There is almost daily information regarding Michigan’s auto insurance coverage. Most industry experts feel a change is imminent and this article in today’s Detroit Free Press lend credibility to a change to our coverage options. If you have questions specific to your coverage please contact me through the “contact” tab on my website.

Marty O’Neill, Insurance Agent

BY CHRIS CHRISTOFF • FREE PRESS LANSING BUREAU CHIEF • April 29, 2008
LANSING — A new, bipartisan — and in several ways unlikely — coalition wants to change Michigan’s no-fault insurance law to allow drivers to buy less medical coverage and save lots of money.
Lawmakers from Macomb County and Detroit, who are often at odds, and organizations as diverse as the Michigan Chamber of Commerce and Detroit Urban League have joined to lead the coalition.

Their push is certain to rekindle debate over how to reduce auto insurance rates, especially in Detroit, where estimates suggest half of motorists drive illegally without insurance because of its high cost.

Michigan is the only state that requires drivers to buy medical coverage with no monetary limits. Insurance companies say that contributes to high auto insurance rates in the state.

The Drivers for Savings coalition supports a Senate bill that would allow drivers to buy as little as $50,000 in medical coverage.

Detroit drivers who pay $4,000 a year on a comprehensive insurance policy could save as much as $50 a month, said Sen. Alan Sanborn, R-Richmond, the bill’s sponsor.

“We are providing a good substantive first step. A 15% savings is nice in these tough economic times,” Sanborn said.

Sanborn said drivers could still buy more insurance up to unlimited medical coverage under his bill. Senate Republicans plan four hearings on the bill around the state, he said.

Rep. Virgil Smith III, D-Detroit, joined Sanborn, saying many drivers are covered by other medical insurance so they don’t need much coverage from their auto insurance. Smith chairs the House Insurance Committee.

He said a new, $50,000 minimum requirement would be higher than all other states except New York, where drivers also must carry a minimum $50,000 in personal injury insurance. Smith said the lower cost would help drivers afford auto insurance rather than driving illegally without it.

Michigan’s average auto insurance premium for a comprehensive collision policy is $1,089 and ranks 12th among states, according to the National Association of Insurance Commissioners. The national average is $949.

The Drivers for Savings coalition includes U.S. Rep. Carolyn Cheeks Kilpatrick of Detroit, the Michigan Chamber of Commerce, the Detroit Urban League, the Small Business Association of Michigan and the Michigan Sheriff’s Association.

A competing group is opposed to eliminating mandatory unlimited medical coverage. Michael Dabbs, spokesman for the Coalition Protecting Auto No-fault (CPAN), said without unlimited coverage for all drivers, taxpayers would pay for treating those with severe accident injuries, such as brain and spinal cord damage.

“Not one of us thinks we’re going to be in an accident,” Dabbs said. “But the reality is many of us will. Let insurance do what it’s supposed to do: protect against catastrophic injuries.”

CPAN contends that insurance companies reap excessive profits. Dabbs said medical coverage is unfairly blamed for high auto insurance rates, and that liability and collision coverage cost drivers much more.

Sanborn said a minimum $50,000 no-fault medical policy would cover 95% of auto injuries in Michigan. He acknowledged that those severely injured in crashes might wind up on government aid, such as Medicaid, but said the number would be few.

The Michigan Catastrophic Claims Association, which insures severely injured drivers, estimates 1,100 Michigan drivers will suffer catastrophic injuries in the coming year. The MCCA charges a flat fee on every vehicle — $104.58 beginning July 1 — to cover individual medical costs in excess of $440,000.

The MCCA covers 11,400 severely injured people whose lifetime care will cost an estimated $66 billion.

I like to post everything I find about child auto safety. Today the Detroit Free Press reported on Michigan’s child booster seat laws.–Marty O’Neill, Insurance Agent

BY CHRIS CHRISTOFF • FREE PRESS LANSING BUREAU CHIEF • March 26, 2008
LANSING — The big buckle of the law will get bigger to protect more kids on Michigan roads.

