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Quick And Easy Guide To Cheap Insurance

Quick And Easy Guide To Cheap Insurance

Life has unpredictable moments.  It’s a fact that far too many people overlook, only to find themselves in a moment of crisis without any kind of financial protection.  These are the moments that can financially destroy a family.



Insurance can be a difficult thing to manage.  There are so many forms of insurance, and so many things in life that could result in financial distress, that it’s sometimes difficult to decide which life situations need to be protected with insurance.  Some forms of insurance can be rather costly, while other types remain very affordable given the level of protection that is provided. You can choose a whole life policy, which can be expensive, or a low cost term life insurance policy.

There are several preliminary steps you should take in order to evaluate what parts of your life need to be protected.  Not all insurance products are necessary for everyone.  For example, a single person without any children has very little need for much more than enough life insurance to cover funeral expenses.  A married couple with a home, several children, and many assets, could benefit greatly from a well-selected life insurance product.  It’s important to keep in mind that insurance is a way to provide peace-of-mind that if things go wrong, any financial ramifications will be completely taken care of.  The protection is not only for finances, it also protects entire lives from being completely destroyed by the financial strains many different types of crisis can create. With these factors in mind, you should compare life insurance rates before purchasing.

To determine what form of insurance you need, first self-evaluate your life, and the areas of your life that you need to protect.

Self-Evaluation

  1. Are you married?
  2. Do you have children?
  3. Do you own a home, or do you rent?
  4. Do you own one or more vehicles?
  5. Are you the sole “breadwinner” in a family?
  6. Do you own any high-value items?

These six important questions can help you to determine not only which aspects of your life contain enough risk to warrant insurance, but they also can help you to determine what level of insurance you need to purchase in order to appropriately protect yourself and your family from financial crisis.

The most important factor that will determine levels of insurance is whether or not you have children.  The moment you have children, your insurance needs multiply, because it is your responsibility to make sure that your family isn’t held holding the financial bag should anything happen to you and you become incapable of generating income.  Secondly, it is your responsibility to make sure that the welfare of your children is protected in the unfortunate event that something should happen to you, or to your ability to provide for them financially.  All too often, this is an important need that goes overlooked simply because of the associated cost.

The following table provides a quick reference to determine which types of insurance you should evaluate (but not necessarily purchase) given your specific life circumstance based on the answers to the six questions above.  Answer the questions above for yourself, and then match the answers to the insurance types in the chart below.

Question

HI

RI

LI

LT

CI

HT

DI

EV

PI

PT

FI

FL

Are you married?

X

X

X

X

X

X

X

Do you have children?

X

X

X

X

X

X

X

Do you own or rent?

X

X

Own one or more vehicles?

X

X

X

Sole breadwinner?

X

X

X

Own high-value items?

X

X

HI – Home                             CI – Car                                PI – Product Insurance

RI – Renter’s                       HT – Health                          PT – Pet Insurance

LI – Life                                DI – Disability                      FI – Funeral Insurance

LT – Long Term Care        EV – Eye/Vision                   FL – Flight/Travel Insurance

The chart above will help you to choose which insurance types you should be considering based on which questions pertain to you.  This guide will outline below how your individual answers will affect whether you need each type of insurance coverage, and what level of coverage is right for you.

Home Insurance

When you have invested as much money as it takes to purchase a home, there really isn’t an option not to have homeowner’s insurance.  Most mortgage companies will require that to qualify for the loan, and the insurance premium must be paid out of escrow.  This means that payments for the insurance are automatically added to the mortgage payments.  A home represents such a large portion of our assets that it should never be uninsured, even if the owner is single and without kids.  The last thing anyone needs is a home destroyed by a storm or fire, and no financial resources to rebuild.

Most home insurance policies cover all of the following damaging events, with a few variations from policy to policy.  Coverage typically includes fire or lightning, windstorm or hail, explosion, riot or civil commotion, aircraft, vehicles, smoke, vandalism, theft, falling objects, ice or snow, accidental overflow of water or steam, sudden tearing apart or cracking, freezing, damage from electrical current, or volcanic eruption.

