Navigating The Dos And Donts Of Insurance
Navigating the Dos and Donts of Insurance
Whether you are purchasing life insurance or
home insurance there are a number of dos and donts that you need to consider before purchasing a plan. Insurance is meant to protect you and your possessions and so you want to ensure that your premiums arent going to waste. Many people have paid costly premiums for years only to find out that when they need to make a claim, they are denied or not entitled to what they expected. These dos and donts will help you avoid such a frustrating situation.
Life Insurance
The main purpose of life insurance is to provide financial support to your dependants when you are no longer around to provide for them yourself.
Do:
Consider a complete life insurance policy instead of just an accidental death or travel accident policy to ensure you are adequately covered
Weigh your budget against your needs and find a policy that is affordable and offers the right amount and type of coverage
Dont:
Treat your life insurance policy like a savings account - dont buy a cash value life policy if you actually need a term life policy
Delay something could happen to you at anytime and you want to ensure your loved ones are protected
Underinsure many people make the mistake of not purchasing enough coverage. The general rule of thumb is to ensure you are covered for at least 10 times your annual income. This amount will ensure your dependants are financially secure when you are gone
Let your agent decide whats good for you ensure you research your options and the terminology involved in the different types of policies and coverage types available to you. Make sure you understand the implications of your policy and that you read and understand all of the fine print
Treat life insurance like a one-time purchase as your family and needs change over time so should your life insurance policy. You may want to revisit your policy over time
Home Insurance
Your home is likely your most valuable asset and probably is the biggest purchase you will make. As a result, you want to ensure your home and the valuables in your home are protected.
Do:
Read your policy word for word and ensure that you understand it fully - for example, if you live in a disaster prone area (flood or earthquake prone) you may need to buy separate coverage to be protected from such disasters or perhaps your policy will have a separate deductible for claims resulting from these disasters
Check the insurance requirements of an area before you buy a house there check with companies, check the coverage provided and checks rates that are common in the location. For example, after Hurricane Katrina many large home insurance companies pulled out of the area
Update your home insurance company as soon as you make a modification or addition to your original home structure not updating the insurance company about changes is one of the biggest reasons that home insurance claims are rejected
If you live in group housing or a condominium complex check to see what is covered under the group housing insurance plan you want to ensure that you are not buying duplicate coverage for the same structure. It is better to add on to a group housing insurance plan to ensure that everything is covered
Figure out your budget consider how much insurance you think you will need and price this out before you purchase your home
Have your home appraised before you buy it you cant know how much to pay for insurance unless you know what your property is worth
Consider getting a home security system some insurance plans offer discounts to people with home security systems. Some insurance plans have clauses which say you must do everything in your power to keep intruders out and may not compensate people who they believe havent done so. A security system will help you prove to your insurer that you have done everything in your power to protect your home from thieves
Dont:
Confuse what you paid for your house with its rebuilding costs land is mostly indestructible and so including land in an estimate to rebuild your home in the event of a disaster will only unnecessarily increase your premiums because when you make a claim you will only be paid what your insurance provider feels is necessary to rebuild or renovate your home
Over insure a property that isnt really worth the amount you are paying to insure it
Wait to insure your home the risk of something happening to your home is just as likely on the day you move in as the day you move out. Dont leave yourself vulnerable by putting off getting home insurance
Following the dos and donts above will help you make the best decisions regarding life insurance and home insurance so that you are adequately covered when you need to be.
by: Navneet Tumber
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