 Insurance is notoriously complicated, and few people have the time or desire to pore over their policies. But some basic knowledge can go a long way — and that’s where an insurance agent can help, by clearing up some of the most common misconceptions they encounter.
Here are five things agents say are helpful for customers to know. Insurance doesn’t cover everything When it comes to insurance, “Most people don’t understand the details. For instance, they often don’t realize that most homeowners policies won’t cover flood or earthquake damage. If your home is at risk for these disasters, you need separate coverage. Auto policies generally cover only personal use of your car, so if you’ve picked up a side gig delivering groceries or meals during the pandemic, you likely need additional coverage. Otherwise, accidents you have on the job may not be covered. Insurance policies of all types also generally exclude wear and tear. Agents often gets calls from policyholders asking if their insurance will pay for things like broken dishwashers or aging gutters. The answer is no. Insurance is designed to cover sudden, accidental damage, not regular maintenance. A gap in coverage can be costly There are various reasons you might let your car insurance policy lapse, whether you’re having trouble paying your bills or you no longer own a vehicle. But this could cost you. People tend to shop insurance after they’ve already canceled their insurance, [but] unfortunately that’s a huge negative when calculating your price. After a gap in coverage, insurers view customers as riskier and charge higher rates. You can avoid this by shopping for quotes before your policy expires, buying non-owner car insurance if you’re between vehicles and asking your carrier for leniency if you’re struggling to make payments. You can’t get coverage for something that’s already happened. If you get into an accident and your car needs repairs, you might want a rental vehicle to help you get around. But by that point it would be too late to add that coverage, Your auto policy would pay for this only if you had rental car coverage in place when the accident happened — not if you added it the day after. The same goes for other insurance. For example, say a storm leaves an inch of water in your basement, but you haven’t purchased flood insurance. You can still buy coverage for future disasters, but it won’t pay for damage your home has already sustained. You shouldn’t skimp on liability insurance Many people focus on buying enough coverage for their belongings, but the liability insurance on your policy may be even more important. It pays for injuries or property damage that you’re at fault for. A lawsuit is going to be more devastating than losing your laptop [or] ring. Including legal fees, the cost can total hundreds of thousands of dollars, especially if someone is seriously injured. To protect yourself financially, buy enough liability insurance on your auto and home insurance policies to cover your net worth. Your agent is there to help Confused by your policy’s fine print? Don’t struggle through it on your own. They are there to take care of you and walk you through this process. It's a good idea to interview agents to make sure you trust them and they have the services you need. Once you’ve found an agent you’re comfortable with, it's recommended to touch base once a year or whenever there are changes in your life. This might include getting married, buying a new car or renovating your home, all of which could trigger updates to your insurance. The most important thing to have in your agent is trust, You get so busy with your kids and your job and whatever else you have going on; you shouldn’t have to think about what you need your insurance to do. Source: MSN Money
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 You can part your hair down the middle and slather on all the wrinkle cream you want — unfortunately, aging is inevitable. Though it may be a tough realization, you are getting older. And that means you should consider getting life insurance, even as a young adult.
Life insurance is designed to provide for your loved ones if (and when) you die. You pay into a policy over time, and after your death your beneficiaries receive a payout to help them make ends meet. It may seem morbid to think about, but it’s a smart way to plan for the future, despite that future still seeming far away. Experts often advise people to look into life insurance when they’re young adults because that can be less complicated and less expensive than purchasing it later. The pandemic has made it even more of a priority: In a recent survey, 19% of Gen Zers and 17% of millennials said they planned to spend more on life insurance this year than last. Members of both age groups identified the pandemic as a major reason for the shift. If you’re among them — or just simply curious — read on to find out how to buy life insurance if you’re young. 1. Figure out whether you need life insurance At its core, life insurance is a contract between a firm and a policyholder who pays regular premiums. If/when the policyholder dies, the firm gives their beneficiaries money to make ends meet. Policies can cover virtually any type of expense, including funeral costs, housing, food and so on. Two other big problems are typically replacement of income to the deceased’s family and elimination of debt in the event of death. Deciding whether to get life insurance is a highly personal decision. It requires asking yourself some tough questions. An easy way to know if you need life insurance is to consider if someone would suffer financially if you were to pass away, if the answer is yes, then you need life insurance. 2. Time it right Purchasing life insurance can feel counterintuitive. The best time to buy life insurance is when you’re young and healthy — even though you (hopefully) won’t need it to kick in until you’re older. The younger you are, the less risky you seem to an insurer, and the lower your premiums are likely to be. The opposite is also true. “If you wait ’til you’re sick or dying, it’s too late, You’ll either be denied a policy or its premiums will be unaffordable. It's recommended to checking in with yourself about it at least once a year. It’s not a bad idea to consider it whenever you tick off a new milestone, as well. Buying a house, getting married, having a kid — those are some of the big life events that cause people to step back and say, ‘Hey, my situation has changed. This might be a time to update my financial plan, and one of those things could be purchasing life insurance. 3. Choose a life insurance type There are two major kinds of life insurance: term and permanent. Term life insurance has a specific time period associated with it. You’ll pay into it for, say, 10 years, and if you’re still alive when the decade is up, your coverage ends. Permanent life insurance can stay in place forever as long as you meet certain criteria. Unlike term life insurance, a permanent policy has an investment value, known as a cash component, that you can tap during your life, to pay premiums or to borrow yourself. That added benefit usually results in higher premiums. (There are subcategories within these types of life insurance, too, including universal and whole.) Consult a financial advisor or independent life insurance company on the best life insurance policy type for you. Working with a financial professional can help you figure out how much coverage you need for your own personal situation. Don’t be shy about calling on one since most are tele-advising, and their expertise can protect you from making financial missteps. 