There are three categories of mistakes many people make when it comes to their insurance protection:
Not Purchasing Needed Insurance
The first mistake, with potentially the most devastating financial consequences, is not purchasing needed insurance. This category of mistake often involves life and disability (income protection) insurance where otherwise prudent people adopt an “It won’t happen to me” mentality and forgo purchasing valuable – and affordable – coverage to protect themselves and their loved ones in the event of a financial catastrophe.
What happens if you became sick or were injured and unable to keep working?
How long could you go without your paycheck?
What happens if you make a hasty exit from this life?
Would your spouse and family have the financial means – without your income – to buy groceries, pay the mortgage, and maintain their standard of living?
I’ve found many individuals also make the mistake of an “all or nothing” approach when it comes to not purchasing needed insurance. Over the years I’ve witnessed numerous instances when a client asks about life insurance with a specific coverage amount in mind. When they find that amount doesn’t fit within their budget they make the mistake of going without that insurance entirely.
If your family would need $500,000 of life insurance and all you can reasonably afford is a $250,000 policy, buy the $250,000 policy! Your family would be far better off with $250,000 than to be left destitute if you make an untimely exit from this life.
Not Understanding What Insurance You Need and/or Purchased
While the first mistake is about neglecting to purchase needed insurance the second mistake is not taking time to understand what coverage you may need and/or what you have purchased.
While it is certainly understandable that insurance can sometimes seem complicated and confusing, most insurance agents are perfectly willing to review policies, explain coverage options, and answer questions – whether at the time you request a quote, when you purchase a policy, or any time questions arise – to make certain you understand and are purchasing appropriate coverage.
Unfortunately, when a disaster strikes is when it’s too late to question whether you have appropriate or adequate insurance protection. If you don’t understand your coverage or wonder whether a certain type of damage is covered ask your insurance agent. Being an informed buyer requires having a clear understanding what insurance you may need and what your policy covers.
Believing All Insurance Is The Same
There are a lot of insurance companies selling the same types of insurance policies. While many of those policies offer similar coverage benefits every insurance company is not going to provide you with the same service – particularly at the time of a loss.
While price is certainly an important consideration when you’re shopping for insurance you should also take time to learn about the insurance agent and company. Ask friends for recommendations, research on the internet – find out about their reputation for customer service, including who will assist you when you have a question or policy change and how claims are handled.
A local insurance agent can be an excellent resource to help you make informed coverage decisions and to assist you after purchasing a policy with coverage and billing questions, policy changes, and claims.