Exploring the Insurance Maze
There are few financial issues
that are more important than insurance because of what it means
to forestall severe financial hardship if a sudden event such
as a death, car accident, or natural disaster strikes your family.
At the same time, you want to avoid buying costly and unnecessary
Keep in mind three primary questions
when searching for insurance. First, what types of insurance
do you need—life insurance for your family’s financial
security, protection from liability due to accidents, or to
guard against property damage from accidents, robbery, fire,
or storm? Second, how much insurance do you need to protect
against the risks you have identified? Third, where can you
go to get reliable insurance that is priced competitively?
Where should you start? After
you have determined what risks you want to cover, you can either
shop for insurance through a trusted agent or on your own through
the Internet. Agents can be valuable if they help you analyze
your insurance needs. A good agent can help you through the
maze or insurance contract language, particularly if you are
looking at a complicated long-term care contract or property
and casualty insurance. However, if you are limiting your insurance
hunt to a fairly straightforward term life insurance contract
and you are willing to educate yourself on the many choices,
then you probably can move forward on your own. Remember, an
agent working for a specific insurance company will push that
company’s policies. Therefore, you should consider choosing
an independent insurance agent because he or she can help you
sort through the insurance possibilities.
If you chose the Internet, www.Insure.com
is a good source of comparative information and can get your
insurance quotes. If you go to other sites, be careful not to
give out your personal identifying information such as your
name, address, telephone number, and social security number
unless you are ready to contract with the company for insurance.
After all, there are many legitimate sites that will give you
quotes without asking for this information upfront.
How can you check to see if the
insurance company or agent is reputable? Insure.com is a good
place to check for national complaint and lawsuit records for
companies, and the Wisconsin Commissioner of Insurance (OCI)
is a good place to check to see if it the state has taken action
against the company or agent (http://oci.wi.gov/pub_list/pi-030.pdf).
Just last year, OCI brought 158 serious actions against insurance
companies for a total of just under $400,000 in penalties. OCI
also denied 102 insurance agent licenses and revoked another
34 licenses for serious violations of state insurance laws.
What types of insurance should
you avoid? Generally speaking, the following types of insurance
are not competitively priced and prey on your fears: mortgage
life insurance (unless required by your lending institution),
insurance on outstanding credit card balances, and flight insurance.
The same type of coverage is built into basic life and disability
policies and will cost you significantly less.
Where can you go for more information?
The Wisconsin Commissioner of Insurance publishes a helpful
Consumer’s Guide to Insurance at: http://oci.wi.gov/pub_list/pi-051.pdf.