How risky hobbies raise your insurance

9:00 AM hobbies, insurance, life insurance, raise, risky No Comments

| By Geoff Williams, U.S. News & World Report

Love skydiving or mountain climbing? Such thrill-seeking pastimes can cost you more than you think.

You think mountain climbing or sky diving is risky? Try telling your insurance agent about it.

Mitchell Fox, 30, of San Francisco, is an avid outdoorsman, a guy who rock climbs and scales mountains, but his thrill-seeking has come at a cost. Fox had life insurance, but after he left his position as a director of marketing at an online stock brokerage to become co-founder of the startup GoodApril.com, a free online tax planning service, he was no longer covered. He applied for life insurance from a company that had a listed rate of $20 a month for $350,000 of term life insurance. He was accepted—if he would pay $180 a month. Reluctantly, Fox declined to buy life insurance, and he's without it for now.

"As someone who works in finance, I understand why an insurer would charge a higher rate to a higher-risk customer—that makes good business sense. And honestly, mountaineering is a dangerous hobby. My wife took a scary fall a couple of years ago on Mount Shasta and was lucky to be mostly unhurt," says Fox.

That said, Fox feels the insurance industry as a whole isn't thinking through these rates in a fair way. "It frustrates me that the difference between paying nine times as much per month for insurance was the fact that I was honest on my application about a sport I only infrequently participate in—I've climbed three mountains in two years. Am I really nine times riskier a customer than less-active people, whose chances of heart disease are probably higher? Am I really nine times riskier than a bad driver? I don't recall the question, 'Are you a good driver?' on the application."

So if you have an active lifestyle or have been thinking your life needs more adrenaline, here are some things to consider.

You will pay for that risky hobby. And you will possibly pay quite a bit more than you expect. Joel Winston, a former deputy attorney general for the state of New Jersey, is now a New York-based attorney who founded AnnualMedicalReport.com, an organization aimed at improving privacy protections for personal medical information. There are no hard-and-fast rules on what an avid or occasional mountaineer like Fox will pay, but Winston has compiled what he says is a rough estimate of additional prices an otherwise healthy person can expect to pay if he or she is seeking $500,000 in term life insurance and engages in the following activities:

Motorcycle riding: expect to pay an additional $1,000 per year
Scuba diving: additional $2,500 per year
Skydiving/BASE jumping: additional $2,500 per year (and there's a good chance you'll simply be denied life insurance)
Hang gliding: additional $2,000 per year
Rock climbing: additional $1,500 per year
Hunting: additional $500 per year
Recreational boating/fishing: additional $750 per year

It isn't just life insurance, either. Winston says the individual health insurance market is "almost like the Wild West, depending what state you're in." In some states, companies selling individual—not group—policies have started increasing premiums based on dangerous hobbies. Again, these aren't hard-and-fast numbers, but assuming your insurer knows what you're doing in your spare time, a Mixed Martial Arts (MMA) fighter can expect to pay an additional $1,000 a year for health insurance, and a marathon runner, an extra $750. If you have an individual health plan and own a registered gun, whether it's something you hunt with or have tucked away in a drawer, you might easily spend an additional $2,000 a year, says Winston, although that practice will end when the Patient Protection and Affordable Care Act, also known as Obamacare, begins.

You can pretty much give up the idea of getting long-term disability insurance. There are probably exceptions, but if you engage in risky activities like skydiving, you won't likely get this insurance, or you'll have to pay so much that it won't be worth it. Vincent Sarullo, 45, is a co-founder of Tower Fund Services, a financial services company in Red Bank, N.J., and while he has a quiet day job, he enjoys deep sea diving. Sarullo is also a rescue diver for the fire department in Red Bank. He works in a respected industry and is trusted by his local fire department to dive. Doesn't matter. He can't get the insurance.

Ironically, he says of an industry that is all about studying the details surrounding dangers, "I think the insurance companies just don't understand the risks, or lack thereof," says Sarullo, who won't give up diving to attain long-term disability insurance: "I love it too much."

You can do something crazy every once in awhile. Wake up one day and suddenly feel the urge to learn to skydive? Watch the opening scene in the Billy Crystal comedy classic "City Slickers" and decide that you, too, should run with the bulls in Spain? If you risk death in some wild stunt and don't end up coming out okay, your life insurance will still pay out, says Laura Adams, a senior insurance analyst at InsuranceQuotes.com, an insurance comparison site.

