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Insurance Customer Information
by Daryn Edelman
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Overview
Don't get slammed by having a bad insurance policy.
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Objective information for insurance customers can be hard to come by. Insurance companies, who generally have the most information about their products, are often concerned for profit rather than providing consumer-centered information. Getting feedback from others must be balanced by self research, common sense and deciding what is best for you.
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Function of Insurance
In a sense, one of the earliest types of insurance to humankind was when a group of people got together to hunt. Here, a group of people with the same needs, banded together to spread the risk of their "investment" (the hunt). While it may be likely that one person might be hurt or injured, having a group of people allowed the risk to be spread around so that the group had a very high percent chance of being safe and successful. Today, large companies have people pay monthly premiums and when one of the group dies or is in an auto accident, the premiums from the other members of the group are used for hospital bills, health care or to provide safety/security to relatives. Hence, it is only if you are a member of a certain group that you would need insurance in the first place.
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What Do You Need?
Most states require auto insurance. If you are in a flood or hurricane prone area, you may need to research insuring your home against these types of disasters. Life insurance is intended to help a family in the event that the prime financial contributor is hurt or passes away. Many life insurance companies have combined traditional life insurance with a savings plan or having families contribute part of their premiums to mutual funds or investments. This is not insurance and a person who performs a bit of research can find better loans, investments and savings plans. Limit your insurance payments to exactly what you need to insure.
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Objective Sources
Certified financial planners and people that are not in the business of selling particular products are generally good sources of information as to what products, terms and types of contracts you should consider purchasing. Sites like suzeorman.com and davidramsey.com allow you to access financial experts that can give you educated answers to your insurance questions
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Don't Be Fooled By Quotes
Many consumers are fooled by thinking that quotes are the actual prices of the products and services. Insurance companies often use very low quotes to bring clients in, and only later detail the actual price. With life insurance, for example, what you actually will be paying depends (under most plans) on a physical exam and after the information you put on the application is verified. Many companies will quote you based on the body type of an Olympic athlete, not the average person.
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Understand What You Sign
Before purchasing insurance, be sure you clearly understand the contract. Ask about surrender charges, fees, penalties and any other additional costs. Have the agent show you in the contract exactly what is stated and where. He may say a surrender charge is around $50, but when you read the contract, it may say that the charge for ending the policy is $50 after the 20th year. For the first five years, it is $5,000, next five years is $4,000 and so on.
