My Future - March 2010
You Comparison Shop for Shampoo, Why Not Insurance?
Real Savings Can Be Had by Looking at What You Need
Are you one of millions of Americans who loves to find a bargain and get the most for your money? Comparison shopping for clothes and groceries is relatively easy. You know what you like and what you need. You know your sizes and your tastes. There are brands you know and retailers you can trust. When was the last time you compared your current homeowner's, auto, health and life insurance to similar coverage offered by other companies?
Unfortunately, many consumers feel overwhelmed when it comes to shopping for insurance products. They feel there are too many - or not enough - options, they don't trust salespeople and feel they don't know enough to make an informed decision. As a result, they may wind up with "cookie-cutter" coverage selected by another person that, at best, costs more than it should and, at worst, doesn't provide the benefits they need, when they need them.
According to the Ohio Department of Insurance (ODI), comparison shopping for insurance is essential because it is so important to our daily lives and bottom lines. The first step is to look at the different types of coverage you need.
The key to homeowner's insurance is to look for ways to bring your costs down by bringing your insurance in line with your current lifestyle.
- Reassess the current value of your home or condominium and your possessions to see whether you need to increase or decrease your insurance to cover their replacement costs in today's market.
- If you are retiring, you likely will be around the home more often and can personally look after your home and possessions. As a result, many insurance companies offer discounts to retirees because of lower risks of theft or property damage.
- Reassess the value of your expensive possessions, such as jewelry, heirlooms or art, for which you may need a special "floater policy" for extra insurance coverage.
- If you purchase a vacation home or boat, see if you can consolidate your homeowner's coverage from the same insurer and qualify for a multiple policy discount.
When it comes to auto insurance, it's often a great idea to admit your age.
- You also may qualify for discounts if you take a senior driving refresher course, limit the amount of driving you do or agree to drive only during daylight hours.
- If you have worked for the same employer for many years, you may qualify for an auto premium discount.
- If your children have turned 18, left home and are not regularly driving your vehicle, your auto premiums could be lower.
- If you are driving an older vehicle, consider dropping collision insurance, since the cost of coverage can exceed the car's value.
As you age, health insurance considerations become paramount. Here are several issues you may need to address. Americans are eligible for Medicare at age 65. If you plan to retire sooner, you'll need to consider health insurance coverage until then.
- If you decide to retire or have been laid off from your job before you become eligible for Medicare, check to see if you can continue to get health insurance at the group rates from your former employer under COBRA (Consolidated Omnibus Budget Reconciliation Act).
- If you are no longer employed and your COBRA benefits have run out, but you still are not eligible for Medicare, consider a catastrophic or high-deductible medical plan, which typically carries lower premiums than other individual policies.
- Carefully weigh whether you need disability insurance. Important considerations include whether you are still employed, your age, how many years until you are eligible for Social Security, your individual financial needs and your ability to pay the premiums, which typically escalate significantly as you age.
Now is a good time to re-evaluate your life insurance to determine whether you still need as much coverage as you once did.
- If you are covered by a group life insurance policy through your job and are planning to retire soon, ask if you can convert it to an individual policy.
- Review your policies to determine whether you can decrease coverage. Consider these factors: Is your spouse alive? Is your home paid off? What other financial assets do you have? Are your children financially independent? Do you have high debts or anticipate estate taxes that could burden others when you pass?
- Update your beneficiary designations, particularly if you have divorced, your spouse has died or you have remarried.
- If you are strapped for cash and are considering selling your life insurance policy to a third party in return for a sum of money, called a life settlement, carefully consider the impact of this transaction. You may be required to pay taxes on the amount received and the deal may affect your eligibility for public assistance.
Most importantly, no matter what type of insurance you're looking at, don't guess. If you don't have the answers you need to make an informed decision, ask the experts. The Department of Insurance offers free and unbiased information at 1-800-686-1526. Visit www.insurance.ohio.gov to review consumer guides, tip sheets and toolkits.