Top 7 Insurance Mistakes
Insurance is the product you buy in case the unthinkable happens. Unfortunately, by the time you need it, it’s too late to make sure you have the right type and amount of coverage. Make sure you don’t make any of the following seven mistakes while buying financial protection against disaster.
- Not Shopping Around The most common mistake is that people don’t shop around for insurance. They wind up going to one agent and letting that person handle all of their insurance needs. If you would just read the insurance buyers guides offered by their state insurance departments and then call around to a few companies, it could make a huge difference in the price they pay for insurance.
- Comparing Only Rate Prices When you’re shopping around, it’s best to look not only at prices but at companies’ reputations for paying claims. You can check out insurance companies by looking at how they rank with third-party insurance rating companies, such as A.M. Best, Fitch Ratings and Standard & Poor’s. Examine a company’s complaint ratio. State insurance departments sometime publish this information, and the Web site of the National Association of Insurance Commissioners publishes these numbers.
- Not Comparing Agents Not all agents are created equal. First, make sure an agent is properly licensed. Check with your state department of insurance. Then make sure to get referrals and ask each agent some questions. Ask them to explain the policy. Ask what value they’re going to bring to the table. How will they help you?
- Not Understanding Your Policy A consumer’s biggest mistake is not knowing what’s in the fine print of a policy. Many people don’t know what their deductibles are and don’t realize what’s not covered until disaster strikes.
- Not Buying Enough Don’t skimp on health insurance no matter how robust you feel today. It’s really important so you don’t just go into such medical debt that you never can dig your way out. People think they don’t have to deal with it until they’re 50. You’re uninsurable at that point. Consider getting life insurance if you have dependents. It can help pay the bills after a working parent dies unexpectedly. Buy it when you’re young and healthy because it’s much cheaper and easier to obtain when you don’t have a chronic disease.
- Buying Unncessary Insurance You don’t need life insurance on children, only on people who have dependents. In terms of specialized insurance, don’t buy insurance from somebody you went to buy something else from. If you’re worried about identity theft, don’t rush out to buy identity-theft insurance. Check your homeowners policy. It might already include some identity-theft protection. Credit cards also offer some protection against unauthorized charges.
- Not Updating Coverage Evaluate your coverage whenever you go through a life change, such as birth, adoption, marriage or divorce, but at least once annually. If your home has gone up in value, make sure you increase your policy limits. If the kids have left home, you can get more-affordable auto insurance coverage.