Top Home Insurance Companies

Homeowners insurance is rated largely on financial strength.  When it comes down to major disasters, the one element of an insurance company that can keep it afloat and honoring its obligations to customers is through a strong financial position.

The nation's 10 strongest homeowners insurers for 2010 are below. Although based in a small number of states, they write business in multiple states and may write in yours. Contact them directly or through the state insurance department to check them out.



Tips When Buying Home Insurance

The process of buying homeowners insurance isn’t quite the same as auto or health.  Most people only purchase homeowners insurance when they are going through the process of obtaining a mortgage for a house and closing on the sale.  Often, the consumer doesn’t even make payments to the insurer directly – instead they are escrowed through the mortgage company.

However, if a homeowner takes the time to carefully shop around, they stand the potential to save a great deal on their home insurance premium.  This means that, if the insurance payment is escrowed, you could essentially lower your overall monthly mortgage payment.

1. Determine Insurability

The first step is to get quotes from as many insurance companies as you can.  You will need to inform the insurance agent of the year the home was built, the age of the home plumbing and electrical systems, the roof type (20 yr, 30 yr, etc..), the square footage of the home, and where the home is located.

Before you jump at the lowest quote offered, make sure to walk through the steps below with each insurance agent to obtain similar quotes that all match the kind of policy you are looking for, and the discounts that you qualify for.

2. Determine how much insurance you need

In general, insurance agents will insert a number of factors about your house into a cost estimator in order to determine an estimated replacement cost for your house.  It’s important to keep in mind that plot size doesn’t matter, since the insurance company will only be insuring your house, not the land.  Typically replacement coverage can range from 125% to 200% to cover for inflation or increased cost of construction over time.  The ideal solution when you are obtaining quotes is to choose coverage of 200% replacement cost coverage and obtain quotes from all insurers based on that coverage level.

3. Save with higher deductibles

Reduce your home insurance costs by selecting higher deductibles on your policy.  In the event that your home is destroyed or damaged to the extent that you will need to make use of your homeowners policy, a deductible of $500 or more will seem insignificant compared to the total cost of repairs or replacement.  However the yearly savings from selecting a higher deductible can be significant.

4. Tailor your policy options

Every home insurance policy has options just as any other insurance policy does.  In particular, the most variable part of the policy is the liability coverage.  Different levels of coverage ranging from $300,000 up to a million can be purchased at higher premiums.  Liability coverage will pay for any injury or property damage to others who are on your property.  Try to judge the lowest level of coverage you feel comfortable with, and obtain all of your quotes based on that level of liability coverage.

5. Take advantage of all discounts

Make sure when obtaining quotes that you take full advantage of all discounts that are offered by the insurance company.  For example, a security alarm system or your age may qualify you for some significant discounts.  If possible, try to get your home insurance policy from the same company you obtain your auto insurance policy from.  Only do so if the quote is better, with the multi-policy discount, than any quotes you obtain from other sources.

Renter’s Insurance

Renter’s insurance is the equivalent of homeowners insurance for renters.  Instead of covering the home, it covers the contents owned by a renter.  Rental insurance covers your possessions inside the building including furniture, electronic equipment, etc.  It also provides you with liability protection if someone gets hurt in your apartment because of something you did.

Since you are renting, the only insurance company you may be dealing with is your auto insurance company.  The best option is usually to work with them, since they will give you a multi-policy discount (if they don’t, then demand one!)

Tips to Getting Renter’s Insurance

  1. Make sure to make a detailed list of everything substantial that you own, especially large items like furniture, electronics, appliances, art, tools and anything else with value.
  2. Make sure to identify big-ticket items.  If you own very expensive jewelry such as a family heirloom worth several thousand dollars, for example, you should make sure that it and other valuable items are covered by your renter’s policy.
  3. Video document the contents of your apartment.  This only requires a few minutes, and saves the time of trying to write down a log of your items on paper.  Simply take a camcorder and walk around your house recording everything you own.  Then store this videotape somewhere safe away from your apartment, for example, in a safe deposit box or at your family’s house.  Repeat this every few years as your possessions will surely change.

