The 7 Worst Insurance Mistakes You’re Making

Purchasing insurance to cover a wide range of eventualities is a smart move. But insurance brokers are ready to play on our anxieties and ignorance in order to persuade us into purchasing more coverage than we truly need.

It’s possible to find out whether you’re overpaying for insurance by re-evaluating your coverage in crucial areas. We’ve compiled a list of the top seven ways individuals overprotect themselves. Eliminating coverage that isn’t absolutely necessary may help you save a lot of money.

1) Homeowner’s Insurance

Investigate the cost of rebuilding your house in its current location if necessary. Depending on which insurance company you go with, you may get quite a varied appraisal of your situation. You may get a free estimate by searching for an “online replacement cost calculator” on the internet.

You’re overpaying if your insurance covers more than the cost of rebuilding your home. Consider raising your deductibles as a way to boost your cash flow. However, even though you’d be making a promise to pay more in the event of a claim, your monthly premiums would be cheaper (what you pay every month to guarantee your continued coverage).

2) Policy Expiration Dates for Life Insurance

It is common for people to believe that they can acquire life insurance and then set it to run on autopilot. This is not true. Quite the contrary, in fact. In order to replace the income of a policyholder in the event of their death, life insurance premiums should be reduced as the policyholder ages and accumulates assets.

In other words, how much life insurance do you really need? Generally speaking, if you expect to retire within 20 years, save eight to 10 times your present salary; if you expect to work another 40 years or more, save ten to twenty times your salary. A more accurate estimate may be found by searching for a “Bankrate life insurance calculator,’ which can be found online.

If you find yourself with more than you need, you have alternatives. There are a number of options, such as surrendering your policy to the insurance provider in exchange for cash or selling it to a third-party firm. [Read What to Do About That Old Life Insurance Policy to discover more about this disturbing tendency.]

3) Getting a Car Insurance Policy for an Old Car

Check your vehicle insurance policy’s small print! There are likely to be several places where you’ll get wet. Three quick locations to look are as follows:

Comprehensive and collision coverage should be dropped if your vehicle is worth less than $5,000. The car’s ‘Blue Book’ worth is already low, so why spend a lot when you can get a new one for less?

To save money on your monthly insurance bill, try raising your deductibles on your car insurance coverage.

The odds of a new automobile breaking down aren’t high enough for you to justify having towing coverage if you’re driving a newer car. You may not even be aware that you’ve been charged for these unnecessary extras until it’s too late.

4) Health Insurance Coverage in More Than One State

When it comes to health insurance, you’d be amazed how many couples have separate policies via their respective employment. This is a complete waste of time and resources. Don’t forget to merge all of your family’s medical insurance policies into one. It’s easier, less time-consuming, and more cost-effective.

5) Your Family Situation May Have Changed

If your family’s living situation changes, you should adjust your insurance policy appropriately. Take, for example, if your child moves out of the home and no longer drives the family vehicle, immediately remove him or her from your car insurance policy.

Consider removing your children from your motor insurance policy while they are away at school, then swiftly adding them back when they come home for the summer break. A simple phone call to your insurance agent is generally all it takes. Because ensuring a young person is more expensive, following this advice may help you avoid wasting a lot of money.

6) Too Many Insurance Companies

Many insurance companies provide a one-stop-shop for all of your insurance requirements. Despite this, it’s not uncommon for consumers to purchase several types of insurance from various providers. Customers who purchase numerous policies from the same insurance company can get large savings. If nothing else, check around and see if there are any deals available.

7) Insurance for bad credit

So much money is being wasted on this insurance that it could as well be considered fraud. It works like this: You may be offered credit insurance when applying for a new loan or credit card. This insurance promises to cover the balance of your debt in the event of your inability to make payments on time, such as unemployment, sickness, or death.

Some lenders use the dread of leaving a mound of debt to their loved ones as a selling point for this form of insurance. Don’t be fooled by this. It’s quite unlikely that anything will happen. In addition, the insurance at issue is often expensive. If you’re looking for this kind of protection, you can get it for far less money with other forms of insurance (such as disability or term life insurance).

Annually reviewing your insurance policies is a good idea to make sure you have enough coverage, check for cheaper rates, and/or combine your policies with fewer insurers to save money. You may save hundreds of dollars a year if you spend just an hour or two on this.

The following are three other methods for saving hundreds of dollars annually:

  1. Get out of debt using your credit cards. This year’s best debt transfer credit cards offer 0% interest on your balances for up to 21 months.
  2. Pay off your mortgage to free up $1,000 to $2,000 a month in additional cash. Learn how to pay off your mortgage 15 years early with these three tips.

It’s time to cut down on or get rid of your auto payments. Refinancing your car loan is a good idea if you’re currently paying more than 6% APR.

Read Also

Reduce Your Health Insurance Premiums in Three Easy Steps
Instead of taking out student loans, consider opening a tax-advantaged account like this one
The 4 Best Credit Decisions You Can Make Now
Don’t Pay For These 5 Types Of Insurance!

Leave a Comment