There is one caveat, and that's whether you bought your life insurance a few weeks or days before you ran with the bulls, which would suggest you bought it because you knew there was a good chance you might be a goner. Adams says that generally with an insurance policy, "there's what's called a contestability period, usually about two years, where the insurance company is more likely to investigate a death."

Above all, be honest in your application. You might easily think it's not worth the trouble to tell an insurance company about your love for mountain climbing, and it's true that it's probably not smart to volunteer the information. But if you're asked and lie to an agent or on your application, you're taking just as much of a risk as the pastime you're engaged in.

"If they ask about your lifestyle, you've got to be honest," says Adams. "If you're a pilot or scuba diver and you lie about that, and then you die in a skydiving accident or you go spelunking and they find you underwater in a cave, the insurance company may not pay out. They can argue that it was fraud and that your beneficiaries aren't entitled to anything."

And odds are, they will find out. Insurance companies, says Winston, are well aware of "the groups you're involved in, the commentary you write on Facebook, the stuff you post on Instagram. If you have a low-value insurance policy, it won't come up, but if it's a serious policy that could bring in big numbers, they'll want more background on you."

Winston adds that even if you're quiet about your activities, someone else might not be. "Somebody might post a picture of you diving underwater and tag it to you on Facebook, and so suddenly your insurance company knows what you've been up to, and it isn't even something that you disclosed," Winston says. "But that's just the way things are interconnected now."

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A logo tattoo for a raise? These workers did

8:30 AM raise, tattoo, These, workers No Comments

"We call it brand ambassadorship," said Anthony Lolli, owner and CEO of Rapid Realty, a New York based real estate firm that encourages employees to get a tattoo of the company's logo. In exchange for the tattoo, employees receive a 15 percent commission increase for life. NBC's Joelle Garguilo reports.

By Amy Langfield, TODAY contributor
How far would you go for a raise?

Inking a deal with Rapid Realty has a more permanent feel now that the New York City-based brokerage is giving a 15 percent raise to its workers who get a tattoo of the company’s logo.

So far, 40 agents are inked and more are lining up, Anthony Lolli, the CEO of Rapid Realty told NBC News.

One new agent got the tattoo after only a week working for Rapid Realty.

But isn’t that crazy?

“I don’t think so,” Lolli said. “Some people fall in love with the opportunity. They fall in love with the brand.”

It’s actually pretty conservative compared to other people who have tattooed company logos on their person, such as the man who tattooed the web address of a porn site on his face or the woman who auctioned the space on her forehead for $10,000.

Rapid Realty

Agents of Rapid Realty in New York City are eligible for a 15 percent increase in commission if they get a tattoo of the company logo.

But at Rapid Realty, there are no regrets yet and all 40 inked employees are still with the company, Lolli said. Some early adopters are even making plans to touch up their colors.

The tattoos can be any size anywhere on the agent’s body to qualify for the bonus. They’re getting the tattoos anywhere they like: on their thighs, biceps, ankles, wrist, behind the ear and elsewhere, Lolli said. Some have only the RR logo, while others have also spelled out Rapid Realty. “They’re allowed to customize it,” he said.

Since all of Rapid Realty’s 1,100 agents work on commission, the 15 percent boost kicks in each time they complete a deal. Most agents start at a 25 percent commission so a company tattoo will bump them to the 40 percent bracket. Some agents were already maxed out at the 40 percent rate, but still got tattoos even though there was no extra pay in the deal, Lolli said.

About two years ago, Rapid Realty agent Adam Altman was the first to make the commitment after he closed a deal for a tattoo parlor in Bushwick, Brooklyn. A video on the company website documents the event, as the bespeckled, bearded agent adds the stylized RR logo to his existing tattoo collection. He already had tattoos on his arms, legs, back and mouth.

“The company’s been good to me. I don’t see myself going anywhere. If I have it on, it’s gonna force me to keep going and working harder, cuz you know I have that logo on, you know you’re not going to give up. It’s there for life,” Altman says in the video .“Rapid for life.Yo.”

