The Ruby Freelancers Show 031 ? Insurance

Podcast: Play in new window | Download (Duration: 59:57 ? 36.2MB)

Panel

Discussion

01:07 ? Jim Gay is a new member of the Ruby Freelancer?s regular panel!

02:03 ? Freelancing and Experience

03:48 ? Radiant CMS

05:34 ? Liability Insurance

07:52 ? Kinds of liability insurance

• Professional/errors in omissions
• General liability
• Umbrella policy

10:15 ? Disclaimer: The Ruby Freelancers are not insurance agents, attorneys or financial advisors

10:45 ? Putting liability back on the client

11:47 ? Seeking advisors and professionals who specialize in your needs

13:20 ? Proof of insurance 15:07 ? Following best practices

16:26 ? Insurance brokers versus salesmen versus financial planners/advisors

20:02 ? Health Insurance

• Personal Plans versus employer plans

24:31 ? HSA: Health savings accounts

• Cafeteria plans
• Medical emergencies
• Debit savings cards

28:20 ? FSA: Flexible savings accounts

30:44 ? When laws change industries change

31:50 ? Life Insurance: term life

33:52 ? Purpose is to replace income and pay off debts

38:05 ? Whole life insurance

41:15 ? Contingency plans

45:42 ? Disability Insurance

50:27 ? Working from home: business insurance

57:41 ? Go to Meetups, do a presentation, build your career

59:05 ? The Ruby Hangout

Picks

Transcript

CHUCK: Should we kick this thing off then or do you wanna do some small talk first?

EVAN: Small talk? I don?t know what it is.

JIM: [laughs] I was going to make the same joke.

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CHUCK: Hey everybody and welcome to Episode 31 of the Ruby Freelancers show. This week on our panel, we have Eric Davis.

ERIC: Hello!

CHUCK: I?m Charles Max Wood from devchat.tv and this week, we have a new member of our regular panel and that is Jim Gay.

JIM: Thank you for having me.

CHUCK: Why don?t you introduce yourself really quick, Jim?

JIM: Sure. I am currently writing ?Clean Ruby?, which about writing applications that reflects business processes a little bit better than we typically do it. I am a co-founder of ?Arlington Ruby?, which is a meet up in the DC area; I?m the co-organizer of that. Co-organizer of DC RUG. And, I used to be a graphic designer. I did a lot of freelance graphic design work and then started getting into Ruby when I heard about Rails and saw how great it was, I guess about? I don?t know? 6 or 7 years ago, probably 6. I don?t know. I never marked it on the calendar. So, whenever it was? one point something rather that I got involved, so. That?s my story.

CHUCK: Wow. So how long have you been freelance?

JIM: I actually started freelancing when I was still in college in ?99 and I graduated in 2000. I kind of hate it when people say, like, how long they have been doing stuff because I hear other developers say, ?Oh, well, I started programming, you know, when I was four.? And it sounds really impressive.

CHUCK: [laughs]

JIM: ?and intimidating. You know, like if you are just getting started and people listening to the podcast is like, ?Oh, geez. He?s been freelancing since he was still in college. I just started.? It really doesn?t matter. I mean, sure, they?ve been doing it for a while but it doesn?t mean you are necessarily going to be more successful just cause you started at a certain age or something like that.

CHUCK: Right. That makes sense.

ERIC: It?s the same. Like, ?I have 30 years of experience? versus ?I had 30 of the 1^st year of experience?.

JIM: [laughs] right.

CHUCK: [laughs] Yeah. Or, you know, how long have you been programming Ruby? How relevant is that when it?s, ?Well, I just kind of hang out with the other Ruby developers on my development team and handle all the simple stuff for them?. You know, you can be doing that for 10 years and you are not necessarily a highly experienced, highly skilled developer.

JIM: Right.

CHUCK: So Yeah. I can see that. But you have been doing it for more than 10 years. [laughs]

JIM: Yes. More than ten years. You know, enough to have figured out when I ought to say no and when I go after something and still learning though. You know, there?s always new techniques or negotiation tactics or just ideas. So?

CHUCK: Right and don?t you have an open source CMS or something, that you work on?

JIM: Yes. ?Radiant CMS? is the oldest Rails CMS. I think there?s a? (gosh, I can?t remember the name of it now) but, there was a plug-in, ?Comatose? was a plug-in that did CMS and Radiant was like, the first application you could get going with. And so, I have been the lead developer on that project for over two years now. I have been contributing to it for maybe four years or building extensions for it for about that long. So, yeah? and I have been working on that in my spare time. It used to be that, I do a lot of Radiant stuff and I?d meet people and ?Oh, you do Radiant? You must do a lot of websites?. And at the time, it was true. But then, over time, you get good at something and people hire you just for your Ruby development skills or just managing a team. So, unfortunately, I?ve not been able to put as much time in to Radiant as I?d like, but it?s one of those things that?s like, always there. I can sort of exercise my brain on it when I have some spare time and I have to get away for client work.

CHUCK: Okay. So, one more thing, as far as introductions go, before we get going and that is how do people find you on the web?

JIM: My website is saturnflyer.com and my handle on Twitter and GitHub are saturnflyer and that?s pretty much how to find me.

CHUCK: Okay. Cool. So, the topic we have on the calendar this week is ?insurance?. Now, I?m assuming that we all have insurance of various types. Is there a particular type of insurance that you guys wanna start with?

JIM: When I first heard this, I thought it was mostly going to be about? like immediately, what jumped in to my head was liability insurance.

CHUCK: Right. For the business.

JIM: Yeah.

CHUCK: Right. So, really quickly, insurance is something that you have to provide for yourself or your business as you get going and liability insurance for your business is definitely one of those. Eric, do you carry liability insurance for your business?

ERIC: No. I haven?t had to and most of the clients I?ve worked with, I?ve either done sub-contracting under them, so I was under their policy or they just didn?t need it. They didn?t care about it at all. Like, small companies and stuff. So, I haven?t had the need to have thought about it every now and then, but just it hadn?t been a requirement.

