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Consumer Update: September 2021

A newsletter from the Office of Consumer Affairs and Business Regulation. Read the letter from the Undersecretary, Consumer Briefs, and other agency features.

Table of Contents

Consumer Update

Letter from the Undersecretary

Dear Massachusetts Consumer, 

Undersecretary Palleschi

This month marked the 20th Anniversary of the attacks that occurred against our Nation on September 11th, 2001. When I think about 9/11, I share the thoughts of many Americans who mourn the over 3,000 lives cut too short. Was it fair that what was supposed to be an ordinary day for those individuals going to work or catching their flights, turned tragic in less than an hour? 

Yet many, if not all of us, at some moment in our lives will be reminded of the reality that life is so precious but not always fair. The families and friends of each individual life lost that day were forced to mourn publicly and globally, continuing to do so every September, year after year. An annual reminder to every American, the fragility of existence, and that tomorrow is no one’s guarantee.
 
Nobody can ever be fully prepared for the loss of a loved one unexpectedly. September marks Life Insurance Awareness Month. Protect your loved ones and consider a life insurance policy that is appropriate for you and your family. Read the Division of Insurance's tips in this newsletter to help educate yourself in making the right coverage choices.

Sincerely, 
Edward A. Palleschi
Undersecretary, Office of Consumer Affairs and Business Regulation

Division of Insurance Offers Life Insurance Tips this Awareness Month

This Life Insurance Awareness Month marks an opportune time for Massachusetts residents who have purchased a life insurance policy or are considering purchasing a life insurance policy to review their circumstances and decide whether coverage is right for them.   “Life insurance can be a critical component of preparing for your family’s future and it’s important to feel confident that your family will be financially secure, said Commissioner of Insurance Gary Anderson.”

This Life Insurance Awareness Month marks an opportune time for Massachusetts residents who have purchased a life insurance policy or are considering purchasing a life insurance policy to review their circumstances and decide whether coverage is right for them.   “Life insurance can be a critical component of preparing for your family’s future and it’s important to feel confident that your family will be financially secure, said Commissioner of Insurance Gary Anderson.”

To increase awareness about life insurance, the Massachusetts Division of Insurance offers the following advice:

  • To determine what policy is best for you, you should consider all available assets and compare them to your family’s obligations, including burial and final illness expenses immediately due; ongoing financial expenses as home mortgages, utility bills, and day-care costs; and funding the long-term expenses of college tuitions and retirement.
  • Massachusetts law allows you ten days to change your mind about purchasing a life insurance policy. This is called a free look period. If you decide to cancel the policy within ten days of purchasing it, the company will return all of the premiums you have paid.
  • When purchasing life insurance, shop around and compare policies and premiums. Be sure that you understand the type of policy you are purchasing and how the benefits are paid when you die, as well as whether there is a cash value should you surrender the policy. There are four basic types of life insurance:
    • Term Life policies provide a death benefit to your beneficiary if you die within the policy term. Term Life Insurance premiums generally are less expensive but premiums can increase as you age. Term polices typically do not have any cash value.
    • Whole Life policies, which may also be called straight life, ordinary life, or permanent insurance, provide a death benefit regardless of when you die, as long as your policy is active and you pay all necessary premiums.
    • Universal Life policies, which may also be referred to as Flexible Premium Universal Life, let you vary the amount and timing of your premium, as long as the premium that you pay is enough to keep the policy in force. It is very important with this type of policy to closely review your annual statement and be aware of the cost of insurance, the depletion of cash value, and the policy value.
    • Variable Life policies vary based on the investment performance of the assets in which your premium payments are invested. Death benefits and cash values are directly related to the performance of investment options you choose.
  • You will usually be required to fill out a health and lifestyle questionnaire in order to purchase a life insurance policy and you may need to have a medical exam. The cost of your policy takes into account your age, height, weight, medical history, occupation, family health history and other personal habits like smoking, as well as whether you regularly engage in activities considered risky by the insurer such as motorcycle riding, skiing, or climbing.  Any false statements on the application could reduce or cancel your coverage.
  • Likewise, if you have an existing policy and are considering a new policy, or have an existing policy that lapses, your health may affect your ability to get a new policy or the premiums you will pay.
  • Review existing policies once a year or following major life events such as divorce or remarriage to make sure that you do not need to make changes to your named beneficiaries. There are no restrictions on the number of beneficiaries you can name, or how you decide to divide your assets amongst them. However, generally, insurance companies will not award death benefits to a minor. It is also recommended you name a second or third beneficiary, also known as contingent beneficiaries, in case something happens to your primary beneficiary.
  • It is the responsibility of the beneficiary to notify the insurance company of your death, which is why it is important to keep your policy information safe and accessible, and keep your beneficiary fully informed. A death certificate or other legal document will be required to verify your death.