So far, Lolli himself isn’t inked, but is grateful for his agents’ devotion. “It’s very humbling. I have an attitude of gratitude,” he said.

He’s considering getting a tattoo when his company hits a big benchmark of 100 offices. Currently Rapid Realty has franchises in New York City, Boston, Philadelphia, Long Island and New Jersey. But with 62 locations, he has some time to consider where he wants his tattoo for the 100th.

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Energy costs raise concerns on growing economy

4:35 AM concerns, costs, economy, energy, growing, raise No Comments

The U.S. economy kept growing moderately in the late winter months but rising prices for gasoline and other energy products were beginning to worry producers and consumers across the country, the Federal Reserve said on Wednesday.

"Reports from the 12 Federal Reserve districts indicated that the economy continued to expand at a modest to moderate pace from mid-February through late March," the central bank said in its latest "Beige Book" summary of national activity.

It found several hopeful signs for growth, including steady hiring and shortages of skilled workers as well as brisk new-vehicle sales and improving residential real estate markets but with a strong dose of concern about energy costs.

"Manufacturers in many districts expressed optimism about near-term growth prospects, but they are somewhat concerned about rising petroleum prices," the Fed said.

Similarly, while immediate prospects for consumer spending were seen as bright, "contacts in several districts expressed concerns that rising gas prices could limit discretionary spending in the months to come."

According to the report:

Activity in the Boston, Atlanta, Chicago, Dallas, and San Francisco Districts grew at a moderate pace, while Cleveland and St. Louis cited modest growth. New York reported that economic growth picked up somewhat. Philadelphia and Richmond cited improving business conditions. The economy in Minneapolis grew at a solid pace and Kansas City's economy expanded at a faster pace.

Hiring was steady or showed a modest increase in most districts, the report said. But companies continued to have difficulty finding qualified workers for high-skilled jobs.

The Beige Book, prepared this time by the Cleveland Fed based on information collected by April 2, has market interest because it is based on anecdotal reports from business people from coast to coast and thus reflects real-life conditions. 

Reuters contributed to this report.  

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New mandates for paid sick leave raise hackles

12:28 PM hackles, leave, mandates, raise No Comments

Correction: This post has been corrected from an earlier version, which included incorrect data on the number of small businesses offering paid sick leave.

The only thing worse than staying home sick with chills and a fever or a hacking cough is having to be at work while battling illness. Yet for many workers, especially those who work for small businesses that don't offer sick leave, that is a very real choice.

Federal law does not require business to offer paid sick leave, and many businesses are abandoning the benefit, but now some state and local governments are stepping into the breach, ringing alarm bells for some small business owners.

"People will lose jobs," said Darlene M. Miller, president and CEO of Permac Industries.

If governments mandate paid sick time, "it will ultimately make small manufacturers like my company less competitive, and reduce the work that we win in our bidding," she said in an email. 

The idea of a national mandate for paid sick leave was kicked around a few years ago in the wake of the "swine flu" scare, when many policymakers came around to the idea of paying contagious workers to stay home. But the idea never became law, and no action is expected from the current, deeply divided Congress.

But some smaller governments are acting.

Connecticut now requires companies to give full-time workers five paid sick days a year, and a law that goes into effect later this year in Seattle will require firms with five or more employees to provide paid sick leave. Similar efforts are under way in New York City, Philadelphia and Massachusetts. Proponents say these laws protect low-wage workers — and prevent them from passing contagious illnesses onto the public many of them serve. 

"It's just really difficult for someone whose earnings are just getting them by to give up just one day's pay," says Sherry Leiwant, co-founder and co-president of advocacy group A Better Balance. "It's just not going to work to say to people, 'Stay home when you're sick' if they need that money to put food on the table." 

Leiwant said 82 percent of restaurant workers and 64 percent of retail workers in New York City don't get paid time off when they're sick. This is somewhat alarming in a city where so many people encounter waiters and cashiers on a daily basis. Among all small business, defined as those with fewer than 50 employees, only 32 percent offered paid sick leave in 2011, according to the Society for Human Resource Management. 

