Insurance Simplified
In this article I will just break down insurance so as to take the confusion out when shopping for one:
Insurance covers 4 key components:
-Life
-Property
-Income
-Health
Depending on your age, income statues, and life stage you may need anywhere from two to all four types.
An insurance policy has 3 major components you should look at when purchasing it:
1. The Premium
This is your most recognizable and easiest part to understand. Your premium is the payment you pay for that policy whether you pay for it yearly, semi-annually, or monthly. The size of the premium determines the type of coverage you will receive with your policy
2. Coverage
The coverage determines what the policy covers or does not cover in case you will ever file a claim, such as a health emergency, or property damage (accident).
3. The deductible
The deductible states how much money you will have to pay before your insurance starts their coverage, whether it is $500 or $3000, you have to put this money down first on an expense before the insurance coverage kicks in (except life insurance policies).
Sometimes the deductible is a percentage, such as 10%, and comes in various forms and added terms such as you will be covered up to $1 million in expenses, or after you pay $500 you will pay only 20% of your bill.
So the deductible comes in various shapes and forms and you must look at these more carefully than the premium, to see what kind of cash you will have to fork in order to coexist with the insurance payments.
The most important part of your insurance policy is your coverage and then the deductible. For your purposes you must examine what is covered and what is not (such as car theft). You don’t want to be happy only paying $60/month on your car insurance, only to find out when it’s stolen that it was not part of your coverage.
I will add one last segment to this article which is how you can buy insurance.
You can do so in one of the following ways:
-from an insurance agent that is not associated with the company
-an agent of the company
-directly from the company
A perk of buying directly from the company is that the policy will probably be cheaper as there will be no commission if it’s online. However, independent agents can offer you more choices because they are not bound by one insurance company.
The best way to go is based on your needs. If you need very simple car insurance you can probably go online directly to the company, but if you need a more complicated policy that you have never encountered before, it will be wise to speak with a good agent.
How do you find a good agent? Well, that’s a big mystery; you can find a good agent just like you can find a new mechanic: by asking for referrals from friends and coworkers. If they have been with an agent for a long time and can relate a good story where the agent provided them with a really good service, that’s probably a good bet.