I don't understand insurance

Insurance questions and insurance answers tend to revolve around certain insurance misunderstandings. Often people are a bit shy about asking certain questions of their agents or brokers. Have you even found yourself sitting there nodding your head when really you don't get it?

Turner's Tips thought it would be a good idea to go to the horse's mouth. So we asked some insurance professionals to give their opinion on what are common misunderstandings about insurance. In our words, here is some of the responses:

1. Most people's minds turn off when they heard the word, "insurance". They think it is hard to understand and that it will always cost a lot. Whether it is buying insurance for your car or planning for your future, there is an expectation that it is going to be hard to do and expensive. An insurance salesman is not always considered to be a person you can trust.

2. People get confused about the different types of policies. Sometimes they think that a medical insurance policy that will cover your dental expenses is the same as a business insurance policy. Another misunderstanding is that life or health insurance is the same as long term care. What a terrible jolt to find out that what you thought you paid for is not what you need!

3. People think if they have group insurance at work that they do not need anything else. This is rarely true. Group insurance can cover some but not all excess medical expenses when traveling. Group insurance does have some life insurance coverage but it can be limited to one or two times the annual income of the employee. The amount available for a spouse is much less.

4. Even business people may misunderstand the concept of co-insurance or how a deductible works. People often make assumptions that are not always correct. Insuring to value is important not only in home insurance but affect your farm or business insurance as well. This can also impact accidental death coverage, term insurance and whole life insurance. Again, it is not a pleasant surprise when you face a big increase in rates that you did not expect.

5. In business insurance there can be a real lack of understanding about the difference between a claims-made policy and an occurrence policy. Not knowing could leave you without coverage if you choose the wrong form and then do not act correctly in reporting claims.

6. People have to buy auto insurance to drive. You can't get a mortgage if you don't have home insurance. Life insurance is something that is often ignored and put off. Inflation, changes to the size of your family, buying a home, starting a business can all tie into life insurance products. In the army they say, "proper planning prevents pi** poor performance". The other common saying is, "fail to plan and plan to fail". Why would buying life insurance be any different? At some point you will buy it. Why not choose the most effective way?

7. The term "comprehensive" or "all risk" means that "everything" is covered. There is not an insurance policy that covers "everything". There is always exclusions or limitations.

8. Buying "cheap" and regretting it later. When a claim happens this can end up costing a lot more then what was initially saved at time of purchase.

The solution

So how do you resolve this problem? Get to to know your broker or agent. You can ask your friends and family if they know of someone who has a good reputation. Find someone who is concerned about you, as a person, not just a sale. This broker should show a strong knowledge of insurance. A good broker will want to work with you and show you the options available. There will be an education component to help you make good choices. A good agent will be there when times are tough, not just when things are easy.

Turner's Tips wants to thank the following members of Linkedin in regards to this article: Rita Sandstrom, Susan Caruso, Barbara Zito, Maggie Haze CRPC, Deborah Benson, Wendie Howland RN MN CRRN CCM CNLCP, Shelly Latino, Ellen Jacobs, Heather Lang, Karen Encher Skala, Beverly Schick CIC CPIW AIS, Jessica DiLella, Melody Ferguson, Evie Elphic, Pamela Bertoncin CFP, Rebecca Brewer, Stephanie Ethe, Sandra Falco, Katie Lee and Beth Paterson.

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