Gov. Jennifer Granholm is expected to sign a bill soon requiring car booster seats for children ages 4 through 7 who are less than 4 feet 9.

Current state law requires a car seat of some kind for children younger than 4.

“It’s more protection, something we should have done a long time ago,” said Sen. Michelle McManus, R-Lake Leelanau and sponsor of the bill.

McManus said a car booster seat costs between $10 and $25 but said the state can apply for a federal grant to give booster seats free or at a reduced cost to families that qualify based on their incomes.

The new law, effective July 1, would allow police to stop drivers for a booster seat violation alone, as a primary traffic offense. Fines would be $65.

Advocates of the bill say vehicle seat belts don’t properly fit across the smaller bodies of children, leaving them vulnerable to accident injuries from the belts themselves.

Booster seats raise children higher so seat belts fit snugly across their chests and hips, instead of their necks.

The strap-in seats reduced neck, spine and abdominal injuries for children ages 4-7 by 59%, according to a 2003 study by the American Medical Association.

Michigan would become the 39th state to require booster seats for children through age 7.

“I think it’s a fabulous idea. I think there should be a five- point harness required for kids up to 8,” said Christina Calderwood, 36, of Rochester.

She said her 5-year-old uses a safety seat rather than a booster seat, and he doesn’t complain.

“He knows race car drivers wear five-point harnesses,” Calderwood said.

Tara Bradshaw, 39, of Wyandotte said some parents will view the new law as a government intrusion. But Bradshaw said she uses a booster seat for her 4-year-old.

“When it’s a law, more people do it,” she said. “I don’t like the government telling me what to do, but I’m all for doing what’s necessary to keep my children safe.”

The issue was a topic Tuesday on the Free Press’ MotorCityMoms.com Web site, where most readers supported the new booster seat requirement.

Still, some questioned whether it would be a hardship to some families or merely was an attempt to muster revenue for police departments through more fines.

A 2006 national survey found that 58% of children ages 4-7 were restrained in booster or safety seats.

The state is planning a public awareness campaign for the new booster seat law through the Office of Highway Safety Planning.

More news! News in Michigan, as it relates to auto insurance, has been fast and furious. Below is an article from the Associated Press (AP) outlining yet another plan aimed at Michigan’s auto insurance coverage.–Marty O’Neill, Insurance Agent

By TIM MARTIN
The Associated Press

LANSING, Mich. (AP) — House Democrats plan to take another stab at changing Michigan’s auto insurance rules in an effort they say could make rates more affordable for those who need a break most.

The bills would eliminate the use of credit scoring in setting insurance rates. Democrats who support the legislation say allowing credit history to influence insurance rates is unfair and that rates should be based only on driving history — not on whether motorists have paid their bills on time. Democrats say the practice of using credit scoring as a factor in rates hurts low-income people the most.

“We need to rewrite Michigan law so it protects consumers,” said Rep. Bettie Cook Scott, a Democrat from Detroit.

The bills are scheduled to be taken up in the House Insurance Committee House on Thursday. While the legislation possibly could pass the Democratic-led House, it would face more resistance in the Senate, where Republicans hold the majority.

Rep. Virgil Smith, D-Detroit and chairman of the House Insurance Committee, acknowledged Tuesday that the Senate votes aren’t there to pass the bills at this point. But Smith said “anything could happen” late this year as the 2007-08 legislative session comes to a close during the so-called lame duck session.

The Insurance Institute of Michigan opposes the legislation. The organization says that the use of credit scoring benefits two-thirds of the state’s motorists and helps provide a more accurate reflection of risk when rates are set.

“If it’s designed to reduce insurance rates, it does just the opposite, frankly,” Insurance Institute of Michigan executive director Peter Kuhnmuench said of the legislation.
The legislation would give the state insurance commissioner more power to approve auto insurance rate increases before they take effect. Refunds could be ordered if it is determined consumers are overcharged or were discriminated against.

