For many, buying insurance is akin to a colonoscopy. You know you have to do it, but you put it off as long as possible, expecting it to be a long, painful procedure.
Buying insurance doesn’t have to be unpleasant.
Here are five insurance tips that will make your buying experience a breeze, no matter what type of coverage you are in the market for.
Insurance tip #1: Do your research
The best way to make buying insurance a breeze? Research. The more you know going in, the more confident you will be throughout the process.
Fortunately, there are a number of online resources to gain knowledge. You can learn the features of different types of insurance, determine what you need and don’t need, check out multiple insurance carriers, obtain quotes, and find a reputable agent.
Insurance tip #2: Use a reputable, independent agent
A knowledgeable insurance agent can make the process easier and less time-consuming. They offer recommendations and do a lot of the legwork. For some types of insurance like disability and life insurance, you need an agent to navigate the complexities of the policy.
If you don’t have an agent, choosing one can make the buying process even more tedious. To make it easier, ask friends and family members for referrals. Read online reviews of agents and check with the Better Business Bureau for ratings and complaints.
You will also need to choose between two main types of insurance agents: captive and independent.
Captive agents typically represent one company. They are limited to selling that company’s policies.
Independent agents are contracted with multiple insurance companies. They serve as independent contractors. They are compensated by a commission percentage of their sales.
Most experts suggest working with an independent agent to have multiple policy options. The more choices you have, the better underwriting you can obtain and the less you may pay in premium.
Insurance tip #3: Know what you need before buying
Insurance agents are salespeople. Their job is to sell you something. Their success is often tied to how much they can sell you.
A reputable agent will limit their recommendations to your budget and what they perceive to be your insurance needs. But it’s in your best interest to do your own research and understand to the best of your ability what you need and don’t need. Without proper preparation, you may end up spending more than you anticipated and buying more coverage than you need.
For example, insurance policies come with a number of optional riders. These riders typically add to the cost of your policy. While some of these riders can enhance your coverage, others may be unnecessary.
A life insurance agent may try to sell a whole life insurance policy instead of a term policy by touting whole life’s cash value component. However, whole life is considerably more expensive than term life. There are also a number of online calculators that can help you determine the amount of life insurance coverage you need to help you not buy too much.
Insurance tip #4: Understand how your policy is underwritten
The insurance buying process can become more painful during underwriting. It’s frustrating to find out an insurance company may penalize you for something you didn’t realize would be a problem.
Insurers underwrite disability coverage based on the risk of an applicant filing a claim. The less risk you pose of filing a claim for a house fire, long term disability or untimely death, the less you will pay in premium.
Life and disability insurers have similar underwriting standards, which include age, health, and lifestyle. Your profession is also a major component of underwriting.
Your driving record will be considered in life, disability and auto insurance policies. Homeowners' policies have a number of underwriting minefields, such as the breed of dog you own, your home’s location, or the presence of accessories like a fireplace or swimming pool.
Be honest with your agent during the application process. If there is something potentially objectionable about your underwriting, your agent can often help you find the carrier that offers the best rate for those circumstances.
Insurance tip #5: Find out how to save on your policy
Most insurance policies and carriers offer ways to save on premiums.
For example, there are a number of ways to save on disability insurance. One is using a graded premium structure. This means you pay less when you start the policy but your premium increases over time.
Property/casualty insurers enable you to save by bundling home and auto insurance. Many insurers also offer discounts for safe driving.
Many carriers also offer a deduction for paying by automatic draft from your account and paying the premium annually instead of monthly.
Research ways to save on your insurance to maximize your savings during the buying process.
Jack Wolstenholm is the head of content at Breeze.
The information and content provided herein is for educational purposes only, and should not be considered legal, tax, investment, or financial advice, recommendation, or endorsement. Breeze does not guarantee the accuracy, completeness, reliability or usefulness of any testimonials, opinions, advice, product or service offers, or other information provided here by third parties. Individuals are encouraged to seek advice from their own tax or legal counsel.