by Chad Hagy Shopping for insurance these days is much simpler than it was 20 or even 10 years ago. The Internet has made it easy for people to shop for the best prices and policies from the comfort of their own couch. As a busy savvy daddy, what more could you ask for? But do you know what you should be looking for when you buy insurance? Here are six important things to think about when shopping for insurance to help you make the best decision for yourself and for your family.
- How much insurance do you need? This is one of the biggest questions you may have when you begin shopping for insurance. When it comes to life insurance, most people probably don’t need the multi-million dollar policy that they would want but a small four-figure policy probably isn’t going to be enough. A general rule that many financial experts suggest is to get a policy that is 10 times your annual income. For auto insurance, you should consider getting a policy that amounts to the value of your assets. With any policy, realistically evaluate your needs so you are not overpaying for insurance you won’t use and so you aren’t left without enough coverage when you need it.
- Choose a reputable company. You may get a good rate on your insurance policy from a small insurance company that isn’t well known, but these companies are often “fly by night” companies that could disappear at any time if they go out of business. And when they disappear, so does all of the money you’ve paid into your coverage as well as the coverage itself. With a larger company, you know they will be around for a long time and if not, there are typically protections in place for consumers if the company ends up going out of business.
- What are the limitations and exclusions? Many people who buy insurance do not consider the limitations or exclusions listed in the policy. Unfortunately, they do not even know what the limitations or exclusions are until something happens and they need the coverage only to find out that it’s not available. Always read the fine print and don’t sign the policy if you do not agree with the limitations that are listed.
- What could cause a raise in rates or a policy cancellation? Do you know anybody who has paid their insurance premiums on time every month only to find out that their insurance policy was cancelled for some strange reason? These cancellations can come at the worst times. For instance, your auto insurance policy could get cancelled if you are in too many accidents in a given period of time. On the other hand, your premiums could be increased for the same reason. You should know what could cause a rate increase or cancellation on your policy before you decide which policy to choose.
- What happens if the policy lapses? How much of a grace period does your insurance company offer before your policy is considered lapsed? Will the company charge you a penalty for lapsed policies or late payments? A lapsed policy could mean no coverage when you need it the most so you should know what happens if you allow you policy to lapse before you even sign up for the policy.
- What types of insurance should you never buy? Never buy car insurance for your car rental - it's effectively covered by your credit card. Never buy that "lemon insurance" - you know the one they try to sell you when you buy a new car. Big rip-off. The last time I bought a new car, I told the guy, "Listen, let me save you some energy. I'm not buying this thing. How about them Bulls?" He still tried and even offered a a price that was maybe 2/3 off of what he initially started with. What a joke. "Unemployment/credit insurance" is also usually ridiculously overpriced. Cancer insurance is a perfect "fear-driven" insurance product that is almost always not providing much additional coverage if you have health insurance already. MSN lists other types of insurance you probably don't need.