Whenever someone passes away there is usually an associated financial loss. Such loss could be the primary income for a family or the replacement value of someone responsible for the care of a child or disabled parent. It could also be a business executive in charge of sales or an employee who managed the operation when senior management was absent.

This potential financial loss is often referred to as a person’s human life value. The value itself is calculated based on the future loss of an income stream, the future cost of replacement, or the immediate impact to a company while it attempts to replace the key employee.

For most families, the potential loss of income is the primary reason to buy life insurance. Losing the paycheck of a working spouse will leave most families in a tenuous situation. Their normal lifestyle becomes vulnerable on a reduced income.

In years past, the primary breadwinner was usually the father. The mother tended to the house, while the father headed to the office. Mom was there to welcome the kids home from school and Dad brought home the paycheck. Times have changed and today women participate equally in the workforce. Despite what continues to be an income discrepancy between the sexes, the money Mom earns is essential to the financial well being of the family.

Additionally, it is no secret that consumer debt in the U.S. is on the rise. Government data shows that Americans literally have a negative savings rate (i.e. we spend more than we earn). As such, any reduction in take home pay can potentially devastate literally hundreds of thousands of families. While this scenario is harsh enough while both parties are alive and well, the reality of what happens at the death of either breadwinner is frightening.

Because of these reasons, life insurance continues to play an important role in any financial plan. In fact, it should be the primary asset for families that stand to experience severe lifestyle disruptions should a spouse pass away. Unfortunately, the value of life insurance is frequently misunderstood by those who need it the most.

There are many variations of life insurance products to consider, but that’s a topic for another day. The important message here relates to the extraordinary value of life insurance itself, not any particular policy type.

Indeed, there are very few, if any, recipients of a death claim who have asked their insurance agent about the type of coverage. The fact is the tax-free death benefit provided a welcomed amount of cash at precisely the time when money was needed the most.

Your loan package has been approved, your closing date is just days away, everything you own has been packed, and all that remains is a quick call to your insurance agent to line up a homeowner’s policy. That’s when the nightmare starts.

Your agent informs you that your new home is uninsurable due to a history of insurance claims filed by the previous owner. Despite home inspections and various required real estate disclosures, this could happen to you.

Obtaining homeowner’s insurance used to be one of the last tasks a buyer performed before closing; now it should be one of the first.

Insurers always check a property’s claims history before issuing a policy. Water damage claims are red flags, of course, but homeowners can also set off alarms simply by inquiring about their coverage, without ever filing a claim.

Most insurers research past claims through a shared database called CLUE, which stands for Comprehensive Loss Underwriting Exchange. When you apply for homeowner’s insurance, the insurer will request a CLUE report to determine whether you or the seller have filed any claims during the past five years. Even if you currently own a home and have a squeaky-clean claims history, if you buy a house with multiple claims filed against it, you may not be able to secure insurance coverage.

Unfortunately, you can't order a CLUE report if you are not the homeowner. However, you could always ask the seller to order a copy of the report as a contingency to your offer.

If you are ever denied insurance because of past claims you can request a free copy of your CLUE report. In the event of a dispute with your insurer, you have the right to ask that your account of the events be included in the report. If you are simply curious about your home's history, you can order a copy from ChoicePoint, the company that manages the CLUE database.

It pays to educate yourself about homeowner’s insurance when seeking affordable coverage. Consider the following:

Learn the rules regarding homeowner’s insurance renewals in your state. Regulators of some states exercise control over when an insurer can refuse to renew your coverage.

Pay for small losses yourself. Insurers take notice of customers submitting frequent small claims.

Think twice before calling your agent or insurance company. Once you call the insurer opens a claims file on you regardless of whether you actually file a claim.

Increase your deductible and consolidate insurers. To reduce your homeowner’s insurance premium, consider raising your deductible. Also, most insurers offer discounts if you insure both your car and home with them.

Examine your credit record. In addition to your past claims history, insurers often use your credit score to determine whether to issue you a policy.

Securing proper insurance for your business can mean the difference between survival and failure in times of financial loss. However, in spite of its importance, many small business owners still don’t know all they should when it comes to insuring their company.

Consider the following tips:

• Keep business records updated, duplicated, and organized--and keep them that way. Maintain detailed records of all business transactions, not just for your insurance policies. In the unfortunate circumstance that you should have to file a claim to recover losses due to a business interruption (especially a claim for loss of income or extra expenses incurred due to business interruption), the faster you can get detailed information into the hands of your insurer, the faster you' ll get your claim paid. Finally, make sure you store copies of your records at an alternate location.

• Know the current valuation of your property and its replacement cost. Insurers reimburse for loss in one of two ways: replacement cost valuation, which is the cost to replace property at current market value, or depreciated settlement, which is the cost to replace property minus depreciation. When available, you should choose a policy that reimburses by replacement cost value.

• Be aware of any policy waiting period that applies to business income loss. Any losses incurred during the waiting period will not be covered. Many businesses suffer their greatest income loss and expenses during the first hours and days following a disaster. Instead of a waiting period, consider a policy with a known dollar deductible. You won' t be covered for the first losses up to the stated dollar amount, but you will be covered for any loss over the deductible.

• Look for a policy with an extended period of indemnity following a business income loss. Some policies only cover losses incurred up to the point that you can reopen your doors. Without an extended period of indemnity clause of say 60 or 90 days, you cannot make claims for losses you continue to incur even after reopening.

• Know what coverages your policy doesn’t include. Review the exclusions and limitations of your policy and add in what you feel is necessary. Frequent exclusions in these types of policies include the loss of cash or securities, losses resulting from employee dishonesty, boiler explosion, and forgery. Read your policy closely, and talk with your insurance agent to ensure you have the necessary coverage for your business.

• Know under what circumstances your business interruption insurance is applicable. Business interruption insurance is designed to cover the loss of income incurred if normal business operations are disrupted or halted by damage to property. Businesses most affected by this kind of loss include manufacturing, wholesale, and retail stores.

Basic business interruption insurance doesn’t cover additional expenses, losses beyond actual loss of income that you may incur. For example, if your office burns to ground, you may need to rent substitute space (perhaps at a greater cost), buy or rent computer & other business equipment, install phone lines, set up security measures, etc. These kinds of expenses generally fall under extra expense insurance.

• Understand how your co-insurance clause works. Co-insurance clauses can lead to penalties if you are not adequately insured at the time of a loss. Suppose you own a building that is valued at $1 million. If you have a co-insurance value of 80%, that means you must insure the building for at least 80% of its value, or $800,000, in order to collect on any loss in full. If you only insure the building for $400,000 -- half of the required co-insurance amount - then you can only collect on half of any loss. So if you had a loss of $10,000, and had only insured the building for $400,000, then you could only collect $5000--half of the total loss amount.

If you cannot get the clause waived by your insurer, make certain that you have bought an adequate amount of insurance to cover the value of your property. That way, you will not experience any co-insurance penalties at the time of a loss.