CHUCK: Right. What about you Jim? Do you currently carry liability insurance?

JIM: I don?t. It?s sort of the thing that I have been fearful about. When I saw that this was the topic, I thought, ?Oh, great, I?m not going to really know much about this? but, I had contracts where they?ve required it and then I?ve gone and looked for it. And I actually had lunch with Evan Light yesterday and we were talking about it and that was pretty much his experience too. Like, a lot of start-ups that he works with, he just puts them in contract; very clear about the liability and he never gets it. He may correct me, but as far as I know, he?s never had to get it. I?ve only needed it once, but for the most part, no. It hasn?t been a concern. Though, I do know someone in the DC RUG community, Charles Calvert who has admonished me and said, ?You really got to get it. Because I ran some problems myself and you know, shorted out some money because of management problems. And the hammer comes down you and all of a sudden you are, you know, fighting a legal battle?.

CHUCK: Right. From, what I understand, the liability insurance is there for exactly that. So, if you get sued over your work for one reason or another, they are suing you for damages caused by defective code or suing you because you didn?t fill some end of the contract or something like that, then the liability insurance is what will ultimately pay out and save your business. Am I understanding that right?

ERIC: Yeah, to a point. I mean, it?s kind of confusing because its insurance; its financial and also legal stuff. But, there?s also (let me see if I can get this right?) there?s ?Professional Liability? and ?Errors & Omissions?, which is I think that?s more what we have to get if we are, like, coding errors and stuff. That?s what attorneys and doctors might have if, like, they screw up. They are supposed to be the professional, they are supposed to know what they are doing and they do something wrong. But then, there is also general liability which is? I think that?s also? Okay, so there is ?General Liability?, which is just like anything happens. Like, if someone gets to your office and slips and falls, that?s goes under general liability. And then there?s also another one I heard, there?s ?Umbrella Policy?, which is just like this huge, several million dollar policy which is just kind of an umbrella, covers everything that can happen. So, I have heard people having to get some general liability, but it?s mostly like professional liability and errors & omissions is what they need.

CHUCK: Mh-hmm.

ERIC: And also, I?m looking at a site that I?ve did some research on before; it looks like it also covers like copyright infringement and stuff like that. So, it might do some IP protection and all that.

CHUCK: Yeah. That makes sense. I?m looking on Wikipedia and it pretty much says what I?m seeing or what I?ve before and that is if you get sued. I mean, obviously, the policy is an insurance policy, so they stipulate what they cover and what they don?t. So, if you get sued or something for something that doesn?t apply to the policy, then they won?t cover it.

ERIC: Yeah. I mean, because I actually have a finance background, so like, the whole point of insurance is to take risk of some action happening off of you as a business or a person and transfer it to the insurance provider. And it?s a statistical thing and that, you know, you maybe find 1 out of 100 businesses get sued for an error in their code. So, therefore, insurance provider can insure all 100 people and they are only probably going to have that happen for one of them. And so, it?s just a risk I guess adjustment from you know, the company from the insurer. And so, it?s almost all insurance policies, especially liability are going to only come up if you get sued or a legal action is taken against you. But, it?s the scope of it has kind of a fuzzy details and why they have so many names and packages.

CHUCK: Yeah. So, I?m also wondering, and I wanted to disclaim all this by saying that we are not insurance agents, attorneys or financial advisors. Just to make that clear, you know, you should probably talk to a professional if you are worried about this, to figure out whether or not you want an insurance. And I recommend that you talk to both an attorney and an insurance person. The insurance salesman will tell you that you need to buy it because they will get a commission off of it. So, find somebody who has some integrity and make sure that you are getting the facts straight. But, yeah, I have wonder, can you put the liability back on the client in the contract or is that not binding enough?

ERIC: Well, I mean it?s legal at that point. I mean, because what?s going to happen is you are going to get sued. Or let?s say you get sued for doing or not doing X. The court is probably going to look at your contracts, look at your agreements or your emails; figure out who was liable. And whenever they make a decision or reach a judgment, that?s going? to be either in favor of you saying, ?No, the client is wrong. The freelancers in the right. Therefore there?s no damages awarded?. Or, they are going to find it another way in that, ?Yeah, the client is right. The freelancer needs to pay the client $1,000,000 in damages?. And then, that?s when the insurance kicks in because the insurance, at that point, will pay the million dollars to the client instead of the business.

But in all honesty, also, depending on the legal structure, you know, what kind of how you are operating all that, some of them might be protective just by having a corporation or how you have stuff organized. You know, like you said Chuck, you have to talk to an attorney for legal stuff and then maybe an accountant and insurance broker and you going to have a bit of advice just to figure out how you are liable or how you could be liable.

CHUCK: Right. Absolutely. Do you have anything to add Jim?

JIM: I sort of second that. I mean, when I?ve had to look into it, I?ve make sure that I talk to the right people about it. I mean, I don?t know anything about it and I?d much rather have? you know, people spend their hours [laughs] everyday figuring out what the best thing is. And sometimes, it?s just good to find the right person and take their advice.

CHUCK: Yeah. It?s kind of an interesting thing. I know my dad has liability insurance for his business, but he also has like a physical office malpractice insurance because he is a dentist.

ERIC: Mh-hmm.

CHUCK: You know, so, that kind of thing.? And it kind of falls along the same lines, but his concern is like, ?Somebody is going to slip and fall on the sidewalk outside this dental office? or, you know, ?somebody will sure him for malpractice, which has never actually happened in the 25 years he?s been practicing. But, you know, it?s that kind of thing that you kind of worry about and think about when you?re talking about liability insurance, generally at least for the businesses. So, we are kind of in a different space there.

ERIC: Yeah. And I mean if you do have an office or, I mean, I don?t know where co-working stuff fills in but, I seem to remember that to get it, at least you might? it required to show a proof of insurance. I mean, just like on the personal side; you buy a house, you have to kind of show a proof of home owners insurance, which covers almost the same thing as general liability, but for personal at your house versus like an actual business. So, you know, co-working is kind of like the odd ball. I don?t know where that falls, but you know, if you?d get an office or have an office, you?re probably going to want general liability. I mean, just a visitor comes by and hurts himself, that?s going to cover you.

