When Milissa Burch made the decision a few years ago to become a stay-at-home mom, trimming nonessential expenses became a priority. She looked at her insurance policies first and quickly found ways to reduce and maximize her policies by just “shopping around.”
“It can be challenging, trying to figure out what coverage you need and what the best policies out there are,” Milissa says. “I saved hundreds on our car insurance by switching companies. In other areas we decided to increase coverage … like for life and health insurance because we have three young children. I’m glad I explored our options.”
Like millions of American consumers, Milissa discovered insurance is not “one size fits all.” While insurance costs continue to increase — from more than $1.3 billion in 2004 to $1.8 billion in 2013 — options too continue to grow, according to statistics by the National Association of Insurance Commissioners.
When choosing an insurance policy, whether it’s home life, auto, rental or other; consumers should begin by finding out whether their state insurance department offers any information concerning insurance companies and rates among other steps, industry experts say.
According to the tips on USA.gov, “Check several sources for the best deal. Try getting quotes from an insurance focused website, but be aware that many online services may provide prices for just a few companies. Make sure the insurance company is licensed and covered by the state’s guaranty fund … Find out what others think about the company’s customer service.”
Health Insurance: making smart picks to prepare for life’s emergencies
Over the past few decades, the cost of health care has risen significantly, and new federal regulations have also impacted the market.
“There are certainly different rules on where you buy your health insurance these days and whether they are looking for insurance as an individual or as an employer,” says Mark Riley, legislative chair for the South Carolina Association of Health Underwriters. “Under the Affordable Care Act, everyone in America has to buy health insurance or face a penalty. So, the best thing for individuals to do is to contact an agent to find out what options are available.”
Signed in 2010, the Patient and Affordable Care Act — commonly known as the Affordable Care Act — is heavily challenged and controversial to many Americans. For individuals covered through their employers, experts say it is important that individuals know what new plans look like.
“Because a lot of new health plans have changed, they may have different co-pays, different deductibles, different out of pocket expenses from what they used to have,” Mark says. “They should also always know what different networks look like because different plans now have different networks as well.”
For consumers considering new plans, the South Carolina Department of Insurance makes the following suggestions for individuals:
Make sure you feel confident with the insurance agent and company. It is a good idea to contact the Department of Insurance to make sure the agent and the company you are dealing with are licensed in South Carolina.
Learn what kinds of policies will provide what you need and pick the one best for you.
Don’t hesitate to shop around and ask a lot of questions.
Do not sign an application until you review it carefully to be sure the answers are complete and accurate. Make sure that the word “insurance” is actually used and that there is no disclaimer stating that, “This product is not insurance, nor is it intended to replace insurance.” Fraudulent plans do exist, and experts suggest calling the State Department of Insurance to ensure that the agent and company are licensed in the state. Consumers should also beware of agents or companies that insist on cash payments or automatic withdrawal as well as those boasting that the coverage is available to all clients regardless of history or risk.
“Education is the key,” Mark says. “Consumers just need to make sure they search out the right answers and are well informed and well-educated about the options that are available. It can be a complex marketplace, and quite honestly the most qualified people in the marketplace today are qualified insurance agents, a reputable professional who can help them navigate the current healthcare system.”
Life Insurance: How to best prepare and protect your family
It may not be a fun purchase, but when it comes to the list of top items consumers know they should buy, life insurance ranks high. Life insurance policies are agreements or pacts between individuals and the company. When the policyholder passes away, death benefits are provided to beneficiaries.
Among the two types, term insurance covers consumers for a “term” of one or more years while permanent insurance plans provide long-term financial protection and usually include death benefits and cash savings in some cases. Coverage amounts and types can depend on many factors, including marital status, debt, income and other expenses like college savings for children.
“A lot of people wait to buy life insurance when they get married, buy a home and start a family. So, the more debt and the larger the family, the greater the need for life insurance,” says Gerry Allen Cieluch, president of National Association of Insurance and Financial Advisor — South Carolina. “Some people wait and buy life insurance when they near retirement. It is more expensive then due to their age, and insurability becomes an issue because of health concerns. An easy rule to remember: whether buying term or permanent, the younger you are, the cheaper it is.”
Many companies are lowering their rates in part due to longer life expectancies. Other market trends include a wider range of options for obtaining life insurance, including via agents, mail, Internet — even television. When determining which plan is best, experts suggest asking the following questions:
How much of the family income do I provide?
If I were to die, how would my survivors, especially my children, get by?
Does anyone else depend on me financially, such as a parent, grandparent, brother or sister?
Do I have children for whom I would like to set aside money to finish their education in the event of my death?
How will my family pay final expenses and repay debts after my death?
Do I have family members or organizations to whom I would like to leave money?
Will there be estate taxes to pay?
How will inflation affect future needs?
“Just like buying a car, shop around,” Gerry says. “Look for A-rated companies. If buying term, look at the guarantees provided and also conversion options (being able to convert your term policy to a permanent policy at a later time). When buying permanent insurance, make sure the product meets your needs not only today, but long term.”
Property Insurance: How much coverage is enough?
Traced back a few centuries, property insurance is said to protect consumers against most risks to property, including homes, cars and personal items. Like any other business, property and casualty insurance providers set prices based on the cost of what is used in the product and past experience with claims that are filed.
“When the cost of construction, repairs and such rises, the cost of property and casualty insurance must also rise,” says Frank Sheppard, president of the Independent Insurance Agents & Brokers of South Carolina. “We also recommend the use of a trusted insurance professional to help guide a consumer through the process,” he says. “In insurance, one size does not fit all, and an insurance professional will identify and offer the best solutions for the specific situation of each consumer.”
Officials with the South Carolina Department of Insurance say consumers should consider the following when making decisions on property insurance:
Property and Belongings: The better your coverage, the less you will have to pay out of your own pocket if disaster strikes.
Self Protection: You need enough liability coverage to protect yourself from lawsuits resulting from your negligence or events that could occur on your property.
Lender Requirements: Your housing lender will require you to cover the house for the replacement cost of the dwelling.
Policy Requirements: Insurers may impose some coverage requirements for replacement cost protection. Preferred plans usually require policy limits at 100 percent of replacement cost. Standard plans usually require policy limits of at least 80 percent of replacement cost.
To find an agent, Frank suggests checking with family and friends as well as trusted insurance professionals.
“Good insurance agents and insurance companies will regularly follow-up with customers to determine if any major changes have occurred that would change their circumstances regarding proper insurance coverage,” he says. “Major life changes — getting married, buying a car or home, having children, kids in college, changing jobs, retirement — are times when a customer should review their insurance coverage.”
For Milissa, who saved hundreds with a few phone calls to change and adjust her policies, reviewing her insurance options will now be something she does routinely.
“We never thought about changing our policies before, but I’m definitely glad I took the time to look at our policies and make a few simple changes,” she says. “It really paid off.”