Mortgage Insurance

Mortgage Insurance should not be confused with PMI (Private Mortgage Insurance) which is an insurance typically required by mortgage companies when buyers obtain a mortgage for a home with less than a 20% down payment.  Mortgage Insurance, on the other hand, is a life insurance that pays off the remaining balance of your mortgage in the event that you die.

While this sounds like a good protection to have, it is only necessary under certain circumstances.  Since most mortgage insurance providers don’t require a medical exam, this insurance product is ideal for mortgage borrowers who are in poor health or who may have existing medical conditions that make regular life insurance too expensive.

However, for most healthy people, life insurance is a much more affordable and flexible option.  Life insurance proceeds are payable to your selected beneficiary to do with as they please (they don’t necessarily have to pay off the mortgage).  Typically a life insurance plan is less expensive and provides sufficient coverage to pay off the mortgage.  Additionally, unlike mortgage insurance, the life insurance benefit doesn’t decrease as the balance on the mortgage decreases.

For a comprehensive list of top Mortgage Insurance providers, see the section of this guide on Life Insurance.

Life Insurance

One of the last types of insurance people typically think about is life insurance.  Usually young adults never consider the ramifications of their death, or the impact it will have on their families.  Once an adult gets married and has children, they begin to think about what would happen to their spouse and children if they were gone.  While healthy – it can be difficult to consider what could happen to a family if you were to leave this earth after an accident or illness.  However, especially if you do have a spouse and children, this is a subject that everyone should give serious consideration to.

There are four important things that you should ensure is protected should you pass away.

1. Lost Income: While healthy, some people tend to take their income for granted.  It isn’t until an illness sets in that people start to realize how quickly that income can disappear.  The first rule of life insurance is to make sure that lost income is replaced so that those surviving family members can enjoy the same quality of life even though they must suffer through such a terrible loss.

2. Pay off Debt: A steady income usually means that bills and debt all gets paid on time.  The hope is that eventually, after working a number of years, all of the debt gets paid off.  When there’s a death and the income stops, debt is usually the first thing to cause additional grief to a family.  Debt collectors start to call, and family finances nosedive.  Enough life insurance should always be covered to take care of any of your outstanding debts.

3. Final Expenses: Most people don’t realize that funerals can be very expensive.  Depending on region of the country and quality of items purchased for the services, funerals can total from $5,000 upwards of $10,000 or more.  One of the basic things life insurance should cover are all of those expenses.  If nothing else, no family should need to pay out of their own finances to bury a loved one.  Every person should have at least enough life insurance to cover their own funeral expenses.

4. Children’s Education: One of the lifelong goals of most parents is to work steadily on setting aside money for their child’s education.  By the time their children attend college, there’s usually enough of a fund set up to help support those costs.  However, when anything unexpected happens to a parent and income is suddenly cut, that education is immediately in jeopardy.  While it is not a top priority item, children’s education is certainly at least a high priority to consider when purchasing life insurance coverage.



When should anyone consider getting life insurance?  The simple answer is everyone should consider it.  At the least, children should be insured to cover just final expenses.  A family has enough to deal with the grief of losing a loved child – funeral expenses should never be a concern.  As those children grow into young adults, insurance coverage should increase to cover debts as well.  Finally, as young adults grow to full adults, get married, buy a home and have children, life insurance should increase dramatically to cover lost income and children’s education.   Obviously, life circumstances have a great impact on what level of coverage should be chosen.  This means that you should reevaluate your coverage to make sure that it is sufficient to meet the needs of your family if you are ever gone.

Top Life Insurance Companies

One of the best methods to obtain life insurance that meets your needs is to perform obtain free online quotes from as many insurance companies as you can.  While it may be time consuming to do this on your own, there are services out there such as Life Quote Insider that will compare “cost, features, and financial strength of hundreds of life insurance products.”  This is a good idea, because when it comes to life insurance, you always want to be confident that you are protected by a financially strong insurance company that has the ability to meet its financial obligations.

While revenues do not always identify the highest rated life insurance companies, it is certainly a sign of financial strength, which is always a big plus in the life insurance industry.  The following table lists the top twenty U.S. Life insurance groups by revenue in 2007.

Standard & Poor’s is an excellent resource to research the insurance companies listed above.  Standard & Poor rates insurance companies based on financial strength.  If you locate a top ranked company on the list in the table that has received the S&P’s highest rank – you can be confident that the company is likely one of the best.