CHUCK: Yeah.

JIM: Yeah. I wonder about that though. It?s kind of like? there?s a lot of talk about testing and how when you write an application, you need to make sure you are testing first or you?re just at least testing in general. But, a lot of developers just don?t do it or they don?t understand how to do it. And, liability insurance is kind of the same thing. Like, you know, when I was starting out and I first went to an office somewhere, I just shared a space with? it was a PR firm and they had an extra office and I just pay them on a monthly basis and there might be a lot of freelancers out there who are doing the same thing. They know somebody who got extra space and they just take the office. And liability is probably something we ought to look into and figure out ?do you really need it?? but, I know at the time, I was just so stressed out about just getting my business off the ground, that I wasn?t even thinking, ?What if some ceiling tile falls on someone?s head and hurts them? Am I going to get covered for that?? A lot of what you are doing when you are starting out is just figuring out ?how can I make money?? And you sort of put those things aside, but liability insurance should certainly be on your list of things to investigate the next time you sit down and start searching for things that better your businesses.

CHUCK: Yeah. One thing that while you were talking, kind of came to mind for me was, if you are following best practices; so, you are putting test around all your code, you are doing all of the things right, you know, that are generally accepted to produce high quality code, and yet you still produce code that somebody sues you over, does that reduce your liability? In the sense that, does it reduce the risk that you will actually lose the law suit?

JIM: [laughs] That is a perfect question for an attorney.

ERIC: [laughs]

CHUCK: I?ll have to ask my attorney and then see what he has to say.

ERIC: Yeah, I mean if you have an attorney, and a judge that understands TDD and best practices, then yeah, that might. But, I mean, and that is kind of what going to the court is going to be; you need to represent and show, like, here?s all the things we did to make sure your data was secure and that the code would work correctly. And you know, that might help build your case but, realistically as like solo or small business freelancer type stuff, if you get sued and have to go to court, you are out a ton of money whether you win or lose. Like, that?s just the reality of it. It costs a lot just to even go to court.

CHUCK: Yeah, that?s true. Alright. Well, I think we?ve covered? is there anything else to cover on this or we pretty well covered everything that we know or want to say about it?

ERIC: There?s one thing I know just from the personal side, if you do go looking for insurance, it?s a really good idea to look for an insurance broker. Basically, like Chuck what you were saying earlier, if you go to an insurance salesman, they are going to sell you their products. And most insurance salesman work for one specific company like ?ABC Insurance Incorporated?, so they are going to push that stuff. Whereas a broker is more of? they are a bit of a middle man, but they have access to other things. So, a broker might be able sell you ABC insurance, but they might also have XYZ Insurance and you know, global tech or whatever insurance. And so, they can kind of work for you to figure out what policy is going to be better, maybe the best price. Some brokers will get a commission and so they get a bit of a biased more than what you need, but then other hand, some brokers just get flat fee. So, that?s one thing to look at.

And, I also if you get a financial planner or something like that, you can pay someone a flat rate or an hourly rate to give you financial advice, but they are not actually selling you stuff. They are just being a consultant and saying, ?Hey, you need to get this insurance. I?m completely unbiased and I?m telling you the best in my opinion.? So, I mean, that?s kind of what we are talking about earlier, like, get a bunch of people that can advise you and then get their advice, look at the stuff yourself and then you can make the final decision; instead of just walking up to someone and buying the first thing you see.

CHUCK: Right. As far as insurance goes and as far as finding brokers, the one that I really like or that I used to find insurance people is I?ve gone through daveramsey.com. If you click on the ?Endorsed Local Providers?, (I have yet to use any of the professionals he?s recommended and be disappointed in the service I got) and for insurance, he recommends the general brokers. So, that?s a good resource. I?ll put a link in the show notes for that. Is there anything else we need to cover on liability before we move on to some of the other insurance types?

JIM: I don?t think so. I think what Eric was saying about was a good segue. My wife and I talked to a financial advisor on a periodic basis and he?s the person that I go to, to help me plan my business as well. So, he?s helping me grow and figure things out and make sure I?m putting money in the right place. But, I go to him when I need to figure out what we are going to do with our health insurance or who should I talk to for liability insurance. So, he?s sort of like the person that I would go to ask any of those questions. And if he doesn?t know, I expect to get from him either the one resource that he thinks is the best or couple of good options to help me narrow down my choice. But, that?s how I got my health insurance. I think I was cold called by some insurance saleswoman and she was very nice and I talked to her about my family and what we needed for our health insurance or health coverage. She was fine but, I don?t know, it just seems really expensive to me, but I thought, well, I?m on my own; it?s just going to be expensive. And shortly thereafter we got involved with our current financial advisor and he found plans for us that were less than half the cost from what we had heard from others. So, I don?t know what your experience is, Chuck or Eric, but, I was shocked to hear that It was so much cheaper than I had heard from, obviously a saleswoman calling me up.

CHUCK: My experience is a little bit different mainly because I have a chronic health issue; I have type 2 diabetes. And so, when I try and get health insurance, I just get laughed at, which is kind of a problem if you are independent and your wife doesn?t work and have health insurance of her own. And that really wasn?t an option for us. It wasn?t something I wanted my wife to do. I?m not trying to say anything about anyone whose wife works because honestly, I understand everybody has a different lifestyle. Some people just don?t wanna be at home or feel like they have to work or whatever and that?s totally fine. But, our situation is such to where I?m the sole provider and I?m the one that had to go find health insurance.

So, we went through the endorsed local provider to see what we could get and they honestly could not get the plan that would take me. I applied to a couple of them and the rates were either outrageous or they just decline me. And so, what wound up happening for us is, they found my wife a good deal on decent insurance and it cost a ton less than I thought it would going through them. It?s just a local company here, probably 20 minutes away from my house. And then, what they did is they advised me to go to the state and the state of Utah has a health insurance pool that they have contracted with one of the local HMOs to provide. And so, I actually have my own health insurance policy that I am on, myself.

