Insurance World

For most of us, insurance coverage represents a love-hate relationship. We hate paying for the premiums, but love having the right kind of coverage when it is needed. We realize that is important to have insurance coverage, but just the thought of contacting different insurance agents, or researching different insurance plans, can not only be a scary experience, but incredibly overwhelming. Knowing what types of insurance are available, and making sure you have the correct coverage for your life’s needs is a task that should be given careful consideration.

Using the following suggestions, whether you are a novice or a veteran insurance buyer, will help you to make critical insurance coverage decisions. First and most important, is to ask yourself the question; what kind of insurance do I need? There is auto insurance to protect yourself and others when driving. Health coverage is a vital issue to address, as well as life insurance, disability and long-term health care. If you have a home, you need to protect your most valuable possession with home-owners insurance. There are many types of insurance for each of the categories mentioned. Asking the right questions can make all of the difference in deciding on the policy that fits you best.

Auto Insurance

Auto insurance is required in most states. You may not be required to carry full coverage, which includes collision, comprehensive and medical coverage; but you are required to carry liability coverage. Liability is the foundation of any auto insurance policy. If you are at fault in an accident, your liability insurance will pay for the bodily injury and property damage expenses caused to others in the accident, including your legal bills. However, if your vehicle is damaged, the expense to repair it will not be covered without having a full coverage policy. Collision, comprehensive and medical coverage are for your benefit. Collision will pay for the repair to your vehicle, while comprehensive coverage will pay for damages to your car that weren’t caused by an auto accident. Medical payments coverage will pay for you and your passenger’s medical expenses after an accident. This coverage will pay no matter who is at fault.

Collision coverage is usually the most expensive part of a policy, you can choose a higher deductible, say $500 or $1000, and keep your premium costs down. If you have a newer vehicle and have a lien against it, the lending institution will require that you have full coverage. By working with a professional insurance agent, the agent would be able to give you many cost saving suggestions that you could take advantage of to lower your rates, and still give you the coverage you need.

Health Insurance

Health insurance is one of the largest expenses that we face today. Educating yourself about the different types of health insurance available will assist you with your insurance buying decision. There are many types of plans, but essentially two kinds of health insurance: Fee-for Service and Managed Care.

Fee-for-Service assumes that the medical professional will be paid a fee for services provided. Managed Care encompasses various plans and can include: health maintenance organizations (HMOs), preferred provider organizations (PPO), or point-of-service (POS). These plans provide comprehensive health services to their members and offer financial incentives to their members to use providers in their network. Health insurance is one of the least understood types of insurance; many people feel they do not need health coverage, but just one major illness or accident can force you into bankruptcy when you can’t pay your bills. This is why you need to understand all the different types of plans available and what plan would best suit your needs and budget. Meeting with an insurance professional and asking the right questions, can save you many sleepless nights of worry and provide you with some peace of mind.

Life Insurance

There are some basic things to consider when you are assessing your life insurance needs. You should first consider your financial situation and the standard of living you would want your dependents or survivors to maintain. Would you want a policy that would cover funeral expenses and final medical bills, or do you have a family to consider where your coverage would also pay outstanding debts, child-rearing expenses, and educational costs? There are two main types of life insurance available. They are Term Life and Permanent or Whole Life.

Term provides death benefit protection for a specified period of time. You can buy a policy in increments of 10, 20 or 30 years. These are usually less expensive, but your rates can increase each time you renew your policy. With Permanent, the costs of the policy are stretched out over a longer period of time, usually spread out over your entire life. Permanent can also be used as a savings vehicle. Once the premium has been paid, the company invests the additional funds. It’s a very important choice as to what insurance company you choose. A knowledgeable and experienced agent can answer all of these and your personal questions about life insurance.

Disability Insurance

Is disability insurance really necessary? Many of us can easily become sick or disabled tomorrow and not be able to work for two or three months. Would you have enough savings to cover your living expenses? There are two types of disability insurance. Short term and long term disability.

Short term will pay you a percentage of your salary for a short period of time. These policies are usually not very expensive, and usually cover a period of three to six months. Long term disability insurance picks up where your short term leaves off. Long term will pay a percentage of your salary until you are 65 years old. Disability insurance can be costly when you by it on your own, but it should be a part of everyone’s financial plan. It could easily be argued that you need disability coverage more than life insurance.