4. Determine the right benefit The policy’s payout, or the so-called “death benefit,” typically ranges from the tens of thousands of dollars to the millions. To figure out what you may need, do some research by determining how much you need in the even your family lost its income. You need to take into consideration what liabilities and assets you have, how much income you’d need to replace, whether you need to plan for education costs, and more to determine how much coverage you need. 5. Find an insurer (and vet them) If you have a job with benefits, you may have some life insurance coverage through work. Though it may help you with your decision, you might want to avoid relying entirely on your work life insurance. It's typically group term life insurance provided for free or at a discount to employees. It’s often not sufficient. Having individual life insurance in addition to your policy through work is important since group life insurance coverage usually ends when you leave your job. When evaluating various insurers, look at how long the company has been around, what its financial strength is, and whether you’ve seen negative headlines about its rates changing. 6. Apply for life insurance Underwriters use risk to determine rates. So to save money on life insurance, experts suggest getting a medical exam to prove how healthy you are. In non-pandemic times, this typically involved blood and urine tests. But the coronavirus crisis changed things. These days, you can simply fill out a questionnaire or give the insurer other personal details, like age, gender, job, driving record and prescriptions. You can get a life insurance policy without even leaving the house. The good news is that these companies are making purchasing life insurance easier than ever, Many companies are using e-signatures, online applications, and sometimes not even requiring blood or urine tests, making life insurance more accessible to more people. 7. Review your policy You’re not done quite yet. After you lock in your life insurance, you need to remember to tweak it as time goes on. Policies often need to be adjusted after a significant life event like getting married, having a baby, getting that promotion at work, starting a business or preparing to retire. Schedule a review with your life insurance agent as soon as possible after a life milestone to make sure you’ve got the right amount of coverage. You might also need to update your life insurance beneficiary. When you’re young and single, you may choose a parent or sibling to receive the payout in case of your death. But you’ll probably want to change that to your spouse or child as you get older. Source: MSN Money  Life insurance comes in many forms, so it’s important to pick the right insurance for you and your family. Although sometimes life insurance can seem like an unnecessary expense, for most families it’s absolutely essential. One of the guiding ideas behind life insurance is to ensure that any large financial obligations are satisfied in the event that your family experiences a loss of income. So, the key to picking the right life insurance for your family is to analyze where your income comes from and what your large financial obligations are. Although every family’s situation is different, here’s a look at some of the most common uses of life insurance and how it can act as a safety net for your family.
Primary Coverage: Breadwinning Spouse The focus of most life insurance policies is on the breadwinner in the family, for obvious reasons. If a family loses its primary source of income, then the financial security of a family is immediately thrown into doubt. Life insurance can provide a relatively immediate source of funding to take care of a household’s monthly bills until a source of income can be restored. Life insurance comes in many forms, so it’s important to pick the right insurance for you and your family. Although sometimes life insurance can seem like an unnecessary expense, for most families it’s absolutely essential. One of the guiding ideas behind life insurance is to ensure that any large financial obligations are satisfied in the event that your family experiences a loss of income. So, the key to picking the right life insurance for your family is to analyze where your income comes from and what your large financial obligations are. Although every family’s situation is different, here’s a look at some of the most common uses of life insurance and how it can act as a safety net for your family. Secondary Coverage: Nonearning Spouse Although there’s a clear need for insurance coverage for the primary breadwinner in a household, a nonearning spouse should usually be covered as well. Life insurance can help pay for services that used to be covered by the nonearning spouse, such as child care, cleaning or home maintenance. These services, which can often be taken for granted, are quite expensive when you have to hire outsiders. How Much Insurance Do You Need? The specific amount of life insurance you buy will depend greatly on your specific financial circumstances, and you’re best served by discussing your options with a licensed life agent. However, there are some general rules of thumb you can use to approximate how much life insurance you might consider getting. Life insurance in general serves two main purposes: Providing a financial foundation to support your family for years to come and paying off any major debts so that your nonearning survivors don’t have to worry about them. For the financial support portion of the equation, some pundits suggest simply multiplying your annual income by 10 to arrive at a life insurance amount. However, this should be tailored to your family’s specific needs and desires. If you want to provide enough insurance to cover your spouse for the rest of his or her life, along with your kids until they reach the age of majority, simply count up the number of years you want that money to last and multiply that by your annual income. For the debt payoff side of things, first add up all of your debts, including your mortgage, auto loans, college expenses and credit card debt, in addition to any other obligations. Then, subtract your existing liquid assets, including any existing life insurance such as you may have from your employer. If you add up your income replacement needs with the amount you’ll need to pay off all of your debt, you should arrive at a ballpark figure for how much life insurance you might want. How To Find the Best Life Insurance Policy for Your Family There are many kinds of life insurance, from term and whole to universal life insurance and more. The best policy for your family will depend on your needs and a cost/benefit comparison among the different types. Your employer may also offer group rates and varying levels of coverage. To find the best combination, analyze your income, debts and future needs and consulting with at team at USA Mutual Insurance to get started with a Life Insurance policy. Source: MSN Money |
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