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Regardless of how much competition there is, insurance fees seem to always inflate faster than the standard rate of inflation. This forces you to make risk-benefit decisions on types, duration, and levels of coverage on a regular basis.
Insurance advisors should be licensed to give advice and sell insurance. Some specialize in certain products, such as property, investment, life insurance and others sell a range of insurance products. Some insurance advisors may also be registered to sell investments.
Insurance advisors are usually paid by the companies whose products they sell. They make money each time they sell a policy. If you decide to buy a policy, the cost is built into your insurance payments.
Be careful jumping towards the best price. Watch for exclusions and the overall integrity of the insurer. It doesn’t hurt to research their performance on social media or the web especially if you’re considering a lesser known company. You may get what you pay for.
Credit score usually plays a significant role in insurance costs. Some insurance companies also calculate their own “score” for you. In both cases, improvements in these scores can lead to lower insurance premiums. Insurance companies usually show you some level of detail behind the determinants for your score but you should understand those inputs and how you can improve them. If you make improvement, make sure to discuss this with the company and you could not only reduce future rates, but possible some retroactive refunds on past payments.
Pay for what you need. More insurance companies are offering ala carte programs providing you some flexibility in determining the types and levels of coverage. Be careful to understand exactly what you are getting and/or giving up if selecting this process.
Any major change to the items covered under your policy should be communicated to your insurance company. If you don’t communicate, this could void the terms of your policy. If you buy another house and convert the former house for a rental, the rental requires a different type of policy.
It seems that every other commercial is for insurance and every other skyscraper belongs to an insurance company. They’re making money.
Switching home insurance providers usually involves the new provider taking a tour of the house and pictures of the inside and out. Think about high-risk situations that could cause the provider to raise your rate. Pets, fences, flammables, grills, trampolines, pools, and more. How does the furnace look? Are the flammable materials near the hot water heater or furnace? Probably best to remove those from that area.
Do you have a functioning alarm system? Are windows broken? Do you have smoke and carbon monoxide detectors? Do you have portable heaters?
There’s many things that can raise and lower your rate. It’s recommended to ask your provider directly how to reduce your fees and ask what types of things can cause my rate to increase.
Life insurance gets more expensive with your age. As you age, your health risks increase and the insurer assesses that level of risk using your age and health factors into your payment.
Longer term policies tend to be more affordable per payment (for a given level of coverage) but make sure you don’t miss a payment. If you’re pleased with the fixed rate you have you want to make sure to make timely payments to avoid the risk of the policy being cancelled. Usually there’s a grace period and/or a chance to renew within a certain time frame if a payment deadline is missed but be careful relying on that provision. If you miss a payment on the 18th year of a 30 year policy, that same policy after the 18th year is likely to be a lot more expensive per pay period for the same coverage.
Life Insurance is commonly purchased for a term, called term life insurance, or for a lifetime which is often referred to as universal life and whole life. Therefore one of the most important decisions is the duration of coverage.
How much coverage do you wish to have? More coverage usually translates to more fees. Think about the expenses that you’ll leave behind. Consider wish lists items for those you leave behind such as future educational expenses. You can get quotes to cover various amounts of coverage so you can balance what you can afford and yet get the most coverage.
Speaking of those left behind, the whole point is to make sure the proceeds from the life insurance policy gets to the people you intend. Therefore, you’ll need to determine a beneficiary. There are options from naming kids, business, an estate, and more. These can have pros and cons. Review the options with the insurance providers you’re considering.
Some life insurance policies can be used as savings. They value can increase over time and you may be able to contribute to the value over time. This savings growth may be tax deferrable; consult your tax advisor to verify in advance.
Collectibles / Valuables
Insure or not to insure? This can depend on the value, future projected value, and risk level to protect them. You could reduce your property insurance, usually with your home insurance policy or a riders, by considering using your bank to store valuables (depending on size) in a safety deposit box. A deposit box could be safer than a safe at home but not as readily accessible.
If choosing to insure personal property its helpful to take clear pictures, videos, documentation, or whatever evidence, can help prove their existence, specifications, and condition. Share this with the insurance company. Any changes, additions, removals should be shared promptly as well. These changes could affect the future insurance payments but gives you a better chance for a successful claim if needed. Depending on the item(s), the insurance company may want to know how they are protected and you could ask about rate reductions if you store them in a certain manner.
Bundling refers to providing as many policies as possible to one insurance provider. Usually, the more business you can offer one company the lower the overall insurance costs and added convenience with less to manage and track. Not all insurance companies offer multiple types of insurance especially if you have an assortment of property such as an rental property, cottage, RV, boat, ATV, or motorcycle in addition to a primary residence and vehicles.
This is a great way to reduce your insurance costs but shop around, get multiple comparable quotes. This is easy said but can be very time consuming and more so because getting comparable quote isn’t always possible. Not all insurance companies offer the exact some coverage. Take notes of the differences so you can make the best risk-cost-benefit decision.
Policy Due Diligence
Read your policies and study them carefully. It can be an insightful exercise to understand the variables that affect your rates, the exceptions, and more. They can be lengthy documents with some challenging language and terminology but the more you educate yourself the easier it is to negotiate and understand how to reduce your costs.
Each company is different, there are nearly an infinite number of combinations and exceptions for any type of policy. You may be surprised to find what you’re paying for that you don’t or what you’re not paying for that you need.
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