ERIC: Hmm.

CHUCK: And it?s the only way that I can get insurance for a reasonable cost and so I just went for the high deductible plan. And I get a certain amount of free preventive care, so when I go in and get a diabetes check-up kind of thing, then those are usually covered 100%. But then, like my medication and things like that, I have to pay for out of pocket. So, anyway it was kind of an interesting deal for us but yeah, my wife and four kids are all on the health insurance plan. I?m trying to remember who her plan is with, but yeah, I just went through the state and work that out. And so, my premium is actually about as much as hers is, but, it?s still considerably cheaper than what our single family plan that would have had all of us on there for the one that I could get qualified for. What?s your situation for health insurance Eric?

ERIC: When I first was went into freelancing, my wife working and have a really good health insurance and then, she left that job. And for a while, they went into a agency and basically worked at different places all over the place just to try to figure out what she want to do, what industry she want to get into because the one she was in, she didn?t like. And so, the problem of that is, you?re talking about changing a job every 6 to 9 months and so, that?s not even enough to qualify for health insurance, let alone get on it and if we would be able to get on, we will basically get on it and then lose it when she changes her position.

And so, after a while, we ended up just looking around and went through an insurance broker and basically, I think she got like 14 or so quotes of like, ?We?ll give you this much for this much a month? and then we picked one. And since then, she?s gone worked at two different companies that had health insurance, but we actually declined them because it?s so much easier just to get personal plan and then just hold on to that. Especially because me and her were both pretty young, so we are like, our careers are pretty active right now. And it was just easier to hold on to this personal insurance plan, than it is to kind of like, ?Oh, she is in this employer plan. We got to pick a new doctor.? ?Oh, look this employer changed their plan next year. Now, we need a different doctor.? So, we were able to kind of stabilize and just like, this is what we are going to have. And by that time, my business was actually passing the two year mark, and so, insurer will look at it and say, ?Ok, this is an established business. It?s not a new business.? And so, they looked at it as actual income versus like this is a risk adventure for them. So we just have kind of a run-of-the-mill insurance and it?s just through us and so, if she goes to a different career or I need to do stuff for my company but the insurance stays there and we don?t have to change anything.

CHUCK: Right. So I?m a little curious, do you guys have any kind of health account savings account or anything else attached to your insurance plan?

ERIC: We have something; she got it through her employer. This is the first year we tried it. I don?t care for it because I don?t know if it?s a health savings account or there?s another one? another 3 letter acronym but, it?s nice in a tax reason, but if I kind of feel like we are going to lose money on it, because the kind where at the end of the year, the account goes down to zero again. And so, we had a lot of expenses because we just had our baby. But, a lot of that, we didn?t pay for with that account and just this and that. So, I don?t know. Like, I couldn?t recommend someone doing this or not yet, but, that is something you can look at too.

CHUCK: Yeah, my last employer, before I went freelance, they had a health savings account on which is different I think from the cafeteria plan or something, which is the one that zeros out at the end of the year. So the HSA, you can stock away as much money as you want, as long as you spend it on health related things than it is? you know, you don?t pay taxes on it; you get money out pre-tax. That was really nice. It?s a nice way of building an emergency fund for medical emergencies. And we actually used all of ours up about 6 months after I had? no, it was almost a year after I had been laid off in that last job. My daughter had surgery on her eye and we just paid for it out of that. That wiped it out then we are out of money. Anyway, so they are nice. They are definitely a cool way to go if you wanna just stock money away and save up for medical stuff.

JIM: I think we are switching to a plan that has that. That?s the other thing. We?ve been, like, re-evaluating our health plans over time. We haven?t picked one and stocked with it. But, we just had or fourth child like 2 and half months ago and we are pretty sure we are done having kids, so we looked for a plan that didn?t have a maternity coverage. And we are looking for the one that has health savings plan in it as well, where it rolls over and you don?t have to use it a whole lot. And, I have no idea how that?s going to go. Like, when we first started looking at health plans, we avoided that because we actually didn?t want to worry about receipts. We are busy doing other things and we just didn?t feel like tracking receipts from like going to the drug store or and going to the grocery store and compiling all that just to save a few bucks. But now, we are looking at it from a different perspective and we are thinking like, ?okay, this is a plan where we can just put money into it and add to it over time. We don?t have to worry about losing it all?. So, you know, depending on your needs, it?s always good to re-evaluate what is out there. So, get something 6 months later just to make a second look because there might be some new thing on the market from the insurance companies that might better provide for you.

CHUCK: yeah. One thing that I did find with that HSA is that, they give us a separate debit card that was connected to the HSA. So, I mean, it was pretty apparent if you were charging it at the doctor?s office and things like that, so you don?t have to keep tabs on everything. And I think the way that it worked was like, if you bought off Wal-Mart pharmacy or something, it just goes through the register as a regular charge to Wal-Mart. And if I remember right, it actually reported what you bought on it. So, you kind of got an automatic audit in there and I don?t remember having to keep any receipts or anything to prove that we spent the money on health stuff.

ERIC: Yeah. And I just looked it up. We have an ?FSA?, it is a Flexible Spending Account which a subset of that is the Cafeteria Plan. And there is also a ?Health FSA?, which is not to be confused with HSA. So that seems to be the difference. And, the FSA is the one that gets cleared, like, every year whereas the HSA, the Health Savings Account is the one that kind of you can use year after year. So, we have an FSA and I don?t like the FSA.

CHUCK: Is there a reason that you would go with an FSA over an HSA?

ERIC: It depends. I mean, I know with HSA, we put money into that pre-tax. So, you know, we don?t have to pay taxes on that income type thing. And I don?t know that her employer might match it to a certain point and so, I don?t know how it is with the HSA. There might not be an employer matching.

CHUCK: There is this employer, they didn?t match it but they put a fixed amount in every month.