Every year, millions of dollars in life insurance benefits remain unclaimed either because beneficiaries can't find their deceased loved ones' policy or, in some cases, may not even know the policy exist. To help solve this issue, the NAIC created a free online resource to search for missing polices. Additional information about this life insurance locator can be found here: https://www.mass.gov/service-details/lost-policy-locator-annuities-and-life-insurance.

More information about life insurance can be found on the Division of Insurance’s website: www.mass.gov/life-insurance.  If you have questions about your particular policy, or are considering purchasing one, contact your insurance agent or company.

College Student Credit Card Cautions

The school year is underway and college students are not only earning credits in the classroom, but many are also being inundated with offers for their first credit card. Young people often use credit cards to further independence or bridge a gap between paychecks.  AIG Retirement Services and EVERFI found through a recent survey of over 20,000 students nationwide, more than half of those individuals reported charging purchases to two or more credit cards.

Building and maintaining credit responsibly is something that can begin at a young age. However, understanding the risks, rewards, and repercussions of credit is an important foundation to a successful financial future.

In support of the Office of Consumer Affairs and Business Regulation’s (OCABR) mission to empower consumers through advocacy and education, we have outlined important information to keep in mind before obtaining a credit card of your own.

  • Explore your credit card options.  Many lenders offer a variety of credit cards including, but not limited to standard unsecured credit cards, secured credit cards, and credit cards for students.  Unsecured credit cards are the most common type of credit card and the only one that actually allows users to borrow money based on your credit score.  While secured credit cards require a refundable deposit greater than or equal to the spending limit. Student credit cards, which are intended for use by college students often offer low, manageable credit limits and low-to-no fees.  Select the option that fits best with your lifestyle.
  • Verify the credit card’s annual percentage rate (APR).  APR refers to how much interest a balance will accrue over the course of a year.  According to WalletHub the average credit card APR is about 17%.
  • Determine how you will manage your payments and if you will carry a monthly balance.  When carrying a balance on your credit card, you’re borrowing money from the card issuer and accruing interest. You need to make minimum payments every month to remain in good standing with your creditors.  Also keep in mind that the balance you carry will impact your credit report and the revolving debt—the higher the balance the more your credit may be affected.

The Division of Banks, an agency within OCABR, offers tips on applying for credit and maintaining finances; visit Consumer Money Matters for more information.

Protect Yourself During a Home Improvement Project

Your home is your biggest asset and inviting someone in to make improvements is a big decision.  Protecting yourself and your family should something go awry is of utmost importance.  That’s why the Office of Consumer Affairs and Business Regulation’s (OCABR) Home Improvement Contractor (HIC) programs protect eligible homeowners and contractors during a home remodeling project.  These laws and regulations provide standards throughout the industry and provide protections for homeowners from being taken advantage of by a bad contractor.

Contractors and subcontractors who perform home improvement work on an existing, one to four unit, owner-occupied, residential property in Massachusetts must register with OCABR as an HIC.  Under the HIC law, registered contractors must follow certain requirements regarding contracts, payments, advertising, and business practices.

The HIC law was created in 1992 to protect consumers and regulate the business practices of contractors. It established a registration requirement, a complaint and enforcement program, an arbitration program for resolving disputes, and a Guaranty Fund program to compensate consumers up to $10,000 for unpaid judgments against contractors.

For the purposes of HIC law, a homeowner is an individual owning and living in a home/building with at least one, but not more than four units. Residential contracting is the only type of contracting covered under HIC; therefore, the home being worked on by a registered contractor must be the owner’s primary residence.