Tips to Buying Life Insurance

Buying any kind of insurance can be complicated, but life insurance can be one of the most complicated of all.  Below are a few tips that will help you to navigate the process of buying life insurance a little more easily.

Whole Life vs. Term Life

Term Life Insurance is a life insurance policy that ends after a fixed period of time.  The only payment to beneficiaries upon your death is whatever the death benefit is listed on your policy.  There is no cash balance to the policy, and it can’t be borrowed against prior to your death.  Term Life is a simple policy that offers fixed term protection, but premiums are typically much lower than a whole life policy.

Whole Life Insurance is a life policy that is meant to cover you over your entire life.  A whole life policy premium doesn’t rise over time, but stays the same regardless of your age or whether or not you become ill.  Whole Life also has a cash value that can grow and can be loaned against in an emergency.

Car Insurance

Car insurance can be one of the more complicated and confusing types of insurance to understand and purchase.  For a person who is purchasing a car insurance policy for the first time, trying to understand the terminology can cause some consumers to simply call around and purchase the lowest car insurance quote they receive.  This isn’t always the best approach.

The type of car insurance you require depends on several important factors including:

Your age and driving history can greatly impact the premium that you will need to pay for car insurance.  If you are very young, or have a number of infractions on your driving record, you may not be able to afford anything more than the legally required liability coverage.  However, if you are older and you have an excellent driving record, there are more affordable options open to you in terms of comprehensive and collision coverage.

The age of your car should also influence what type of car insurance coverage you choose.  It’s important to keep in mind that should an older vehicle become so damaged in an accident that the cost to repair it surpasses the value of the car, the insurance company, under collision coverage,  will classify the vehicle as totaled, and will pay you fair market value for the car in its condition before the accident.  If your car is only worth a few thousand, paying hundreds extra on car insurance for that car doesn’t make much sense.

Keep in mind how much you can afford to spend in the case of an accident.  The purpose of insurance shouldn’t be for you to completely avoid any out-of-pocket expenses.  The secret is to balance the immediate costs of the premium now against the long-term potential costs incurred if you have an accident.  The best approach is to only have enough coverage so that in the case of an accident, the majority of the costs are covered, however you should have little enough coverage so that your premium is affordable.  This means you need to be willing to take some risks and cover some of the expenses in the case of an accident.  Accepting a $500 deductible rather than a $250 deductible can lower your premium cost significantly.

Also, carefully consider what benefits you really need.  Additional coverage offered by many car insurance companies include car rental, roadside assistance, and sometimes discount programs.  Consider carefully whether benefits are worth the associated yearly premium costs before you agree to sign up for the additional coverage.



Top Car Insurance Companies

One of the best sources of information on car insurance companies is from J.D. Power and Associates which provides car insurance rankings based on information drawn from individual policyholders.  Financial strength is just as important with car insurance as it is with life insurance, however with smaller claims and higher volume, the true strength of a car insurance company comes from customer service and claims processing.  In the car insurance industry, the company that responds the fastest and processes the insurance claims the most efficiently will have the highest rate of customer satisfaction.  This is why J.D. power focuses on information from policyholders.  J.D. rankings also look at coverage options, prices, billing and payment, and the customer’s overall experience with the company.

Based on J.D. Power rankings from 2007 results, the following insurance company were rated at the top:

However, there are a large number of insurance companies that are very successful with a local customer base, so it’s always best to research the car insurance companies within your local area and see where the rank on the J.D. Power list for the year.  Additionally, you can obtain free insurance quotes from sites such as Quote Wizard for a very fast way to obtain quotes from a large number of insurers.

Tips when Buying Car Insurance

There are a number of ways you can save on car insurance.  The following tips will help you make sure that you receive the best policy at the most affordable premium.

1. Customize your policy: Make sure to understand the benefits and costs of each type of coverage, including liability, personal injury, medical, uninsured/underinsured, comprehensive, collision, or roadside assistance - and only add the coverage that you absolutely need.

2. Become More Insurable: Improving your credit score, taking a driving class, getting good grades, and having a clean driving record are all things you can do to make sure you receive the absolute lowest insurance rates possible.