ERIC: Okay, yeah. I think it?s that and also, you know, FSA might get different discounts from the HSA. I mean, there?s millions and millions of stuff. I see five different 3-letter acronyms just on the summary page of Wikipedia for the FSA. So it?s like, this is why you talk to your broker; you really can?t be an expert in this stuff. You can get a summary or you can ask them, ?Hey, should I open an FSA or HSA?? and they are going to be the ones who can compare the nuts and bolts to you, I think.

CHUCK: Yeah and honestly, if you talk to them and you don?t understand what you are buying, don?t buy it. Make them explain it to you so that you understand what are the repercussion are of buying an HSA over an FSA. And what kind of insurance plan you want to get; whether it?s a high deductible, where you?re saving a lot of money and then you get covered over a certain amount. You know, what it all means. Make sure you get educated because, if you sit down with them for a couple of hours or even for an hour or so, or they can just explain to you what you are buying, then you can make the right decision for you. I don?t particularly care for the health insurance, brokers or agents or sales people or whatever. They basically just sit down with you, talk to you about your situation and then say, ?well you need this.? Anyway, is there anything else to share about health insurance before we move on to another topic?

ERIC: I don?t know much about it but, I know the Obama care stuff is actually changing a lot of this stuff. And I mean, my wife is in Human Resources, so I hear about it from her, but I also have some other people I?ve talked to about it. So, all of those stuff might be changing in next few years. I mean a lot of this is up in the air so, especially if you are using your spouse?s plan, where it?s like the employer?s control in it, it can change from year to year. And so, try not to worry about getting like a perfect system like, ?this health insurance system will help us for the next 20 years?. Just try to worry about what is going to help you in the next year just to keep you going.

CHUCK: Yeah, I definitely don?t wanna get in to any of the political whatever related to Obama care, but yeah, that is something to be aware of, that it is going to change some of the rules.

ERIC: Yeah, I mean, politics aside, like you know there is stuff happening whether you believe it?s right or not or don?t even know what it is. I mean, when laws get changed, industry is changed.

CHUCK: Yeah. Absolutely. So, another type of insurance I wanna talk about is life insurance, mainly because I feel like we all have families and it?s something where, if something happens to me, then our income is gone. So, I?ve really looked into this. It turns out that life insurance, unlike health insurance, you can actually get a policy without having to? where I have type 2 diabetes, I can still get a reasonable rate on term life insurance. The only caveat to that is that, all of the numbers that they measure your health by, when you are diabetic, have to all be in line. So, all of my Haemoglobin is on C which is kind of your overall blood sugar over the last several months. My current blood sugar, my cholesterol, my lipid count have to be inline and I can get term life insurance for reasonable amount or a reasonable rate.

ERIC: It?s kind of like in life insurance. I mean, okay ?Are you healthy?? or ?How healthy are you?? That?s going to determine your rate. Well, for your if the chronic stuff, it?s like, ?How healthy are you relative to? Type 2 diabetes??

CHUCK: Right. I definitely don?t get that the same term rate than somebody without diabetes would get but, you know, it is something that I am willing to pay for that level of insurance. My current general rule for what I am looking for is, basically I am just looking to get for like ten times my annual income and that way my wife could get by for quite a while, especially if she is a little bit more frugal with it than we are with the money we make. And particularly kids and maybe go back to school or whatever and pay off the house or whatever it is, so that she can get by on it and not feel like she is in a big crunch.

ERIC: (Cut me off when I talk too much) My wife?s father actually sells life insurance, so I?ve talked of him at length about it but, the whole point of life insurance is, life is kind of the weird term for it. When someone passes away, the insurance is supposed to help the other people in the family to get back on their feet. It counts the burial expenses a bit, but it?s mostly to replace the income. So, in your case Chuck, since you are the sole provider of your family, you need enough for your wife to get back on her feet, either make it an income or pay off debts and all that stuff.

CHUCK: Yeah, exactly.

ERIC: And so, you have four kids you say?

CHUCK: I have four kids. Yup.

ERIC: And so, like, that is a significant amount, whereas for us, a couple of years back, we were renting we had no kids, we have very low expenses so we got life insurance, but it was very, very little because if one of us passed away, we are both working and theoretically, one of us could just keep working at our job and still pay for everything. So, we had very little life insurance that was just to cover like, you know, after the death, recovering and getting back to work. But, now that we have a house and we have a daughter, it?s like we are going to have to crank up our life insurance just in case, because there is more at risk. And so, that is one way to look at life insurance; it?s like, it?s not a big pay-out, it?s not like someone can retire. It?s kind of to replace an income that just went away.

CHUCK: Yeah. With my parents, it?s kind of the same deal where my mom is a math teacher and my dad owns his own business as a dentist. So, basically, my mom has a life insurance policy on her. I think my dad qualifies, and I don?t think he carries one before his health started to deteriorate so, he really can?t get it unless he gets whole life. But anyway, basically it?s enough to like pay off my parents? house or if something happen to both of them, it would be enough so that? I have two sisters that are under 18 and the rest of my brothers and sisters that currently live at my parents? house would just be out of luck. But, we would get them and I believe we, or they are the beneficiaries in some way that you know, it?s putting trust for them or something, so that we can take care of them. And so, you know, it?s an interesting thing but, yeah, it?s kind of to help the survivors and take care of things that way.

JIM: The other thing that I know, both my wife and I looked at is, you know, we earn different amount so replacing the income of one of us, should one die, is different. So, we didn?t wanna say, ?alright, we need this amount no matter who dies? because we both had careers that could make different levels of income so we had to adjust the life insurance for each person.

CHUCK: Yeah. That?s true. My wife doesn?t work, but we have a policy on her that?s basically enough to pay off the house. And so, one way or the other, I could either hold on to the money and pay child care so that I can get work done during the day, or I could pay off the house and then I have a mortgage and pay for child care so I could work through the day.

ERIC: Yeah, so in that way you are not necessarily replacing an income but you re replacing an expense that is going to come up, which is going to be child care.

CHUCK: Right.