The legislation also would give policyholders more leeway to sue insurance companies for various violations of the state’s insurance code.

Auto insurers would have to report to the state how many claims are filed and how much money they pay out in several different categories. Insurers also would have to report how much they spend related to settling and defending themselves against lawsuits.

Rate increases could be made 90 days after those filings are made, unless those rates are challenged by the state insurance commissioner. Public hearings would be set on rate increases that are questioned.

The auto insurance bills are House Bills 4412, 4993, 5420, 5558 and 5559.

I like to make sure you are getting the latest information on auto safety and that includes auto thefts. Hazel Park is seeing a rash of thefts, mostly on running cars. Below you will find a Daily Tribune article from March 12, 2008–Marty O’Neill, Insurance Agent

By John Michalak
Daily Tribune Staff Writer
HAZEL PARK — Three vehicles were stolen in Hazel Park Monday and all the owners could be charged in connection with the thefts.

The owners left their vehicles running and unoccupied with keys in them. That’s a misdemeanor violation of a local ordinance, said Hazel Park Police Chief David Niedermeier, who again on Tuesday reminded residents about the law.

Niedermeier last year forewarned residents that police would charge persons when they saw cars running without anybody attending to them. The warning came when the city had a rash of vehicles stolen after residents warmed the vehicles.

“You can’t leave cars running and unattended,” Niedermeier said. “Obviously that’s what happened in these cases. It is a common ploy by car thieves to look for exhaust smoke.”

Instead of residents helping thieves, Niedermeier said they should take measures to reduce crime opportunity.

“The majority of property crime — and some violent crime — can be stopped simply by hardening the target,” Niedermeier said. “Don’t make yourself and your property easy targets. You don’t leave your valuables in plain view, your cars running or your bikes on the front lawn. And that’s the case regardless of what community you live in. Citizens can go a long ways in reducing crime rates by using common sense.”

In the most recent car thefts, one of the victims got her vehicle back after she saw it unoccupied at a gas pump at a Sunoco station on Eight Mile Road in Detroit.

The victim, Nicole L. Meier, 25, had reported her 2000 Pontiac Grand Am stolen shortly before 8 a.m. on West Milton.

Nearly two hours later she and her boyfriend spotted the vehicle at the gas station and called Hazel Park police. An officer stood by the vehicle as Meier went home to get another set of car keys. A clerk at the gas station told police he didn’t see the driver of the stolen vehicle.

“I don’t think I’ll ever do that again,” said Meier, adding she didn’t know warming her vehicle unattended is against the law. “I learned my lesson. It won’t happen again.”

Meier said she had a hunch her Pontiac Grand Am wouldn’t go far because the gas light came on the night before the theft.

“It didn’t have any gas so my boyfriend and I went around looking for it,” Meier said. “It ended up being at a gas pump at the Sunoco station five blocks away from my house. The car was in drive, but there was no damage to it.”

Since the thief kept her keys, Meier said she purchased a Club wheel lock for her car and changed the locks to her house.

Other vehicles stolen Monday were a 2001 Pontiac Grand Am on the 1000 block of East Pearl and a 1999 Pontiac Montana from the 300 block of East Milton.

Reprint from Detroit Free Press, March 7, 2008–Marty O’Neill, Insurance Agent

Gov. Jennifer Granholm said in a statement that Hollowell will tackle high insurance costs and predatory or illegal practices.

Hollowell, a former cochairman of the state’s Democratic Party, will start the job April 6. It pays about $120,000 a year.

Lawmakers and advocates say Detroiters are treated unfairly by insurers who charge high rates, especially for auto insurance.

Hollowell, 48, is general counsel for the Detroit Branch NAACP. He worked as a lawyer for Sen. John Kerry’s presidential campaign in 2004. That was cut short when Hollowell was arrested for picking up a prostitute near his home in Detroit.