3. Buy a Safe Car: When you purchase a new car, it’s always a good idea to buy for safety to get the lowest insurance rates.  Anti-theft devices, anti-lock brakes, airbags and any safety features will significantly reduce your insurance costs.

4. Update Your Policy: Always contact your insurance agent immediately when there is any life change that can impact your car insurance premium, such as turning 25 or marriage.

Health Insurance

Health insurance is both one of the most critical types of insurance that people should have, and it’s also one of the most expensive to obtain.  Health insurance for a family of four is far more expensive that life, auto, or home insurance.  It is one of the only ways families have to protect themselves from the enormous costs of emergency medical care.

There is never a question of whether you need health insurance – everyone needs it.  Typically, either a private HMO, Medicare, or some other public or private program will provide health insurance to individuals and families at cost.  Every person should be protected from costs of medical care, which has the potential to quickly drive a family into bankruptcy.

The level of coverage required depends mostly on family status.  A person who is married with two children will require a bit more health insurance coverage for the family than someone who is single.

Once retired, an employer offered health plan usually ends, and unless you are a corporate executive with special benefits, you will be required to change health care provider.  Typically retirement means you qualify for Medicare, or you might choose to self-insure.  If you retire early, you will be required to either obtain a high-priced individual health insurance plan, or go without health insurance.

Top Health Insurance Companies

U.S. News & World report published results of the “Best Health Plans 2009 Search” of the highest ranked health insurance companies based on consumer surveys and “success in preventing and treating illness compared with an average health plan.”

The top 10 of their results were as follows:

#1. Harvard Pilgrim Health Care (score: 91.1%)

#2. Harvard Pilgrim Health Care of New England (90.2%)

#3. Tufts Associated Health Maintainance Organization (89.9%)

#4. Grand Valley Health Plan (89.4%)

#5. Capital Health Plan (89.0%)

#6. Geisinger Health Plan (88.6%)

#7. Fallon Community Health Plan (88.0%)

#8. Health New England (87.9%)

#9. CIGNA Healthcare of New Hampshire (87.7%)

#10. Group Health Cooperative of South Central Wisconsin (87.6%)

Clearly, Harvard Pilgrim Health Care is a leader within the industry.  According to the National Committee for Quality Assurance in Washington, D.C., Harvard Pilgrim rated top in categories such as access to care, member satisfaction, prevention, and treatment of specific diseases.

Harvard Pilgrim is one health insurance company that breaks the mold of most HMOs which seek to limit patients’ access to physicians and services – and which typically deny claims and force patients to fight for their guaranteed coverage.  Harvard Pilgrim, on the other hand, is one of the only HMOs that proactively contacts members and makes sure they understand their coverage.

Charles D. Baker, the CEO of Harvard Pilgrim told the Boston Globe, “We do a lot of outreach to our members.  We reach out to them over the phone or in the mail to wrap a service component around their healthcare delivery.”

If any of the insurance companies on the list above are offered through your employer, be sure to take advantage of it.



Tips When Buying Health Insurance

Choosing a health insurance plan can feel overwhelming at times, because the various types of coverage, as well as the variety of co-payments, terms and conditions.  However there are ways that you can simplify the process that will make the process much simpler.

The first step is to understand the important items to check for.  These are the items that you should compare when looking at different plans:

When two people are married and both employed, you should always do a point-by-point comparison between the two health plans.  Do not assume that because someone has a higher salary means his or her health insurance plan is better.

Another option to consider is a non-employer provided plan.  Because of recent cost-increase of employer-provided health plans, independent or group health plans elsewhere are starting to look more attractive.  Some of these non-employer health plans consumers should consider and compare to their employer-provided plans include:

Another tip to getting the best deal on health insurance is to constantly review your plan benefits and choose only the coverage you absolutely need.  Remember, health care insurance was intended for emergency health coverage.  If you can pay more out-of-pocket co-payments for doctor visits, or higher deductibles, you will reduce your premium significantly and this can be one of the most effective methods of significantly reducing the costs of your health insurance policy.  Even though smaller short-term costs are higher, you can still rest assured that should anything medically catastrophic happen to you or your family, the major costs of that event will not drive your family into bankruptcy.