ERIC: And one thing I don?t know if all policies have them, but I think some health stuff, but I think there is a few that will kind of increase the amount each year to kind of keep up inflation. So like, you start at $100,000, it might go up $5,000 each year without you doing anything automatic approval and I think that you have to pay more obviously, but that?s a nice thing if you cannot figure out what you need, then you just kind of set it and you can just kind of forget about it and check in like once a year, it?s nice in that, you don?t come out? 20 years later and be like, ?Oh, wow, we never updated our policy and we have $20 life insurance?. And I say that because one of our family members passed a while ago and she had life insurance of $5 because she bought it in like, the 20s or 30s and it didn?t have the automatically renewing. I mean, she wasn?t paying very much for it but I mean, the paper work was so much compared to the actual value we you got out of it.

CHUCK: Yeah. I wanna go into ?whole life? just for a minute because when we first got life insurance, that?s all I can qualify for because my diabetes was not under control and if that?s all you can get, then it?s probably still be worth it. Just be aware of a couple of things. Let me explain what whole life is real quick; the difference between whole life and term life is, the whole life, you are paying in and they are putting it in some kind of savings or investment, but you are never going to get in as much money out as you put in because you are also paying for an insurance policy. Anyway, so if you can get term life, you get much better coverage, but you don?t get anything out at the end. In whole life, you do. But, like I said, it?s generally not a very good investment.

So, if you are buying whole life thinking that?s an investment not a great deal. However, if that?s the only way you can get life insurance and you wanna make sure at least some thing is taken care of, then that?s what we did. And the policy I got, I think I was paying like $100/month for $100,000 of coverage, which really would have just covered like funeral expenses and giving my wife maybe a year?s runway to kind of get things together before she?d have to go back to work. But at least it was something. And now I can go out and I can qualify for a much more better plan and get term insurance. But I just wanna put that out there because if that?s the only thing that you can qualify for, and it?s worth it for at least a little bit peace of mind and that?s something you might need to consider.

ERIC: A way to look at whole life is, whole life insurance is basically term life insurance and a retirement account. And, the retirement account you can only invest the money in the insurance company and for the most part, insurance companies aren?t that great of investors in insurance plans. So, you are getting a term life insurance plan and you are getting a kind of crappy investment. And so, you are paying for all that extra. Now, like what Chuck said, if you have to and that?s all that you can get, it might be a good thing. But, if that?s your first choice, it might not be the best use of your money. It might be better to get term life insurance and just get like an IRA or other retirement plan and invest that way.

CHUCK: Yeah. Absolutely. And I think that?s kind of the idea with term insurance is that, we are all hoping, if you get a 20-year term or 30-year term, that by the time the term is up in 20 years, that you are wealthy enough to where, if something happens to you, they are just taken care of because money and then IRA or you have enough money in the bank to where things just things get taken care of out of your bank account. You don?t have to count on the insurance company to take care of your family.

ERIC: That?s the point. It?s like, when you?re retired, like 65 or whatever; the point of term insurance is to replace income. Well, you have your retirement and if it?s still around social security to replace your income. So, you don?t need the term insurance to replace anything and very little expenses, they are significant, but they are not a lot compared to the income replacement amount. So, you might carry a little bit of insurance just to cover burial costs, but the point is, you have to have insurance and savings built up. By the time, you know, you are about to pass away or whatever.

JIM: I had a conversation about all these with a friend of mine a couple of years ago and we sort of had this pact together. Because we were both running around businesses and doing consulting work and we realized that, on top of needing a life insurance, our wives might need help either winding the business down or selling it or something like that. So we agreed with each other that if something terrible happened, we would step in (because we knew a bit about each other?s businesses) and try to help sort of take care of that. So, it?s not directly related to filling out forms and buying life insurance but its like, making sure you have either a trusted friend or family member who will be there; who knows something about your business, who can tidy things up when you have a grieving spouse.

ERIC: That is something I need to do.

CHUCK: I really like that. I need to do that and I definitely know a couple of people around here who I could trust to do that. So, that?s one terrific idea.

ERIC: Trust is one thing, but another thing you can do is you can also have an attorney to do that. You know, some attorneys have to store your wills, but you can have this kind of information in there so it gets opened up, the attorney either hire somebody or does it himself and kind of winds some stuff down or executor of the state or something like that. So, that is something to kind of think about too. The only problem I have with that is you are going to have to share your root password. And that is kind of scary to me.

CHUCK: Right. Yeah, and I kind of wonder with like, the podcast stuff and things like that. As far as programming freelancing, I mean, obviously, my wife can?t run the business after I?m gone because she doesn?t have a clue what I do. But, as far as the podcast and things like that, I think there is some value there that she could continue to, you know, put together or maybe just hire somebody to do some of the stuff that I do as far as, like, just managing the business and making sure that the podcast get recorded and stuff. And so, I think I do need to kind of sit down and make a plan with her as well and just say, ?Okay well, here?s what you are going to need to know [laughs] when something happens; to run that part of business or to hire somebody to do it or to sell it?.

JIM: Yes.

ERIC: Yeah and even if ?that gets changed, like she decides not to? do what you planned, I mean, just talking about it with her might be a good thing. So, she knows and can kind of understand all of the different aspects of what your business actually is or single person business is. So? It?s like, if we pass away and we are incapable of working then, pretty much soon the business will soon going to go under.

JIM: I think that all this is making me think of? I don?t know what better to call it other than like, ?time insurance?. And therubyrep is a great example. Mandy Moore, who helps out a lot of developers and this show as well, she helps ensure? you know, if you have an assistant who you can lean on, who maybe doesn?t do things for you on an on-going basis, but you have some relationship with, when things get hot and you need to offload some type of labour, it?s always good to either have sub-contractors or assistants or things like that they are available. So, even starting relationships and making sure that you have access to those is probably a good idea before you need it.

CHUCK: Right. Yeah.

ERIC: I went on vacation to Canada for I think it?s a week or so, when I did that, I got my client settled so they had everything they needed and there?s nothing going to happen but, I talked to I think two other developers and basically have them on a call and told my clients like, ?I already talked to these guys, pre-arranged stuff of them. If there is an emergency, like a server out of check thing, get a hold of them, they will help you out?. Because when was in Canada, I mean I was literally on an island. There was one place that had an internet access and it?s base like 56k modem type of thing.

