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3 Mistakes to Avoid When Buying Insurance
Most of us buy multiple insurance plans. We insure our bodies (health insurance), our property (renters or home insurance), our cars and our lives (life insurance) in hopes that we will protect ourselves from having to pay high out-of-pocket fees when the unexpected happens.
Buying insurance can be expensive, especially when you have to purchase multiple plans for yourself and your family. Many Americans overpay for insurance coverage because they lack the time or desire to conduct research or comparison shop.
Don’t over pay for insurance or settle for being underinsured. Avoid these mistakes when buying insurance and save:
1) Don’t make the mistake of assuming insurance is out of reach
According to the U.S. Census Bureau 48 million Americans lacked health insurance in 2012. An additional 30% of U.S. households have no life insurance coverage. Many times consumers forgo insurance because they think it’s unaffordable. That’s not the case according to Marvin Feldman, president and CEO of the LIFE Foundation, a nonprofit organization that educates consumers about financial planning and insurance. The 2013 Insurance Barometer Study, which found that the average consumer thinks life insurance is three times more expensive than it actually is.
When shopping for health insurance or auto insurance it’s important to ask about discounts. “Two thirds of consumers don’t realize they can get financial help if they buy their own health insurance, and they can get financial help if they go and buy in these health insurance marketplaces,” said Lynn Quincy, senior policy analyst with Consumers Union, a division of Consumer Reports. You won’t know if you’re overpaying until you conduct some comparison shopping. Health insurance discounts are often income-based, but homeowners insurance and auto insurance providers often provide discounts based on everything from memberships to good driving records.
2) Going for the Lowest Premium Alone
Insurance policies can be hard to understand. There are so many different numbers to consider between premiums, co-pays, prescription drug fees, etc. Resist the urge to choose a policy based on which one has the lowest premium. Consider what you will receive for that premium. Look into a company’s reputation before picking any plan, and make sure you truly understand what’s covered in your policy.
Selecting a provider based on premium can also hurt you, because as a general rule the higher the premium the less you pay on doctor visits. When comparing different plans make sure you compare similar plans with similar amounts of coverage to be able to perform a true apples to apples analysis.
3) Skimming Through Your Policy
Glossing over the details can cause you to miss out on discovering holes in coverage or hidden fees. It’s important to understand what your policy covers. For example, many HMO policies charge more for out-of-network doctor visits. If you have a long-time primary care physician or specialist you prefer to use you should find out whether or not they are in-network before selecting a policy.
If there is anything you are unclear about you should contact your insurance agent. They’re there to provide you with additional information and answer your questions.
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