Eye/Vision insurance

Vision insurance is a supplemental benefit to most health insurance policies.  Understanding what vision coverage your health insurance plan offers will be much easier if you understand the various types of vision insurance.

1. A discount vision plan will generally provide vision care, including glasses and frames, at a fixed discounted rate.  These discounts can be fairly substantial, and even with a deductible that you must pay before benefits are paid, the savings are still impressive.  When you are purchasing  glasses and frames that can top $200 to $300 – a discount vision plan can prove to be very valuable.

2. A vision benefits package typically will pay more for vision services and supplies that you need, although it usually also carries a deductible of $0 to $35 depending on the policy.  The most popular vision insurers include Spectera, EyeMed, Davis Vision, and AlwaysCare.

Vision insurance is actually an important supplemental coverage to have on your health insurance policy.  Most health policies don’t cover standard routine eye exams and glasses.  This is where the vision insurance comes in.  While your health insurance may not cover those $300 glasses, the vision insurance certainly does.  And considering the low cost of vision insurance, the price is well worth the many benefits as well as the peace of mind vision insurance brings knowing that your eyes will always be cared for.

Your eyes are a critical part of your life and without them it is nearly impossible to function.  The low cost of vision insurance is negligible compared to the financial burden losing that function would have on your life and the lives of your family members.

Disability Insurance

Similar to life insurance, disability insurance seeks to protect you and your family should something happen to you such as an illness or an injury.  However, unlike life insurance, disability coverage is meant to cover you if you life through the accident and need time to recover.

Disability insurance replaces your income lost because of the injury or illness.  There are different options when purchasing disability insurance such as how quickly the insurance policy takes effect and how much of your income is covered.

Those who require disability insurance would be anyone who has a spouse or children who could suffer needlessly from a loss of your income.  If both parents work, then both should maintain disability insurance to cover the portion of household expenses that their income covers should they fall ill or get injured.

Top Disability Insurance Companies

Typically, disability insurance policies are offered as additional products from life insurance companies.  Review the list of top life insurance companies in the Life Insurance section of this guide for more information regarding the top rated, financially secure companies.

Tips When Buying Disability Insurance

When you are in the process of choosing short-term or long-term disability coverage, there are a few choices you will need to make, and it’s important that you understand the types of policies available so that you can choose the one that best meets the needs of your family.

Also, if you choose disability insurance through your employer, your options may be more limited.  However typically employees can choose the length of wait time before the policy would kick in – and this selection obviously affects the cost of the premium.

The types of disability insurance available includes the following:


Non-cancelable policy: This means that your coverage can't be canceled or your rates elevated once you sign up.  This provides a good deal of security, but it’s also usually more expensive.


Guaranteed renewable policy: Just like the non-cancelable policy, this plan can’t be cancelled, however the rates can be modified each time the policy would normally have come up for review.  This plan is also slightly less expensive because of that.

Own occupation policy: Different disability policies have different standards by which they define a “disabling” illness or injury.  With this type of policy, you are considered disabled if you can’t work your regular job because of that injury or illness.

Any occupation policy: This policy is usually the least expensive because the standards of “disabled” are higher.  Not only does not being able to work your regular job serve as a requirement, but it also will not pay out benefits until a doctor confirms that you are unable to work at any day job.  Keep in mind that this classification and requirement could be misused by an insurance company to avoid paying out benefits, so it’s important for consumers to make sure they are dealing with a reputable company when purchasing this type of disability insurance.

Long-term care insurance

Similar to disability insurance, but designed to protect you in the case of a long-term illness, this insurance coverage is also typically provided by the same insurance companies that offer life insurance products.

Long-term care insurance covers expenses associated with long term disabilities, when you need help with basic needs such as eating, bathing, dressing, etc.  These are activities of daily living, termed ADLs.  People are usually in need of these services when they have a serious long-term illness such as a serious illness or disability.

Top Long-Term Care Insurance Companies

Long-term care insurance policies are offered as additional products from life insurance companies.  Review the list of top life insurance companies in the Life Insurance section of this guide for more information regarding the top rated, financially secure companies.