CHUCK: [laughs]

ERIC: So, I couldn?t do anything. We would have to take bout to get on to the internet. So, I kind of prearrange stuff with other freelancers and basically had them cover me while I was gone and I have done the same for some people and when they go on vacation, they will cover for me.

CHUCK: Yeah. It?s kind of an interesting thing where you have a contingency plan. I guess that is insurance, you know, should something happen or should circumstances change. Eric brought up in the chartroom something that we didn?t cover but probably ought to and that is ?disability insurance?. Do you wanna explain? Because I?ve heard ?long-term disability? is there a ?short-term disability??

ERIC: Yeah and [laughs] Robby Russell from Planet Argon, Tweeted the other day, because he was talking to an insurance broker and their acronym for short term disability is ?STD?.

CHUCK: [laughs]

ERIC: So Robby was talking to them about STD insurance, which was really funny.

CHUCK: [laughs] I like that.

ERIC: If you really sit down and think about it, you are going to die. That?s going to happen, but that is going to happen once in your life. And when it happens, you are out of your luck. Its are done.

JIM: *inaudible*.

ERIC: Okay, if we are going to go in to like reincarnation, all that. You know, whatever but, you could potentially get disabled and get disabled multiple times or you could get disabled like tomorrow and not be able to work for the rest of your life. But, you still have to pay to live. So, a lot of people actually considered disability insurance to be more important than actual life insurance because, it is a more frequent risk there than just dying. And so, you can get short term disability, which I believe it covers like when you broke your arm or in our case, maybe you hurt your wrist or something. And then there is long term disability which is like you cannot work at all, anymore. I don?t know all of the details about it, but it?s basically along the lines of any job, ?can you work a job that is comparable to what you are working in?? ?Are you at lower efficiency and for how long?? And so, my wife on short term disability for the very last stage of pregnancy and so, I think she didn?t get paid for I think 4-5 weeks or something. And then, disability kicked in and pay for some because she was out of work. Well, as a freelancer and as a developer, really, if you think about it, you were typing a lot. If you hurt your wrists or your fingers, you could be out of work. And I actually broke my pinkie, I guess a year ago and I?m an Emacs user. An Emacs user with a broken pinkie is really useless. I actually had to buy I think a $200 pedal in order to hit control because I couldn?t use my pinkie.

CHUCK: [laughs] Oh, wow!

ERIC: Disability insurance is an important one. I honestly don?t know if I have it on myself. I probably should. But, it?s something that a lot of people miss and it?s a little bit more expensive than (I think) life insurance. But I don?t think it?s as much as health insurance because it?s the frequency factor.

CHUCK: Right. That makes sense. So basically, if you break your neck and you can?t the keyboard anymore, then you are probably going to get long term life insurance or just disability insurance.

ERIC: Or if you hit your head or you have migraines, so you can?t stare at the screen now. ?You can?t do a job programming, could you do something else?? And so, that?s actually more common than actually dying. Like if you get hit by a bus and dying.

CHUCK: Mh-hmm. And what if something happens and I lose my ability to speak? Because I?

ERIC: I don?t know. Oh, for podcasting?

JIM: Video. Videocasting. You just have to have white boards or maybe some?

ERIC: Miming it?

JIM: Yeah, there you go.

CHUCK: Yeah, I?ll just pantomime the whole thing.

ERIC: Interpretive dance.

CHUCK: [laughs]

JIM: Are you doing that now?

CHUCK: you don?t wanna see that. Trust me. But yeah. It makes sense and I?ve heard other people talk about things like that where they get the disability insurance. So, in your opinion, is disability insurance more important than life insurance?

ERIC: In my opinion, I would think it is. It?s also more expensive and harder to get. Just because there?s more factors with it but, I think it?s more important because like I said, you are going to get disabled probably more often or more frequently than you are going to die. And I mean, short term disability is probably? I mean, it depends on your safety. This is all risk, like if you have a years? worth of cash in the bank as an emergency fund. If you get disabled and say, break your arm, that?s going to heal or you can just kind of sit around for a year and get healed, you don?t need on disability. So, it also depends on where you re financially. Like, what you have is backup and stuff.

CHUCK: Right. That makes sense. So, are there any types of insurance that we need to talk about before we get in to the picks?

JIM: None that I know of. There?s probably some that I?m sure someone is going to point out to me that I need to know. I?ll have to start doing research then. That will be Insurance Podcast #2, right?

CHUCK: Yeah, I mean, we didn?t get in to like life, auto, home.

JIM: Yeah.

ERIC: Personals.

CHUCK: Yeah but that?s more personal stuff and you are going to pay for that anyway whether you are full time employed or not. So, I didn?t think that we needed to go in on those.

ERIC: I know there?s (I can?t remember the details but?) if you work at home, there?s some technicalities if you have a home office because your home might be covered with renters or homeowner?s insurance but because it?s a business, it might not be covered. So, I can?t remember it?s policy specific but I think it?s the idea that if someone breaks into your house, or stole your TV your homeowner?s insurance covers it. If they break into the house and steals my laptop, my business insurance would have to cover it. But if I don?t have business insurance, it?s not covered. I don?t know if there?s a specific insurance, but if you have a home office and you have business equipment in the office, you probably should kind of look into your policies and talk to your broker or you know, if you already have insurance, talk to people that make sure your stuff is covered. I mean, that?s something to think about if you just assume that your renter?s or homeowner?s cover stuff. It might actually not.

CHUCK: Cool. Sounds good. Definitely good advice. Alright well, let?s go ahead and get n to the picks. Eric, do you wanna kick us off?