The solicitation charge was dismissed.

This was in today’s Detroit Free Press–Marty O’Neill, Insurance Agent.

STATEWIDE: Auto insurance fee to drop in July
Michigan motorists will pay a little less for auto insurance in the coming year. On July 1, the assessment for the Michigan Catastrophic Claims Association (MCCA) will drop by $18.57 to $104.58 per vehicle. The MCCA covers the costs of treating severely injured accident victims that exceed $420,000.

It’s the second straight year the assessment has decreased. The fee is charged to insurance companies, which pass on the cost to policyholders. It is charged to each vehicle.

Everyone likes their GPS System, Ipod, and Lap Top. However, the more interactive our cars become the bigger bulls-eye they have on them for thieves. These high tech, easy to lift, goodies are becoming mainstays on police reports. This article talks about the growing concern and some prevention tips for protecting your property–Marty O’Neill, Insurance Agent

© 2008 Buffalo News. Provided by ProQuest Information and Learning. All rights reserved.

Pat Jensen never really got to know her global positioning system device.

Her children had bought a GPS unit for her in December because of what she admits is her “really bad sense of direction.”

On Jan. 5, while her son was visiting a friend on Mariner Street in Buffalo, someone smashed a window and broke into her Volkswagen Passat. The thief took the GPS device, her son’s video iPod, a Dell laptop and a $175 pair of sunglasses.

“I literally had just gotten it for Christmas. I had it in the car for just a day or two. I had used it one time. Bummer,” said Jensen, who is in her 40s and runs a nonprofit organization.

The Delaware District resident is a victim of the latest trend in car break-ins — GPS thefts.

Portable GPS receivers cost several hundred dollars or more and they were among the hottest consumer-electronic gifts of the recent holiday season.

So it’s no surprise that thieves are targeting them in car break- ins, police said, grabbing them right off the windshield or from glove compartments and other hiding places.

“The GPSs are just the item of the day, so to speak,” said University at Buffalo Police Chief Gerald W. Schoenle Jr.

Police in Buffalo, Amherst and Niagara Falls and at UB have seen a spike in thefts of these portable navigation units.

No longer satisfied with taking the car stereo, thieves are stealing GPS devices, cell phones, MP3 players and other electronic gadgets.

The Erie County Sheriff’s Office, for example, is investigating the thefts of six GPS units late Saturday and early Sunday in just one Clarence subdivision.

“It’s a target. It’s like leaving a bull’s-eye on your car. ‘Come steal me,’ ” said Patrol Chief Dennis Rankin.

Police are stepping up efforts to crack down on these break-ins, while cautioning users to be more aware of the potential for theft.

And some technology experts say the companies that make these devices need to do more to make it harder for thieves to resell or reuse them.

“As there is more crime, the manufacturers are going to step in,” said Ken Westin, founder of GadgetTrak, a company in Portland, Ore., that sells software that can be installed in electronic devices to help their rightful owners find them if they are stolen.

GPS devices were always popular with the technologically inclined, but last year they took off as a mainstream gadget.

About 6.5 million portable navigation devices were expected to be sold in this country in 2007, a sharp increase over the 2.1 million sold in 2006, according to the IDC market research firm.

GPS devices are becoming hot items for car thieves, too.

Police in Boston, Mass., suburban Miami, Lancaster, Pa., suburban Washington, D.C., Baltimore and northern New Jersey have seen an uptick in GPS thefts, according to recent news reports.

In Buffalo, 47 GPS units were reported stolen in 2007, and 19 were reported taken in the first six weeks of 2008 alone, according to a police database.

“I didn’t know this was going on. Now I’m afraid to leave anything in the car,” said Deanna Mesmer, a Grand Island resident and co-owner of a paper distributing company, whose GPS device was stolen Jan. 18.

Mesmer was at Mother’s restaurant on Virginia Place when her son called her cell phone to tell her someone had found her checkbook in the street and had called their house.

