Save money on insurance and avoid making serious mistakes when you shop for insurance policies with these 7 rules as a guide.
Rule 1: Financial Risks
Only buy insurance for financial risks you cannot manage on your own. Don’t handle insurance as a way to cover any or all losses no matter how small or insignificant. This is a waste of money. Insuring your home with homeowners insurance is a good choice, but taking out expensive, comprehensive insurance for a very old car is a waste of money.
Rule 2: Shop Around
Get a few insurance quotes from different Insurance Companies. Most Insurance Companies provide an online quote service, as well as a telephonic quote service via state of the art call centers. Do not immediately accept the first or cheapest quote. Make sure that the policy covers your lifestyle and individual needs.
Companies that sell directly to the client will also save you additional money for a middleman or broker. Have a look at the benefits the different companies offer, as well as any low-cost Additional Options provided to enhance your basic policy.
Rule 3: Never Lie on a Policy Application
Your policy can be cancelled if it is discovered that you have given incorrect information.
Health, life, and disability insurers run severe background checks on applicants through the Medical Information Bureau, so you can get caught when providing inaccurate information.
Rule 4: Don’t Buy Specific-Risk Policies
Your insurance should provide the broadest coverage you can get. Buying insurance cover against specific illnesses like cancer defeats the purpose of having an insurance policy. If you have ulcers or other medical issues, your cancer insurance will not help you. A much safer option will be to get comprehensive medical coverage instead.
Rule 5: Never Cancel One Policy until You Have a Replacement Policy in Place
You will be uninsured for however long it takes to get a new policy. And if disaster strikes during this period, you could be financially ruined. This rule applies to everyone, but especially for the elderly, since older folks sometimes have trouble getting health and life insurance. Please keep this important information in mind!
Rule 6: Get a High Deductible or Excess
You save money by having insurance policies with high Excess or Deductibles. The premium for high-deductible policies is always lower. Not only that, but you save yourself all the trouble of filing a claim and needing to haggle with insurance company representatives if you have a high deductible and you don’t need to make as many claims.
Lately, most Insurance Companies are offering to pay cash back to policy holders after 4 or more years remaining claim-free. This should be an additional incentive not to claim for any and every mishap.
Note: The more you claim, the more inflated your premiums will become, due toe being viewed as high-risk by your insurance company.
Rule 7: Rainy Day Account
While you can save money on your insurance premiums by following the rules mentioned earlier, it’s probably a big mistake to use that money for, say, a trip to Hawaii. Instead, use any savings to build a nice-sized rainy day fund that you can draw on to pay deductibles. A big enough rainy day fund can cover both periods of unemployment and your insurance deductibles.
Keep these guidelines in mind and you may save more money than you expect on the long run!