Winning With Finances – Coming to Terms With Insurance

It’s important to be familiar with the terminology in order to navigate the maze of options for insurance.

Annuity- An insurance product that provides lifelong benefits. Appraisal- To determine the value of a property (in order to insure for loss).
Claim- Documented demand for benefits as set forth in the insurance policy
Co-pay – A fee that you pay to receive health-care services. Insurance will cover its part.
Insurance coverage – Coverage refers to the defined scope of protection
Deductible – The amount you pay for claims before the insurance company begins paying.
Policy- A written insurance contract, certificate, and all attachments
Premium- The cost you pay to buy or continue insurance coverage
Rider – Modifications to a policy’s provisions, i.e. Addition/exclusion of coverage
Risk- The risk of losing or the probability of it.
Term- A term is a form of affordable life insurance that covers a specific time period or for a certain amount of time.
Terms – These are the written terms of an agreement
Whole life- “Permanent,” life insurance that is valid for your entire life. There are also premiums you have to pay. (It comes with a savings amount or cash value attached to a policy of life insurance.

All insurance is not created equal

Insurance is known for its wide range of coverage options and pricing. Lifestyles affect insurance rates. Bad habits like smoking can have a negative impact on your insurance rates. Credit score can also have a significant impact. It all comes down to risk. Insurance companies are looking for low-risk clients; otherwise, they will charge higher rates to high-risk customers.

It is worth comparing insurance quotes for all types of coverage. For example, life insurance rates can differ based on age, term length, and other factors. Ask your agent about discounts for multiple insurance types. A group of vehicle, home and life insurance can lead to significant discounts on all products. Before signing any documents, make sure you have thoroughly reviewed all policy terms and conditions.

Protection – Even if you’re not there to protect

Life insurance coverage should be 6-10 times your annual income to adequately protect your loved ones in the event of a death or serious illness. This will cover your mortgage and future education costs, as well as maintaining the same standard of living for your family.

Whole Life vs. Term Insurance vs. Whole Life: Why combine a savings account and a more expensive Whole Life insurance policy? A different investment vehicle could give you a greater return on your savings. A typical whole-life policy’s cash value may not start until the third year. You must borrow money and repay it if you have to use your money. All your “savings” will be lost and only your insurance value will be paid if you die.

Term insurance provides you with more coverage for a lower price, such as 10, 20 or 30 years.

There is no such thing as enough

Every adult should have insurance. This includes personal property protection, health insurance, vehicle insurance, and, especially, life insurance if they are parents. It is important to consider the cost of other insurance and the benefits. Why add in-case-of-death-insurance to your mortgage loan if your life insurance would cover this expense? Credit card companies offer job-loss, life, and disability insurance to ensure they are paid.

Is the standard warranty sufficient? A $1100 extended warranty on a car under a 5-year loan contract, with interest, adds up to an incredible amount. You could save that money for future emergencies and your next car. Instead of paying it off, you could earn interest. If you have an existing home-service contract, it may not be necessary to extend your appliance warranty. For electronics-computers, monitors, portable products, etc., extended warranties can be a wise choice. It is important to carefully review the contract terms.