It turns out a thief had smashed the window of her Mercury Mountaineer and ransacked the SUV. The thief stole her $300 purse, an iPod, a camera and her GPS.

UB had 55 car break-ins on its two campuses in 2007 and 10 involved GPS units, said Schoenle, the police chief.

Since Sept. 1, 12 GPS units have been reported stolen in Amherst, town Police Capt. Enzio G. Villalta said.

“That seems to be the new hot item,” Villalta said.

Thieves will take anything of value, even change, but electronic devices are particularly desirable, police said, because they can be easily reused or sold for cash.

“These are all crimes of opportunity. It just takes a few seconds,” said Dennis J. Richards, chief of detectives for the Buffalo police.

A 2007 report from the Urban Institute’s Justice Policy Center — titled “Is There an iCrime Wave?” — argues that the proliferation of iPods and other electronic devices is boosting crime rates.

“They’re easy to resell, they’re easy to reuse, and they’re expensive. And they’re high-status,” said John Roman, senior researcher at the Washington, D.C.-based group, who co-wrote the study with Aaron Chalfin.

Some victims who spoke to The Buffalo News believe their cars were selected because thieves saw the GPS devices in their cars, or had reason to believe they were there.

“It’s an easy target. It’s right there on the windshield,” said Jean-Pierre Tran, 20, a Buffalo State College student who lives on Niagara Street.

He said he had stopped at his grandfather’s home on nearby Hampshire Street to take a quick nap after school on Jan. 18 when someone broke into his car to take the GPS device, his iPod and laptop.

Tran had had the GPS for a week. “It’s sad that I can’t leave anything in my car in the middle of the day,” he said.

Tamala Rohler, an Erie, Pa., resident, was in Buffalo with her family because her 12-year-old daughter’s hockey team was playing at Cazenovia Park rink.

She and her husband had purchased a $500 TomTom One in late 2006 after getting lost trying to get to a rink in Rochester.

On Jan. 27, the Rohlers had parked their minivan and had given their car keys to an attendant in order to get a key to a locker there.

After 2 1/2 hours inside, the Rohlers returned to find someone had stolen their GPS device, a cell phone, portable DVD player, an MP3 player and two digital cameras from their van.

“You feel so violated,” said Rohler, who said there was no sign of a break-in.

Many victims, like Tran and Rohler, had more than one device stolen, losing hundreds of dollars or more.

Some drivers have taken the GPS devices off and hidden them in glove compartments or elsewhere in the vehicle, but that’s not enough, police said; users should detach and hide the GPS holders, too.

“The bracket is an invitation — they have a GPS. Maybe they left it in the car, in the glove compartment, under the seat,” said Niagara Falls Police Capt. John P. DeMarco.

Police in Buffalo, Niagara Falls and at UB’s South Campus have boosted patrols in response to a rash of car break-ins, and UB hasn’t seen a car break-in so far this year.

The GPS manufacturers need to do more to make the devices harder to steal or reuse, said Westin of GadgetTrak and the Urban Institute’s Roman.

Westin noted that the companies that produce car radios responded to a rise in those thefts by introducing the removable radio face.

Preventing car break-ins and GPS thefts

• Park in a well lit area and always lock the doors and close the windows.
• Use an alarm system.
• Remove the GPS device from the vehicle, including the windshield mount. Don’t leave out in the open a purse, laptop or other potential prize for thieves.

* Register your unit with the manufacturer so if it is stolen you have a serial number. Sources: Insurance Information Institute; National Insurance Crime Bureau.

In Michigan we have unique auto insurance coverage (I know, this is hardly news). In addition to our confusing no-fault laws (try explaining them to a person moving here from out of state) we also have unlimited Personal Injury Protection (PIP). PIP is the portion of the auto policy that covers medical expenses for those injured in a car accident. In Michigan this protection is unlimited.

