Crucial Insurance Questions Answered

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InsuranceIt is important to have a comprehensive, cost-effective network of insurance coverage, but knowing exactly what you need and how much can be a puzzle. Although we are licensed for most types of insurance, we only provide life and long term care insurance, mainly because they can be crucial tools in protecting your assets as well as estate planning.  We feel the other types of insurance are complex enough that they need a specialist to decipher which type of policy, amount of coverage, and the benefits you will need for your specific situation.  As always, we are happy to give you the names of insurance agents who specialize in the types of policies that we aren’t as familiar with.  Namely health, home owners, auto, commercial, disability and supplemental insurance.  To help you have a better educated discussion with these agents, we have listed some commonly asked questions about insurance, and their related answers:

1. What types of insurance do I need? For the most part, it’s a good idea to insure at least four key areas: life, health, possessions, and finances.

2. Regarding possessions, is homeowners insurance the most important? A home is likely to be the single biggest investment many of us will make, so homeowners insurance is extremely important. The issue facing most homeowners is how much coverage to purchase, and the rule of thumb is not to skimp. If possible, always pay for guaranteed replacement coverage, if in the unfortunate event that your house is destroyed, it is fully replaceable, regardless of the cost.

3. Guaranteed-replacement coverage is all I need, right? While this coverage will replace your home, the contents may not necessarily be covered. For example, high-priced items such as televisions, sound equipment, antiques, jewelry, collectibles, etc., may not be covered at all or may be inadequately covered. Ask for riders that specifically cover those items. Additionally, homeowners insurance typically doesn’t cover flood or earthquake damage, so you will need to contact a private insurer if you live in an area that is likely to suffer damage at some point due to either of these two natural disasters.

4. Does homeowners insurance cover me if someone gets hurt while on my property and decides to sue me for damages? Homeowners insurance may cover this type of situation up to a certain liability limit, but likely wouldn’t cover everything. You can ask for an umbrella policy, which would add additional liability coverage upward of $1 million fairly inexpensively.

5. Why is auto insurance so expensive, and how can I keep the costs down? The bulk of any auto insurance premium is the liability protection. You should never skimp on this element of auto insurance – look for coverage of at least $100,000 per person, another $100,000 for property, and $300,000 per accident. If available, uninsured-motorist coverage is also a great idea in case you’re ever involved in an accident with a driver who doesn’t have insurance.

In order to keep premiums reasonable, consider raising your deductibles. You will have to pay more out of pocket in the event of a claim, but your recurring premium payments will be significantly lower. You can also eliminate collision coverage, which covers damage to your car in the event you are at fault, but this isn’t recommended if you have a newer vehicle.

You can also:
• Drive safely (good drivers get better deals)
• Insure all cars in your household with the same company (multi-vehicle discounts are common)
• Don’t smoke (statistics show that smokers have more accidents than nonsmokers)

6. Do I really need life insurance? This one’s tricky as there are so many different types and uses of life insurance. If nobody depends on you financially, then life insurance may be optional. However, if you’re married or have dependents, life insurance can be an essential form of protection. It also carries with it many inherent tax benefits.

7. How much life insurance do I need? There’s are many variables that affect how much you need – it is reflective of your current income, expenses and even future expenses for your dependents. The purpose of the life insurance also plays a major role in determining how much to purchase.

8. Health insurance is something I can’t do without, right? According to recent Census data, more than 46 million Americans do not have health insurance. Many employers offer health insurance to employees under group rates, so take advantage if you have the option to. For the most part, there are two types of health insurance plans: managed care and fee for service.

Under managed care (HMOs, PPOs, etc.) the employee is responsible for a co-payment for doctor visits and other services. In exchange, the program provides a list of physicians to choose from for care. The main downfalls: your doctor or specialist may not be on the plan, and you may have to wait extended periods of time before seeing someone. Under a fee for service plan, premiums tend to be more expensive. The main advantage is that you can usually go to any doctor you want. Fee-for-service policies usually pay 80% of patient expenses after deductibles, and the patients are responsible for the remaining 20%. If you don’t have an employer-sponsored plan or are self-employed, make sure you have something in place, as having nothing could literally wipe you out financially in the event of a major medical loss.

9. What is COBRA exactly? COBRA stands for the Consolidated Omnibus Budget Reconciliation Act of 1985. Under this act, if you resign from a job or are terminated for any reason other than pure misconduct, you can continue to be covered under your former employer’s health care plan for up to 18 months. Sometimes, spouses and children are eligible as well. The downside is that premiums are usually fairly expensive because you’re essentially paying the entire premium on your own. The idea behind COBRA is to provide you with a health insurance option until you can arrange for some other kind of health insurance.

10. Does health insurance help if I’m sick or injured and out of commission for a while? Health insurance helps pay for your medical expenses. However, disability insurance is what keeps income coming in if you can’t work for a long period of time. Disability coverage is one of the more commonly overlooked types of insurance, and is one that a lot of working families really need. Some employers offer it, but in many cases you will have to get it on your own. The best policies are those with waiting periods of less than 90 days – this is the time you will have to wait until you can start receiving disability payments.

Another popular type of insurance that is used in place of a disability policy is supplemental insurance. The most well known supplemental insurance company is AFLAC. These types of policies will typically pay you a one time, preset amount of money if you are injured for any reason.  Although supplemental insurance may cost less than disability insurance, the disability policy will usually pay out more for a longer period of time.

11. What about long-term care? Long-term care insurance helps pay for nursing care and other long term health care expenses as you age. Premiums can be expensive, however, so you’ll have to consider whether you can afford the premiums long term before deciding which type of long-term coverage to purchase.

Source:
http://money.msn.com/insurance/vital-insurance-questions-answered-wuorio.aspx?page=2

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