsidy dollars. The exact amounts for each FPL have not been released.
There is a very brief overview of some of the things we can expect to see change with the ACA. New guidelines are being announced daily and I will be sure to update this once it becomes available.
Health insurance is extremely important to have if you want to go road racing. There are a couple other types of insurances that often get overlook but can have a much larger financial impacted on a racer and their family. The good thing is, they are inexpensive in comparison to the benefit and impact they could have on a family.
One of the most forgotten and overlooked insurance is long term disability. All of our financial goals are predicated on our ability to earn an income. If we are unable to go to work and pay the bills, what is going to happen? LTD coverage provides an income in the event you are disabled and unable to go to work. People are surprised to hear that 90% of disability claims are actually due to sickness. Most employers provide some type of LTD benefit and pay for it too. Although that sounds great there are a couple of disadvantages to that. First, any benefit you receive will be taxable. If you own your own policy, benefit comes to you tax free. Another disadvantage with group policies is the definition of disability. Most group benefits do not provide partial disability benefit and define disability as “permanent”. Unless you are completely laid up, these policies don’t pay at all. The insurance company determines that you could be a Wal-Mart greeter so you are not deemed “permanently disabled” but do not possess the ability to do your main occupation so you are fired. Now you are out of a job, health insurance, and disabled to the point you can only be a Wal-Mart greeter or answer phones somewhere BUT you’re not receiving any benefit because group LTD policies aren’t that great. Your wife probably left you because 90% of disabilities lasting more than 1 year result in divorce. Don’t make your wife leave you….own your own disability insurance.
There is also another type of coverage that can offer relief in the event of a catastrophic incident – Long Term Care. LTC was originally designed to offset the cost of nursing homes, home health care, and assisted living facilities. The fact is 40% of LTC claims are being paid out to people under the age of 50. Long term care is a type of coverage that PAYS for registered care to take care of you. In the event you are paralyzed on a motorcycle, a LTC policy will pay to have someone take care of you so your spouse of parents do not have to. This will allow the people who care about you the ability to get out of the home and earn and income because you are laid up. What’s great about this policy is that if you do not use it because of a severe motorcycle crash, there is a 50% change you will use it due to the onset of old age (getting old is inevitable). For those of you with a parent going through the nursing home stage, you know how expensive it can be. A LTC policy is a way to insure against those costs and protect the racer from the worst. The wall street journal ranks failure to consider the cost of long term care as one of the biggest financial mistakes.
Of the four primary insurances (health, LTD, LTC, life) life is the one that is most commonly own. Knowing your life insurance number is extremely important for those who truly care about their family. Life insurance is a precise calculation based upon the things that you want to take care of in the event you pass away early. There are two types of life insurance; the kind you own and the kind you rent. The kind you own (permanent, whole life, cash value life, etc) catches some flack in the media because most of the time it isn’t a good idea. When buying real estate, its location, location, location. When owning whole life, its company, company, company. There are only about 4 companies in the world you should own permanent with. Permanent insurance has lots of benefits and 100% of it pays out. Less than 1% of all term insurance pays but it is a cheap way to cover a life insurance need.
When it comes to financial planning it is all about managing risk and learning to make small mistakes. When I think about my insurance coverage like LTC, would I rather make a $70 mistake a month OR make a $360,000 mistake by not owning it? Disability is an easy decision; would you rather have a job that pays you $8,000mo and $0 if you are disabled OR $7,920 and $5,000 if you are disabled? Easy choice.
If I had to do my insurance planning over I would have bought more. After I recovered from my last surgery I applied to increase my long term care coverage just to have more for peace of mind. I was declined. I don’t want any of you to be in a situation where you wish you had it or, like me, wish you had more. It’s better to have it and not need it than need it and not have it.
If you have any questions feel free to send me an email. If you own a policy of some type or have group benefits I will be more than happy to read over it and tell you what it all means. It breaks my heart to read about fallen riders without coverage. For less than a set of tires you can take care of all four of your insurance needs. I hope this helps.
*Please Note* The following information is an overview of insurance products not specific to an individual or carrier. The amount of insurance coverage recommended is determined through a fact finding process and needs based analysis. To go through this process, please take the time to get in touch with me via email.
You can contact Brandon directly at the following:
P: 817.347.9403 | F: 817.338.1112 | C: 713.560.0860
Brandon Cleland is an Insurance Agent of NML and Northwestern Long Term Care Insurance Company, Milwaukee, WI (long-term care insurance), a subsidiary of NM. Registered Representative of Northwestern Mutual Investment Services, LLC (securities), a subsidiary of NM, broker-dealer, member FINRA and SIPC. There may be instances when this agent represents companies in addition to NM or its subsidiaries.