In other words, under the worst scenario, a person with a debilitating injury would receive a life-time medical benefit from the State. As part of our auto insurance premium we each pay into a fund to support the care of these individuals. It is expensive and like no other coverage in the country.

The State government, along with insurance groups, has been working to give consumers an option when selecting PIP coverage. Individuals would then have the option of carrying a life-time medical benefit, or a coverages less than that.

In the article below, published in the February 15, 2008 Detroit Free Press, Chris Christoff outlines some early proposals on the road to optional PIP coverage in Michigan. More information is sure to follow on this subject and I will keep you updated as it progresses.—Marty O’Neill, Insurance Agent.

February 15, 2008

By CHRIS CHRISTOFF

FREE PRESS LANSING BUREAU CHIEF

LANSING — Most Michigan drivers older than 64 could drop unlimited medical insurance coverage on automotive policies and save hundreds of dollars a year under a bill that passed a House committee Thursday with bipartisan support.

But the proposed change may rekindle prickly debates over Michigan’s one-of-a-kind no-fault law.

Michigan is the nation’s only state to require all motorists to carry unlimited medical coverage. New York has the second-highest requirement — $50,000 coverage. Insurers for years have sought to allow lesser — and cheaper — coverage, hoping to remove the incentive for many to drive illegally without insurance.

The House bill would affect only drivers ages 65 and older who are covered by Medicare, but supporters say they eventually want to extend the opt-out to all drivers. Under the bill, senior drivers could choose the option of no medical coverage on their auto insurance, which could save at least 40% of the total cost of a premium, according to a study released last year by State Farm Insurance Companies.

“We’ve been pushing this for many years,” said Bill Cilluffo, lobbyist for AAA Michigan, the largest auto insurer in southeast Michigan. “People eligible for Medicare should not be required to buy additional medical insurance. That’s like requiring all people covered by Medicare to buy a full health care policy from Blue Cross.”

Supporters of the current law say unlimited coverage guarantees proper care for victims of car accidents who suffer severe injuries without shifting the cost to hospitals and government welfare.

It’s unclear whether the federal government would allow Medicare to pick up the tab for auto accidents under Michigan’s no-fault law. Some lawmakers suggested the state wait for a ruling by Medicare.

The House bill is raising questions about an auto insurance system that began in 1973, and which some say is putting coverage out of the reach of many, especially in cities like Detroit where rates already are high.

Insurers say medical coverage — called personal injury protection, or PIP — is the largest single cost of a no-fault policy.

In addition to unlimited PIP, all motorists must pay a flat fee to the Michigan Catastrophic Claims Association. The MCCA is a statewide pool that pays medical care for accident victims whose medical costs exceed $420,000.

The annual fee varies year to year, and is currently $123.15 per vehicle.

State Rep. Virgil Smith III, D-Detroit, chairman of the House Insurance Committee, failed last year to garner support for a bill that would allow all motorists to choose less than unlimited medical coverage.

An insurance industry report last year said limiting medical coverage to $200,000 would save an average Michigan motorist 18% on auto insurance.

The plan was scuttled by a coalition of attorneys, unions and medical care specialists who said insurance companies stood to gain excessive profits while leaving injured motorists with inadequate coverage.

In 1992, voters rejected a statewide ballot proposal to limit auto no-fault medical coverage to $250,000.

Smith called the bill — which was sponsored by Rep. Joe Hune, R-Hamburg — a first step toward lower auto insurance rates. He hinted at eventual changes to allow those younger than 65 to choose lesser no-fault medical coverage.

“Ten years from now, I’m afraid of what an auto premium will be,” Smith said.

The Coalition Protecting Auto No-Fault opposes the elimination of mandatory, unlimited medical coverage, but it’s open to the idea of exempting Medicare seniors, said CPAN spokesman Kevin McKinney.

Still, McKinney expressed concern that it would lead to a renewed push to end mandatory unlimited medical insurance.

He said the bill, which will now go to the full House for consideration — should be modified to allow seniors to buy supplemental medical insurance.