Advocates like Leiwant believe legislation is the best way to to increase that percentage, but pro-business groups say paid sick-leave requirements do more harm than good. "I think it's important to have paid time off, but it's a question of what the employer can afford," said Helen Darling, president and CEO of the National Business Group on Health. 

"Any mandate basically means that some other things have to go," like health insurance, raises or even additional jobs, she said. 

Darling said employees who do get paid sick time take unfair advantage of it, calling out disproportionately on Fridays and Mondays. 

Denise Fleury, senior consultant in health and benefits business at Mercer, said dealing with absenteeism is a challenge for small businesses but disputed the idea that employees take advantage of paid sick days. "When you have a smaller company, it's more of a community, so I would think abuse of sick leave would be not as prevalent as people might think," she said.

The question of how much it costs to pay sick employees when they're not at work is hotly contested. The NBGH's position statement says a national mandate for companies to provided paid sick days would cost businesses up to $35.3 billion annually. 

Other groups have come up with much lower figures. When the Economic Policy Institute calculated how much businesses in Connecticut would be affected by the state's sick-time law, it estimated the cost to be 0.05 percent of sales across all industries.

Should businesses be required to offer a minimum amount of paid sick leave?

Brian Drum, CEO of executive recruiting firm Drum Associates, said an alternative is for companies to give employees a certain number of paid days off without dividing that pool into categories.

"They really don't want to have the burden of worrying about what's sick time and what's vacation," he said. A growing number of the companies already use this "paid time off" model because it's easier from an administrative perspective, he said.

But companies that don't give their workers any paid time off might need a law to compel them, he acknowledged. "To mandate it isn't a bad thing," he said. "The companies that might not do it probably ought to do it, because people do get sick from time to time."

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Spanish village to raise funds with marijuana

6:16 PM funds, marijuana, raise, Spanish, village No Comments

MADRID — A tiny Spanish village has voted to lease land for growing marijuana as a source of desperately needed revenue — a unique but legally questionable way of battling an economic crisis highlighted by staggering unemployment and a looming recession.

A government official with the National Drug Plan said such planting would in fact be against the law and that prosecutors would intervene as soon as the first pot seed was sown.

The village of Rasquera, population 900 and in the northeastern Catalonia region, said its town hall councilors approved the plan Wednesday night in a 4-3 vote.

Rasquera is a picturesque, compact hamlet of stone buildings at the foot of a mountain range in Tarragona province. It has a castle that dates back to the 12th century.

The Barcelona newspaper La Vanguardia says it is the kind of village that is dying — its young people leaving for lack of work, and those left behind desperate for some lure to keep people put.

The idea is for private citizens to lease or lend land to town hall, which would then create a company to manage the land and lease it to an association of marijuana-smokers in Barcelona.

Under Spanish law, consumption in private of cannabis in small amounts is allowed. But growing it for sale, or advertising it or selling it, are illegal, the anti-drug official said on condition of anonymity under department policy.

The group that wants to acquire the marijuana, called ABCDA, said on its website that it will make an initial investment of $40,000 but makes no mention of how much it will pay Rasquera per year. A representative who declined to give his name said more details would come when ABCDA signs a formal agreement with the village in the coming days.

ABCDA said the project would create 40 jobs in Rasquera — workers to grow, harvest and package the pot — and the marijuana produced would go to ABCDA members.

Rasquera's mayor, Bernat Pellisa, could not immediately be reached for comment Thursday.

But after the Wednesday night vote he hailed the plan. "It is a question of opportunity, which is going to bring in money and create jobs," Pellisa.

The National Drug Plan official said Thursday the project has zero chance of getting off the ground.

If it somehow did, Rasquera's way of raising money in hard times would indeed be novel.

Many Spanish cities and towns are trying to cope by cutting spending on things like social services such as health care and education.

Spain's deficit for 2011 was 8.5 percent of GDP, and the country is now about to enter another recession, with unemployment at nearly 23 percent.

Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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Europe's woes raise global recession risk

6:14 PM Europes, Global, raise, recession No Comments

AppId is over the quota AppId is over the quota By John W. Schoen, Senior Producer

As the European financial crisis threatens to drag the global economy back into recession, leaders from Washington to Beijing are calling for Eurozone leaders to intensify their efforts to contain the spreading contagion.

