Insurance Myths

We have some tips on what type of insurance to buy and how to go about it. After extensive research, we have complied this list of certain coverages to be aware of, myths to the process, and steps shoppers should be taken.

*In terms of life insurance, even if you do not have any dependents, you still need some form of life insurance if you have debt. Some experts resort to the myth that if you have no kids, then this coverage is not needed. If you are caught up on your bills, this may not be necessary. Someone may have to cover the debt and having life insurance is the most appropriate way to avoid that scenario.

*Homeowners coverage does not cover floods as this is a separate policy. Earthquakes also require an endorsement or separate policy. These are granular details that need to be addressed when owning a home specifically to the state you live in. So protect yourself and understand the terms of your policy.

*A homeowners policy should cover the cost of replacement of the home (what you would pay to reconstruct it), not the current market value. So this means the total coverage amount is usually less than the purchase prices. Things like square footage, number of rooms and the quality of the kitchen/bathroom are areas for consideration.

*Umbrella insurance is worth consideration as it will cover above and beyond life scenarios such as visitor accidents in your home, liability on rental properties you may own, injuries that occur on your land, legal defense, etc. Combined assets could be at risk and your current insurance has limits that may not cover what umbrella insurance does.

One common myth is some families think it will not help them as much as some other types of insurance. This is not correct. Geico gives many examples of how an umbrella policy can serve a family that is facing one of those above scenarios.

*Life insurance is affordable as premiums are currently at an all-time low. Anyone who tells you differently is not being honest. Examples from Geico include a healthy 35 year old female desiring a $300,000 term life policy given a rate of $11/month or $1 million term life policy at $20/month. So shop around for this type of coverage. It’s worth getting a quote just to see where you stand to protect loved ones in the future.

*Homeowners or renters policies need to be adjusted when you move to a different location. This is a myth that people are not often aware of. They can also cover both rental units and homes that are bought outright.

Each policy is written for the specific dwelling you currently live in and adjustments may be needed when you move locations. Temporary coverage between homes is available, and this covers you while moving.

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