Selecting a contractor is the most important part of the home renovation process. Before signing a contract for home improvement projects, remodeling, or other work covered by HIC programs, make sure you follow these tips from OCABR:

  • Research contractors and obtain several quotes.
  • Check the contractor’s registration and license status. Use our registered contractor search tool to check registration, view complaints, and more. You can search for registered contractors by Registration Number; Registrant Company name; Registrant Last name; or by City/Town.
  • Request a detailed written home improvement contract. Necessary contract items include, but are not limited to, legal names of involved parties, start and completion dates, total project cost, materials, and payment schedule. A list of contract items and a sample contract can be found on our website.
  • Ensure that your registered contractor obtains the building permit needed for construction. If you apply for the permit, you may not be eligible for other HIC programs, such as the Guaranty Fund.

Remember, if the contractor you hire is not registered, you will not be protected by the HIC law. However, there may be other remedies available to you through the court system if necessary.

If you have any additional questions about the HIC law or associated programs you may contact the OCABR Consumer Hotline at 617-973-8787, Monday through Friday between the hours of 9am and 4:30pm.  For more information about hiring a registered contractor, please visit our Homeowner's Guide to Hiring a Home Improvement Contractor.

Scam Alert: Utility Company Imposters

The age-old adage of, “if it sounds too good to be true, it probably is," applies to many facets of life including your home utilities.  The Office of Consumer Affairs and Business Regulation’s (OCABR) Consumer Hotline representatives report receiving a higher volume of calls from Massachusetts residents concerned about falling victim to utility scams.  The most common tactic fraudsters are using is the "imposter scam."  According to the Federal Trade Commission (FTC) over $1.2 billion of losses reported last year were due to imposter scams. 

An imposter scam is when a bad actor pretends to be someone they are not in an attempt to steal money or personal information.  In the case of utility scams these fraudsters may make contact via door-to-door sales, telephone, email, or mail impersonating your current utility company, or another legitimate business hoping to win your electric, water, or gas accounts.   

Be aware of a potential utility scam by spotting these signs compiled by the OCABR:  

  • Phone calls threatening to terminate services.  Using scare tactics in an imposter scam are common.  These fraudsters will often demand a large unpaid bill or maintenance cost be paid immediately over the phone by credit card or electronic check.  Hang up; it’s a scam.   
  • Unscheduled or unsolicited visits from individuals claiming to represent your utility company.  The imposter at your door may request to view your latest utility bill to confirm that you are receiving the best service available.  Your utility bill contains personal information like your full name, account number, and more that the scammer is trying to get a hold of.  Close the door; it’s a scam.   
  • Postcards or letters offering free months of service or very low introductory rates.  Scammers send mail in hopes that their too good to be true offer will make you follow their call to action.  After receiving your phone call or email the bad actor will attempt to access your personal information.  Shred the mail; it’s a scam. 

Do not provide any personal information unless you have initiated the contact with a reliable and verifiable company.  Also, remember your utility shut-off rights. Utility companies must follow strict rules and processes before turning off your service. A call or unexpected visit will never be the first time you’re learning that you owe money. The best consumer is an informed consumer, don’t be left in the dark by falling for a utility scam. 

OCABR Licensee Recognized: Interstate Electrical Services Corp.

Pictured: Interstate President James Alibrandi and Undersecretary Edward A. Palleschi.

Pictured: Interstate President James Alibrandi and Undersecretary Edward A. Palleschi.
 

Undersecretary Edward A. Palleschi was thrilled to attend Interstate Electrical Services Corporation’s annual employee celebration held on September 22 to present Interstate with the Office of Consumer Affairs & Business Regulation’s Certificate of Excellence as part of our Licensee Recognition Program. President James Alibrandi accepted the award on behalf of the company’s over 600 employees. Thank you to the entire Interstate team for including us in your wonderful company event!

OCABR on the Move

Join OCABR at the Chicopee COA for a discussion about hiring a home improvement contractor, or visit the Georgetown COA for a conversation about preventing identity theft and fraud during the holiday season.

Join OCABR at the Chicopee COA for a discussion about hiring a home improvement contractor, or visit the Georgetown COA for a conversation with OCABR and the Better Business Bureau about preventing identity theft and fraud during the holiday season.

View the OCABR Full Event Calendar
Date published: September 29, 2021
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