“Medicare doesn’t cover a lot of medical services people might need if they’re in a severe auto accident,” he said.

A question I face a lot is with regard to child safety seats. The problems usually come in the form of confusion. Please don’t know how to get the seat placed correctly in the car, don’t know what size seat to use and don’t know if the seat they are using is of good quality. The government is stepping in and in the article listed below from the AP you can see that the safety ratings are getting easier to understand.

Marty O’Neill, Insurance Agent

By KEN THOMAS
ASSOCIATED PRESS

WASHINGTON — Parents who struggle to install their child safety seats or fasten their toddlers in the backseat chairs are getting new guidance from the government.

The Transportation Department said Wednesday it was revamping a consumer ratings system for child safety seats to help parents and caregivers make the best choice.

The new approach is to use a five-star rating system, based on the seats’ ability to secure a child and the ease with which the seats are installed. It also is to consider the seats’ labeling and instructions.

“We believe that the new star system will help simplify one of parents’ most important decisions: choosing the best safety seat that will protect their children,” Transportation Secretary Mary Peters said at an Arlington, Va., fire station.

Many parents can attest to the frustration found in securing a car seat or making sure their child is strapped in. The National Highway Traffic Safety Administration said seven in 10 child safety seats are either the wrong size or misused, reducing their ability to protect kids in a crash.

NHTSA estimates that child restraint systems reduce fatal injuries by 71% for infants and 54% for toddlers in cars and by nearly 60% for infants and toddlers in SUVs, pickups and vans.

By  Marty O’Neill - Insurance Agent

So your 1040 is filed and you are now anxiously waiting for your refund. What do you plan on doing with it? Go on that long-awaited cruise, get a new set of golf clubs or buy that wide-screen TV you’ve had your eye on? There are so many ways you could spend your refund, but there may be better alternatives to consider.

According to the Internal Revenue Service, over 75 percent of American taxpayers received a federal tax refund, with the average around $2,500. It’s what you do with your refund now that may create a better financial future for you and your family later on.

Instead of spending your refund this year, consider funding an Individual Retirement Arrangement (IRA), setting up a college savings fund for a child, or paying down credit card debt. These options will help to improve your financial situation.

First on your list of priorities should be paying down any high-interest credit card debts you have incurred. By paying only the minimum each month, you may be paying just the interest (or less) on the debt and little or nothing towards the principal. Paying down the debt can free up additional money for other important financial needs.

If debt is not a problem, your tax refund could provide you an excellent opportunity to fund an existing IRA or establish a new one. For the 2007 tax year, you can contribute up to $4,000 to an IRA. If you are 50 years or older by December 31, 2007, you can add an additional $1000 to the account. Making a tax-deductible contribution to a Traditional IRA is an option if you are not participating in an employer-sponsored retirement plan or, if you are participating, your Adjusted Gross Income falls within eligibility guidelines.

A Roth IRA may be a more appropriate choice, depending on your eligibility. Contributions to a Roth IRA are not tax deductible. However, qualified distributions are received free from federal income tax.
Your refund could also be used to fund a Coverdell Education Savings Account (ESA) or 529 Plan for your child. Contributions are not deductible, but withdrawals to pay qualified educational expenses are free from federal income tax.

One thing to remember after you’ve decided the fate of this year’s refund: the check you received is not a windfall but the return of an interest-free loan you provided the government.

Regardless of the pleasure you may get from receiving a large check each tax year, adjusting the amount withheld by Uncle Sam to reduce the amount of future refunds may be an appropriate course. You may not get a refund in April, but there may be more in each paycheck to contribute to a Coverdell ESA, 529 plan, IRA or to pay down debt throughout the year.

Take some time to consider your options before making the down payment on that cabin cruiser. The earlier you start saving for your future, the more you may have during your retirement.

If you have questions about these options and others, you owe it to yourself to contact a financial services professional that you know and trust. Your financial future may depend on it.