Are you a recent college graduate? Or are you thinking of buying your first home or set of wheels? Someone must have told you to think about insurance.
It is an excellent way to protect your financial well-being. Insurance provides a safety net to protect us from financial losses due to unforeseen mishaps. You can insure yourself against many risks. But the most common are life insurance, health coverage, and auto policies.
As a novice, you could be jittery about your first steps in insurance. Don’t worry. You’ve landed on the right page. Here are tips to help you figure out what to do when getting your first insurance plan.
Understand Your Need
The main point of insurance is to have a financial safety net in case an unprecedented unfortunate event occurs. For example, liability coverage will help you pay for damages when you cause a car accident. A health plan will cover your bills if you fall ill, and a homeowner’s policy will cushion you in the event of a burglary or a natural calamity.
Avoid signing up for insurance for the wrong reasons. For example, many people look at life insurance policies as investment plans. But that’s not the primary purpose.
Think of it as a safety net for yourself and your loved ones if you pass away. Then, you will be more objective about the pricing and benefits. You will also be able to negotiate a better deal and save cash through excellent life plans.
Bonus Tip: Evaluate your lifestyle and get coverage for all significant risks. No matter how low the insurance may seem, any coverage is better than none.
Check Your Ability to Pay Premiums in the Long-term
Triple-check your budget before signing up for any insurance deal. Make sure you can sustain the premium payments in the long run, especially if you are looking for a life insurance plan without savings or cash value attached.
If you are unsure about your budget, you might fail to pay your premium within the required time. It could result in cancellation of your policy without the option of a refund.
The same could happen with auto insurance. Do not sign up for comprehensive cover if you will struggle with the premiums. It will catch up with you sooner or later, and it could be at a time when your policy has lapsed. Keep your insurance premiums affordable. Overstretching your finances is the first risk to avoid.
Bonus Tip: You can save more cash by avoiding overlapping policies. For example, credit card providers often give complimentary travel insurance whenever you pay for an airline ticket using their card. Check what you already have before spending money on a new policy.
Determine the Best Channel to Purchase
Most insurance companies allow buyers to sign up directly, from their websites, or via an insurance agent. Each channel has its benefits and downsides. Weigh the pros and cons of buying direct or through an agent and decide which is the best for you.
For example, online purchase often costs less. However, the information could be overwhelming, and you might settle for a lower deal. On the other hand, working with an insurance agent is excellent. They will break it down into chewable portions and help you make the right choice. However, you will pay extra for their commissions.
Direct buying from an insurance company is similar to an online purchase. You may have a company rep there, and they may explain the features. But the support level is not the same as when dealing with an agent. Plus, the sales rep will only give you their company’s perspective.
Bonus Tip: Although working with an agent would cost more, it is often a better choice, especially for a novice. After you have learned the ropes, you can explore a direct or online purchase.
Shop Around and Ask for Discounts
Nothing good comes without searching. Compare different insurance providers. Check their products, prices, and claims payments. Fortunately, you don’t have to criss-cross town or hop from one office to another to get excellent insurance rates. There are plenty of insurance comparison websites to help you do it in the comfort of your home.
Bonus Tip: Begin with reputable companies and ask for discounts. You’d be surprised by the amount and value of the discounts offered.
Improve Your Risk Profile
Whether it’s an auto policy, life coverage, or health insurance, you are essentially presenting yourself as a risk for the company to take. Lowering your risk profile will make you more attractive and help you get a better deal.
Give up habits like smoking and take up healthier practices like dieting and exercise. Also, clean up your driving record, and install security devices in your home. You will get a better deal if the insurance company perceives you as a lower risk.
Bonus Tip: In many states improving your credit score will also result in a better insurance risk profile. So, pay your bills and debts on time and ensure your credit profile is attractive.
Trust the Experts
Work with an expert. The above tips may seem simple, but they are not easy to hack, especially for a novice. Your best bet for landing an excellent first insurance plan would be to work with a trusted expert – an agent.