ERIC: Yeah, so I don?t know if I picked this before, but this is one of my picks. It could be not a pick, I don?t care. I have been doing Pomodoro Technique for couple of years now, I think.? I have an old notebooks from when I was an employee, where actually I can see that I was doing Pomodora stuff but I don?t remember when I started but, but recently noticed that I haven?t been as good as I used to. So, for those who don?t know, Pomodoro Technique is like a productivity hack, where instead of trying to work and focus hours on end, you focus for 25 minutes, stop, give yourself 2-5 minute break work again for 25 minutes. You basically cycle back and forth between that. And so recently, I?ve been kind of like, ?Okay, I need to kind of get back into this? the nice thing is there?s actually a book written by the person who actually made the technique. It?s freely available on the website, so you can actually get it and learn about it. And I know the pragmatic programmers have a paid book that you can get that. I think it?s illustrated or has a little bit of extra stuff into it. So for me right now, like I said, I?m having focus problems and I?m not staying on tasks, so this is something that I?m going to start getting in to again. I know it works for me, and so it might be a nice little productivity hack for someone else too.

My second pick, this came up a little bit ago. It?s a TED Talk by Clay Shirky. The title is ?How the Internet Will (One Day) Transform Government?. It?s an interesting talk because he actually gets into talking about Git and GitHub and how that?s actually a really good model for arguing. Which, you have the whole trolls and all that stuff with it too. But it?s an interesting talk. I actually just watched it about an hour ago and it has some pretty neat ideas and some pretty, kind of like ? way of getting Git and? GitHub and the whole distributed conversation stuff. I?ll put a link to that in the show notes.

CHUCK: Alright. Cool. Jim, what are your picks?

JIM: First off is The Rails View. I don?t know if it?s been picked before but it?s a new book out from pragmatic programmers. It?s called The Rails View and John Athayde is in the DC area and I?ve been helping coordinate some local meet up groups where he?s going around doing presentation on his book. He wrote and it with Bruce Williams. It?s a great resource for understanding how to really do things. I think a lot of back end Ruby developers kind of avoid the view side of the Rails application, so definitely check out The Rails View.

Second is there is responsive resources that I came across. I can?t remember where I found it, probably on twitter, but it?s just a list of all kinds of lists of building responsive web design, so check that out. There?s constantly information coming up over time it?s tough to keep track of it, so this is a good little collection of links.

And then lastly, there is a podcast that I listened to sporadically, but I?ve always gotten a lot of good information out of it. It?s called ?manager tools? and it?s specifically about becoming a better manager. And I started listening to it before I ever was really managing anybody. But was curious about what makes a good manager, how should they behave, what should they do. And it really opened my eyes to how it?s really just about good interpersonal communication and managing priorities well and feedback. It?s just a fantastic resource for talking with clients; you know, it?s not necessarily just managing subordinates. But they have a lot of good information there for? maybe you are not a manager now, but then in the future, you wanna be a good one, so you just kind of prepare for when you might have a team of developers working for you.

CHUCK: Awesome. Alright. I?m going to have to check that one out. I?m a podcast junkie. I love podcast. So, anyway. So my picks, I went out walking the other day and what I like to do sometimes is go and do a ?walkcast? which is something that a friend of mine Cliff Ravenscraft does. A walk cast is essentially you go with an audio recorder and you just talk while you walk. And so, it?s usually about as long as you your walk is in your podcast. And my podcast, digital audio recorder that I use for all these stuff, the batteries were dead in it. Now I usually have it plugged in when I?m recording these shows on it, but anyway it was set to use the battery first and the plug in power
second, and so it sucked the batteries dry. So when I got out there, it was dead and I found another app for my Android phone and it?s called ?Easy Voice Recorder? and it seems to work pretty good. So, you can definitely check that out. And I was recording for the Intentional Excellence Podcast, which I?m going to start doing again. It?s just kind of an audio journal so, I?ll put a link up to that when I have it out.

My second pick is Dave Ramsey?s ELP stuff, just because that?s are great and we actually went and saw the Hunger Games and as part of this particular ELP they had like customer appreciation deal, so they sent an email around and I emailed them back and got tickets and so I took my wife.

The last thing that aim going to pick is, there?s been a series of videos from the guys that do Internet Business Mastery, which is a podcast about building an online business. And they?ve put out I think 3 or 4 videos series and its basically just step by step how to get online income fast. And the stuff that they are putting out is just awesome. It?s really good. The videos are about 10 minute a piece and it really is just a quick guide. We are not talking about, like, major money, but it?s just getting you to a point where you are making money and then how to kind of ramp up from there. So, highly recommended. You can find that in internetbusinessmastery.com. Those are my picks. Are there any announcements before we take off?

JIM: I do this all the time, I wasn?t sure if it was going to be relevant to the podcast I?m glad to have the spot for it, but I?m always encouraging newbies that I meet at either DC RUG or Arlington Ruby and do a presentation somewhere. So, go to your local Meetup group and just ask if you can present something for 5 minutes. We?ve had a few people in Arlington Ruby in particular who are totally new and come to me and ask for advice and I say, ?First, take my advice and second, do a presentation in the next meet up. I will give you five minutes ahead of time and if you just put your head down and? learn something,? you?ll actually find that there are experts in the room who haven?t touched on the topic that you?re looking at?. So I think a lot of people who are getting into trying to grow their careers and getting into Ruby development, they think that everyone else already knows everything so they are not going to try and teach it. But, it?s just not true. So, go out to meet ups and talk to people and get in front of them and present something.

CHUCK: That is a terrific advice. And if you don?t know where the local user group is, just reach out to me or somebody else in the community, on Twitter or something and I would bet that we can find something that is reasonably close to you. And if not then, you can always start up a group.

JIM: Actually, I should give a shout out. There is a new one starting up called ?The Ruby Hang Out?, which is Google Hang Outs Ruby meet up. I?ll have to find a link but, I think you can only have so many people Google hangout but they?ll be able to watch the rest of it on YouTube. So, if you?re in the middle of nowhere and have trouble getting out to places either for family reasons or you are just faraway, that?s an interesting one that is starting up. I think its October 3^rd is going to be their first meet up, so we?ll look to that.

CHUCK: Yeah, absolutely. Eric, is there something that you wanted bring up that?s going on with you and your business?

ERIC: No.

CHUCK: Alright. Cool. Then we will wrap this all up. We will catch you all next week!

Source: http://rubyfreelancers.com/the-ruby-freelancers-show-031-insurance/

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