Treasury Secretary Timothy Geithner on Wednesday sought to calm growing fears that European debt defaults could spark a repeat of the Panic of 2008. But he called on Europe's leaders to move more quickly to resolve Europe's escalating debt crisis. 

"They recognize that they have been behind the curve. They recognize that it will take more force behind their commitments," Geithner told CNBC television.

Those remarks were echoed by leaders of the developing world, who fear that the deepening crisis threatens to stifle one of the world's largest markets for imported goods.

Chinese Premier Wen Jiabao said Wednesday that Beijing is willing to help its biggest trading partner, but added that European leaders must act on their own stop the crisis from growing.

"What we have to take note of now is to prevent the sovereign debt crises from spreading and expanding further," Wen said.

American businesses and consumers are already seeing the impact of Europe's failure to deal with its debt woes. Economic growth in Europe has slowed to a standstill, cutting into demand for American products by its largest single trading partner. The threat of a global recession brought on by European debt defaults has given American businesses one more reason not to hire more workers.

Once thought to be limited to the weaker economies on the continent, larger European economies like Italy and France are being dragged down by the lack of consensus among 17 eurozone governments. That political failure has intensified worries about the prospect of a financial solution.

"I think we're all staggered by the lack of concerted continuity between leaders in western Europe to deal with the problem," said Martin Sorrell, CEO of WPP, one of the world's largest advertising agencies.

After more than a year and a half of failed efforts, Greece is on the brink of defaulting on its debt. With its economy contracting, it has been unwilling or unable to cut spending fast enough to win support for a bailout from stronger countries like France and Germany. Leaders of those two countries were expected Wednesday to press Greek Prime Minister George Papandreou once more to enforce the harsh austerity measures.

There is fresh evidence that the debt crisis is spreading. On Tuesday, Moody's cut the credit ratings of two large French banks, Societe Generale and Credit Agricole, that hold large portfolios of Greek debt. A default by Greece would put a major strain on the banks’ ability to raise capital.

Italy, Europe's third-largest economy, is already having trouble selling bonds as investors see rising risk that it may eventually default on its 1.9 trillion euros in debt. On Tuesday, the Italian government had to pay those investors 5.6 percent interest to auction off its latest offering of 10-year bonds. The last time those rates hit 6 percent, European Central Bankers stepped in to buy Italian bonds to avert a wider panic

As investors grow increasingly skittish about Greece, they've begun pulling back from buying bonds issued by other European countries. Governments outside the continent are also weighing whether to expand their bond purchases to help avert a global crisis -- or step back until European leaders agree on a more credible solution to the crisis.

With foreign currency reserves of more than $3 trillion, China could play an important role as a buyer of last resort for debt issued by European countries such as Greece and Italy, whose bonds are being shunned by investors.

The Financial Times reported Monday that Italy had asked Beijing to buy "substantial quantities" of its debt. But an Italian ministerial source told Reuters that his government is discussing a Chinese investment in its industrial sector, not government bonds.

Brazilian president Dilma Rousseff said on Wednesday that her country is also ready to join any international effort to help stem the spread of Europe's financial crisis. Russia, another of the so-called BRIC developing countries, wants to see a clear strategy from Europe's leaders before it commits to buying more European bonds, President Dmitry Medvedev's chief economic adviser told Reuters Wednesday.

"We would like to know what actions will the European Union take itself, what scenario will they opt for: a default on Greek debt or no default? Whom will they help: banks or governments?" said Arkady Dvorkovich.

Russia, which is the world's third-largest holder of gold and foreign exchange reserves, already holds a sizeable portion of European debt. That could limit additional purchases.

The BRICS -- Brazil, Russia, India, China and South Africa -- are expected to discuss possible solutions to the Eurozone crisis next Thursday at meetings at the World Bank and International Monetary Fund in Washington. But for now, said one Greek official, they have not stepped up their Greek bond buying.

"We have invited all the (BRIC) countries to take an active part in covering the country's borrowing needs," said Greek Deputy Finance Minister Filippos Sachinidis. "Despite the invitation, we have found there was little or no participation at all."

Discussing whether there is a light at the end of the tunnel for Europe, with Louise Cooper, B.G.C. Partners market analyst and Keith McCullough, Hedgeye Risk CEO.

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