Tips When Buying Long-Term Care Insurance

When choosing long-term care insurance, there are different options to choose from that can have an impact on the cost of the insurance.  You should understand the impact of these choices on the benefits, and choose the options that best meet the needs of your family.

Also, if you choose long-term care insurance through your employer, the costs will be significantly less since the employer covers much of the cost.  However even without an employer offered insurance plan, the cost of long-term care insurance isn’t very expensive.

There are ways to cut costs and reduce your risk when purchasing Long-Term Care insurance – the following are some important tips.

1. Don’t purchase insurance based on fear

Most insurance claims, at least over 90%, are closed within 36 months.  This means that there’s no need to purchase coverage for longer than 5 years because statistically you will not likely need it.  If you purchase a 5 year policy, this essentially covers 98% of your risk.  Remember – insurance should be a form of protection, but not absolutely protection from every risk.  Costs need to balance statistical risk.

2. Avoid jumping at the bottom price

Many insurance companies may underprice the policy to get customers, but keep an eye on potential price increases.  Purchasing a guaranteed renewable policy only means the policy can’t be cancelled on you – it doesn’t mean prices can’t be changed.  So be careful when talking bottom-line price with agents.

3. Don’t buy small

While small companies are always much more personable, when it comes to insurance most often bigger is better.  Larger companies with large assets are more financially secure and better able to meet their obligations to you should the need ever arise.

Miscellaneous Insurance Types

While there are many legitimate insurance needs in all aspects of our lives, there are also insurance products which are redundant and a complete waste of money.  Many of these insurance companies work off the natural human fear that things might go wrong.  The need to protect ourselves from all perceived future harm can lead many folks to underinsure where they should be insuring more, and to overinsure where they really have little to no statistical risk.

The following types of insurance are examples of unnecessary types that you should never consider purchasing.

Product Insurance: Product insurance is sometimes useful.  However the version of it otherwise known as the “extended warranty” when you purchase big-ticket items is overpriced and a waste of money.  Product insurance is typically only necessary when you have purchased a very expensive item such a diamond ring.  Purchasing warranties or insurance from the retailer is usually expensive.  But buying insurance coverage for all of your expensive items from the same company you obtain your car and/or home insurance from is always the most cost-effective approach.

Pet Insurance: Pet insurance is actually becoming more and more popular.  This type of insurance covers not only vet visits, but often also the cost for ads and reward to help recover your missing pet, cost of pet boarding if you are ever hospitalized, the value of your pet if it dies, and other benefits.  For pets that are highly valuable and take part in animal shows – purchasing insurance might be a good idea.  However for the standard family pet which likely visits the vet only once a year – the cost of the policy simply won’t likely pay for itself, and it would be best to simply put that money into upgrading life or health insurance for you or your spouse instead.

Funeral Insurance: Otherwise known as “pre-need insurance”, funeral insurance offers coverage of funeral costs such as the burial plot and grave work, the casket, the funeral vehicle cost, flowers, and essentially everything surrounding the ceremony.  However, this type of insurance is redundant with life insurance.  You would be much better served to simply pay slightly more on the life insurance premium for enough additional coverage to pay for funeral expenses.

Flight Insurance: Sometimes called travel insurance, this type of insurance covers you whenever you travel.  Again, this is a matter of additional insurance products being offered to the marketplace without a thorough understanding of the redundancy of those products.  Life insurance and health insurance will both cover you in the event that you are killed or insured during travel.  There’s no need to purchase additional insurance in order to do that.

Saving Money on Insurance

In general, once you understand the terminology and policies of the insurance companies, all of the various types of insurance start to make sense.  The goal of insurance is to minimize your family’s risk of financial disaster simply because of an accident or illness.  However purchasing too much insurance simply defeats the purpose of trying to protect the family’s financial future.

Any time you are shopping for new insurance, regardless of type, always keep in mind that research and knowledge about each insurance industry will help you to make a better decision when you are comparing quotes from different insurers.  If you are able to obtain a moderately priced insurance policy portfolio that covers the largest part of your financial risks – then you are on the right track to being financially responsible and properly protecting your family from any insurance needs that may arise.

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