Car-Insurance Savings Develop a Flat
Question: You had a column some time ago on automobile insurance savings possible by deleting older cars from collision and comprehensive coverage. That presented a problem, though, when I started to renew my insurance on one 8-year-old car and one 3-year-old car with the Automobile Club of Southern California in order to save money.
When I tried to delete the older car from my policy, I was told that the newer auto would be assigned an additional cost because it wouldn’t qualify for the discount in assigning two cars in those categories of collision and comprehensive.
As a result the total cost of the insurance isn’t all that much different when you delete an older car and still have a newer one on the policy. And so the “savings” written about is minuscule.--L.H.
Answer: It’s entirely possible. The advice we passed on, all hands agree, isn’t always an automatic money saver. It’s a competitive field out there in the automobile insurance field and companies approach these discount arrangements from a variety of directions.
Some, according to Tim Dove, regional manager in San Francisco for the Insurance Information Institute, sure enough, wipe out the two-car discount unless parallel coverage is carried on both of them. The Auto Club, however, according to Joe Pratt, chief actuary for the AAA, takes a “like lines” approach to the matter. In other words, if you cancel collision coverage on the older car, you will, indeed, lose the two-car discount on collision coverage on the newer car, but you’ll retain the discount on the rest of your coverage--on your liability coverage, for instance.
And, of course, “savings” are very much in the eye of the beholder, Pratt conceded, and it’s entirely possible that losing the two-car discount on collision coverage only could be substantial enough to offset the savings on the rest of the coverages.
Although no one we approached at the time of the original question made such a distinction, the savings achieved by dropping collision and/or comprehensive coverage would seem to be most practical when a multiple-car insurance discount isn’t involved.
Q: We recently bought a new teak dining room set. I’m wondering how the wood should be treated. It does not show any signs of shiny varnish.
About 30 years ago I bought some teak furniture that required being rubbed regularly with warmed raw linseed oil. Using regular furniture polish was a definite no-no. Through the years, though, housekeepers I’ve employed have used wax on it, and somehow the linseed oil theory has been lost.
It looks to me as if my new dining room suite is the same kind of teak. What is the current thinking about how this wood should be treated?--J.C.
A: I get the distinct impression that asking questions about proper wood finishing techniques is a little bit like trying to get a consensus on the perfect martini recipe.
At Ace Hollywood Wood Turning Co., 7823 Santa Monica Blvd., for instance, wood finisher Tony Ley makes the point that because you don’t know what sort of finish the factory applied to the suite before shipping it, the safest course of action is to confine yourself to polishing it with water and a soft rag.
Back in fussier days, Ley adds, furniture factories routinely supplied buyers with information on the type of finish used and made maintenance recommendations. That was apparently the case when, 30 years ago, you bought your first teak dining set and got involved in the warm-linseed-oil regimen.
But at Blafer Wood Finishes, 3416 S. Orange Drive, Linda Livingston polled her fellow workers and found that the consensus favors the use of “any oil-based polish as long as the label specifically says it is for use on wood. “
In its latest study of furniture polishes, Consumer Reports sums the controversy up this way: “Which should you choose and use? As a rule, we don’t think it matters much if your only aim is to keep the furniture presentable. But you should choose a polish that’s easy to apply and that imparts only as much gloss as you want. There are exceptions to that rule, however. If, say, your dining table shows signs of blotchy wax buildup, it makes sense to switch at least for awhile to a product without much wax. Or if the table’s finish has worn down so much that the raw wood is exposed to moisture, then a protective layer of wax would restore its appearance a bit and defer the day when refinishing is necessary.”
And, as far as the “proper scent” in a furniture polish is concerned--that being the current buzzword in the polish business--Consumer Reports makes the point that all polishes smell the same to wood, which rates low in the olfactory department.
Q: In December of this year I will receive approximately $31,000. Certificates of deposit, mutual funds and money market funds have been suggested, as well as IRAs. I understand there are different types of IRAs, one of which is a “self-directed” account. What is to my best advantage?
If IRA, what is the procedure for setting it up? Who determines withdrawal amounts, how is it calculated and by whom? Are withdrawals on a monthly, quarterly or annual basis? If age is a determining factor, I was 71 on my last birthday.--S.M.
A: I don’t mind taking a crack at this, but you really need the services of a professional financial planner, because there are all sorts of questions begging for answers before giving you really meaningful advice.
First, of course, is the source of this $31,000. Unless it represents the proceeds of a company pension plan of some kind it can’t be rolled over into an Individual Retirement Account anyway. And, even if it is a lump-sum distribution from an employer-sponsored pension plan, it still might be more advantageous to you to settle up, tax-wise, with Uncle Sam via 10-year averaging rather than put it into an IRA where you have a number of withdrawal restrictions hanging over it. It’s impossible to guess at such things without knowing a lot more about your financial situation than we do.
If it is a lump-sum pension settlement and if you do elect to roll it over into an IRA, then there are all sorts of avenues to explore: IRAs tied into bank, savings and loan and credit union accounts; IRAs invested in money market funds, mutual funds, insurance company annuities and the “self-directed” type of IRA you mentioned. (“Self-directed” simply means that you open an account with a conventional stockbroker and, with his advice--or without--you yourself decide in what stock or bonds you want your money invested.
And your age, incidentally, is indeed a factor since--even though, if eligible, you can certainly set up an IRA--you’re going to have to begin withdrawing from it at the same time. Until the end of year when you reach 70 1/2, which you’ve already passed, you can take out your money as quickly or as slowly (or not at all) as you like. But at your age you must begin withdrawing at a minimum rate since the whole purpose of the IRA is to provide for your remaining years, not to build an estate for your heirs.
There are two ways you can do this: by buying an annuity with an insurance company that will pay you a stream of equal (or near-equal) payments throughout your life or the combined lives of you and your spouse. Under this arrangement, the payments (and they’re usually made monthly) end when the surviving spouse dies (unless the company has promised to continue payments for a “period certain,” usually 10 years).
The other way is to arrange to have your IRA distributed (by your bank, S&L; or mutual fund) according to your life expectancy as established by the Internal Revenue Service. For instance, a 70 1/2-year-old woman is presumed to have a life expectancy of 15 years--until she’s 85 1/2--so she would have to draw out one-fifteenth of her IRA each year. This is an upward sliding scale, though, so at age 72 1/2 she is presumed to have a life expectancy of 86 1/2. Because of this annual readjustment no one ever ends up with a life expectancy of zero--a diplomatic touch, there, on the IRS’ part.
Most mutual funds--and, at your age, you wouldn’t want a high-flying growth fund, but one with a conservative investment strategy--are pretty flexible on their withdrawal policies.
Don G. Campbell cannot answer mail personally but will respond in this column to consumer questions of general interest. Write to Consumer VIEWS, You section, The Times, Times Mirror Square, Los Angeles 90053.
