6 Common Insurance Mistakes to Avoid
Having at least a basic insurance plan, is essential for anyone. While workplace benefits may cover your insurance needs, not all jobs offer insurance, or they may have limited options. It's important to figure out what insurance works best for you and your family. Choosing an insurance plan can be complicated, so when doing so, try to avoid these mistakes.
Mistake #1: Not Having (Enough) Health Insurance
Whether you're trying to save money or think you're young enough to get by without it, foregoing basic health insurance coverage can be an incredibly costly mistake.
When it comes to health insurance, you have options. If your employer does not provide coverage, you can choose to obtain a policy through the Marketplace, created by the Affordable Care Act. There are different levels of coverage, from bronze (cheapest) to platinum (typically the most expensive). (Catastrophic health plans are available for people under 30, or people with a hardship or affordability exemption.) Each level pays a different portion of your health care bills. As you compare plans, look into what premium tax credits may be available to use, as these can help offset your monthly premium costs.
Less comprehensive coverage or basic insurance plans can equate to lower premiums every month. The problem is you may end up paying the difference anyway when it comes to your deductibles and out-of-pocket expenses. By not giving yourself enough insurance coverage upfront, you’re taking a gamble of whether or not you’ll actually need to use it. Insurance companies can sometimes find less obvious ways to make their money back.
Some examples include:
- Higher co-pays during doctor visits
- If a doctor’s visit is out of your network, out-of-pocket costs may be higher
- Prescription drugs may be more expensive
Consider how often you visit the doctor’s office annually and any prescriptions you’re currently on. This can help you find an insurance policy that covers what you need without breaking the bank.
Mistake #2: Over Insuring Yourself
When it comes to auto, home or life insurance, talk to an insurance agent to figure out the right amount of insurance for your specific circumstances. Just as you don’t want to under-insure yourself and your possessions, over-insuring could be equally as costly.
Mistake #3: Not Asking for Discounts
If you don’t ask for a discount, then you may never know if you would have gotten one or not. There are possible hidden discounts you can qualify for, but if you don’t tell your agent and ask what you can get, they will never know that they need to apply them to your account.
Mistake #4: Not Looking Around for New Policies
You should be shopping around for a new basic insurance policy every few years. In some instances - especially if certain circumstances have changed - you can save money by updating your policy or switching providers. Some insurance companies may even offer discounts based on things like where you work or where you went to college.
Mistake #5: Misunderstanding Your Policy
Make sure that you understand what your policy covers, under what circumstances it can be used and what you can still expect to pay out-of-pocket. Having a thorough understanding of your policy now means avoiding unwelcome surprises when it’s time to file a claim.
Mistake #6: Opting Into Group Life Insurance Automatically
If you choose to take advantage of your company’s group life insurance policy, remember that your rates aren’t locked in - they could go up. Consider any additional life insurance offerings provided through the workplace carefully before signing on. You should know exactly what you’re paying for, and if the premiums are worth the potential benefits in your particular situation. It is important to know if the insurance is portable.
Whether you’re looking at health, auto, life or any other insurance policy, there are plenty of considerations to keep in mind.
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The author does not intend to provide investment, legal or tax advice as these materials are for general educational purposes only. Please consult your legal, tax or investment professional for advice on your particular situation. This material is derived from sources believed to be reliable, but its accuracy and the opinions based thereon are not guaranteed. It is not intended to be a solicitation, offer or recommendation to acquire or dispose of any investment or to engage in any other transaction. Investing involves risk including the possible loss of principal. Past performance does not guarantee future results. Please refer to RRCM’s Form ADV Part 2 for additional disclosures regarding RRCM and its practices.