Long-term care Insurance

Another form of insurance that people around 50 years of age should consider is long term care insurance. There are many confusing forms of this insurance, but it essentially covers costs you would incur when you can no longer perform activities of daily living, such as dressing yourself, bathing yourself, or the need of skilled nursing care at home or in a care facility. Medicare and Medicare supplemental insurances don’t cover most long term care expenses. This is a very important insurance, you would need the help of an insurance professional, one who specializes in long term care insurance, to make sure you have the best coverage to fit your long term care needs.

Homeowner’s Insurance

If you are a homeowner and you have a mortgage on your home, your lender requires you to have homeowner’s insurance. There is much more to consider than how much your coverage will cost, you need an adequate policy that will give you the right level of protection; plus special provisions for your valuables and other possessions. You may need additional coverage for things such as earthquakes or floods. Before you get a policy, you will need to take an inventory of what you have in your home. Know what your insurance limits are, learn the difference between replacement-cost and actual-cash-value coverage. Again, consulting with an insurance professional and one who will listen and understands your specific needs is essential.

With all of the different types of insurances available, it is best to be prepared when selecting a policy. Choosing the wrong insurance policy can have disastrous consequences for both you and your family. There are many decisions that need to be made when looking for insurance, such as deciding what type of insurance you would need, and also considering what you can afford. You want to be able to speak to an insurance agent who will not pressure you or try to sell you insurance coverage you do not need. A professional can suggest and compare different plans and advise you which plan would best fit your own unique needs. All the while, offering this service at no cost to you.

How long could you and your family get by without your income? A month? Maybe three? What would happen if you were unable to work for a year or more? The simple fact is that most of us don’t have the cash reserves to weather an unexpected loss of income in the event a serious injury or illness prevents us from working. And besides, you don’t want to deplete the money you’ve been saving for retirement or your children’s education just to keep the bank from foreclosing on your house.

Think you don’t need disability insurance? You’re healthy and you don’t work in a high-risk occupation, right? So what’s the chance anything could happen? According to a Gallup survey, most people estimate they have only a 16 percent chance of becoming disabled during their working years. But statistics show that a 35-year-old individual has a 50 percent chance of incurring a disability for 90 days or more before they turn 65.

You can’t predict when you’ll need disability insurance or why. But consider that back disorders are the most commonly cited conditions that cause working limitations, followed by heart disease and arthritis.

“Disability insurance protects your family’s financial security. Plus, benefits can be paid directly to you – you can receive a benefits check made out to your name, which you can then use to pay for your living expenses,” said Brad Buechler, first vice president and actuary at Mutual of Omaha. He pointed out that almost 50 percent of all residential mortgage foreclosures are brought about by a disability.

Even if you have long-term disability insurance through your employer, you may want to consider an individual policy as well. Group long-term disability insurance benefits offered through employers typically guarantee replacement of 50 to 60 percent of your salary and begin when sick leave and short-term disability benefits stop. This may not be enough to meet your needs in the event of disability. Also keep in mind that benefits from an employer-paid plan generally are taxable, while individual policies pay benefits free of income tax. Finally, individual coverages are portable and don’t automatically terminate if you change jobs, unlike group coverages obtained through your employer.

To determine if an individual disability policy is right for you, figure out if the total benefit from your group policy would be enough to support you and your family. Typical expenses for most families include groceries, mortgage payments or rent, utility bills, car payments and clothing. Make a list of your expenses and then ask yourself the following questions:

* Do I have disability insurance through my employer? If so, are the benefits sufficient to allow me to maintain my standard of living if I become disabled?

* If my current benefits are not sufficient, what expenses will I cut if my income is reduced by half?

* What other sources of income do I have in the event I can’t work?

* Would my spouse’s income be sufficient to pay my family’s bills?

A good rule of thumb, according to Mutual of Omaha’s Buechler, is to allocate 1 to 2 percent of your income for supplemental insurance, such as disability coverage. The cost of an individual disability policy is reasonable, especially when you consider what is at stake if you don’t have the coverage and become disabled, a much more likely event than most people realize.