Let’s face it, unless you’re in the insurance business, insurance isn’t exactly most people’s favorite subject. But without at least a basic foundation, a lack of familiarity with insurance can cost you—financially and otherwise.
For April’s Financial Literacy Month, we want to make sure you have a solid understanding of why you need insurance in the first place, what kinds of insurance you might need, and how you can save money while still meeting your insurance needs.
Here’s your Insurance 101:
Understand Your Insurance Needs
Before we get too far along, do you even need insurance? The answer depends on your current circumstances.
Insurance is a contractual agreement between you and an insurance company. In exchange for the payment of premiums, an insurance company agrees to provide financial protection or reimbursement against specified losses or damages.
The need for insurance truly depends upon your current financial situation and future needs. If you don’t have a car, you don’t need auto insurance. If you don’t own a home, you don’t need a homeowners policy.
If you are independently wealthy and are able to pay out of pocket for the loss of a major asset, then sure, maybe you don’t need insurance.
But most people see the value of investing a little into insurance to cover their assets, rather than suffering that potential financial loss.
It’s important to look at the full scope of your life as well as what might be on the horizon when determining what insurance you do or don’t need.
Explore Your Insurance Options
When you’re ready to buy insurance, explore different insurance providers and policies to find the best coverage at competitive rates. Compare premiums, deductibles, coverage limits, and exclusions.
A local, independent Wichert agent can help you with this process. We shop for many different providers and policies to make sure you are getting the right coverage at the right price.
Be Familiar with the Typical Types of Insurance
While there are many different types of coverage out there to protect all kinds of assets—and we offer a lot—there are some typical types of coverage that most people will need at some point in their lives:
- Life Insurance: Life insurance provides financial protection for your loved ones in the event of your death. There are two primary types: term life and permanent life insurance (such as whole life or universal life).
- Health Insurance: Health insurance covers medical expenses, including doctor visits, hospital stays, and prescription drugs. It’s important to understand the coverage limits, deductibles, co-payments, and network providers.
- Auto Insurance: Mandatory in most places, auto insurance covers damages and liabilities resulting from accidents or theft. Options include liability, collision, comprehensive, and uninsured/underinsured motorist coverage.
- Homeowners/Renters Insurance: This insurance protects your home or rental property and belongings against damage or loss from events like fire, theft, or natural disasters. Options vary, so research what’s covered and ask about any supplemental coverage you might need.
- Disability Insurance: Disability insurance provides income replacement if you're unable to work due to illness or injury. There are both short-term and long-term disability coverage options available.
- Long-Term Care Insurance: Long-term care insurance covers expenses for long-term care services, such as nursing home care or home health care, which is not typically covered by health insurance, Medicare, or Medicaid.
What about your RV? Or your condo? Or your ATV? Or earthquakes? Or floods? These assets can be protected, too. Explore Wichert’s full range of personal insurance products.
Review Insurance Policies Regularly
Life changes, and so do your insurance needs. Periodically review your insurance coverage to ensure it still aligns with your needs and circumstances.
It’s important to evaluate your policies on a regular basis, at least annually, but especially during or after major life events, like marriage, having children, buying a home, or changing jobs.
Bundle Policies to Save Money
Many insurers offer discounts if you utilize their company for multiple types of policies, such as auto and home insurance, which is called bundling.
Maintain Good Health and Safety Practices
People who live a healthy lifestyle are less of an insurance risk for companies, which can mean lower insurance premiums for you and your family. Maintaining a healthy lifestyle and implementing safety measures in your home and vehicle can help lower insurance premiums.
Understand Policy Terms and Conditions
Read your insurance policy thoroughly to understand the terms, conditions, coverage limits, exclusions, and any potential penalties for non-compliance. Your Wichert agent can help you understand and translate the legalese into terms that make sense to your everyday life.
Start an Emergency Fund
While insurance provides financial protection, there will likely be expenses you are responsible for if you have to submit a claim. Having an emergency fund can help cover unexpected expenses and deductibles associated with those claims.
Most financial experts recommend saving three to six months’ worth of living expenses, which should include your typical monthly expenses, your income stability, debt obligations, healthcare costs, and additional dependent and family obligations.
Seek Professional Advice
If you're unsure about insurance options or need assistance with complex policies, consider consulting with a qualified insurance agent or financial advisor.
Wichert’s agents are all local and independent professionals who can help you tailor your insurance coverage to meet your needs and match your budget. Explore the range of personal insurance options available and connect with a Wichert agent to get started today.