Ahh, insurance. It is so important to make sure you have the proper coverage. Unfortunately so many people overlook this aspect of sound financial planning. When I worked for a high net worth financial planning firm, I was amazed at how many people were under-insured. And I get it, insurance is not only boring, but there are a lot of untrustworthy agents out there.
So here is the bottom line when it comes to insurance:
- You need car insurance by law in many states. Determining how much coverage you need depends on your situation. For example, if you are driving an older car that doesn’t have much value, then dropping collision coverage might make sense.
- Most employers offer health insurance to employees. If you are self-employed or aren’t offered coverage by your employer, then you have to get it on your own. Learn the basics so you know what to buy and what is a fair price.
- Term life insurance is your best option when it comes to life insurance. Policies that offer an “investment” option to their policy is most likely a rip off. The agent selling you the policy gets a nice fee for selling you this policy and then you are paying hidden fees every year going forward. Remember, insurance and investing are two different things: Investing is done for the long-term to grow your money. Insurance is there to protect you in the event something happens that you otherwise could not afford to cover on your own. They should never blur the lines and cross paths.
Below is more information on each of these insurance coverages.
Many people pick an insurance company and then stay with them for many years, myself included. When I first started driving, I stayed with the provider my parents used. I stayed with them for over 15 years. Then I read about people saving money by switching, so I decided to look around. I ended up saving close to $300 per year on my coverage. Recently, I switched again and saved another $100 per year. This is because each insurance company uses its own methodology to to determine rates, so each company will have a different rate based on your situation. Your job is to figure out which one offers you the best coverage for the lowest price.
It may seem like a hassle, but simply taking 15-20 minutes to get a quote can save you hundreds of dollars. There is no guarantee of course, but at least you will know that you are being charged a competitive price. Plus it’s free to get a quote!
Of course, you shouldn’t go with the company that offers you the cheapest premium. I am more than happy to pay more for a premium if the insurance provider has above average customer service. I want to make sure that they are there for me in the event I need them. Personally, I recommend Allstate and Liberty Mutual. Both offer no obligation, free quotes.
My wife and I currently use Allstate for our auto, home, umbrella and rental home policies. Of course, having all coverage under one roof provides for a nice additional discount.
If you are in the market for health insurance, I recommend eHealthInsurance. It’s free to get a quote and with the Affordable Care Act in effect, you are going to need health insurance or you will be paying a penalty. Start your search with them and be sure to compare at least two others for a better idea of what is a good deal.
One more point – again, don’t base your decision solely on price. You might scoff at a high deductible health plan because of the out of pocket cost. But in the long run, it might be the cheaper option. Be sure to look at previous years to get an idea of how much you spend on health related services per year to hep with your decision.
As I mentioned above, term life insurance is your best option here. It’s low cost for a decent level of coverage and there are little to no fees. Be sure to compare a few quotes with a reputable company like QuoteWizard so you know which is a good deal. Best of all, the quote is free.
At the end of the day, insurance is there to protect you financially when you can’t protect yourself. Don’t ignore this important piece of your financial life. Take the time to understand insurance, where your have some coverage holes, and take the steps necessary to plug them up. In the long run, you will be happy that you did.