Common Insurance Mistakes You Can Avoid
November 27, 2023 Author: Tess Downing, MBA, CFP®, Complete View Financial
With insurance, it’s essential to understand what plan is right for you and your loved ones. With the amount of options out there, it’s easy to become confused and make mistakes throughout the decision process. Here are some of the most common insurance mistakes that you avoid.
Pitfall #1: Not Having Insurance
Having insurance is critical in times of emergencies. If you think you’re saving money or don’t think you need it, going without insurance can be a costly mistake.
There are many different options in terms of health insurance. Typically, your employer will have some insurance options; however, you can obtain a policy through the Marketplace if they do not. These plans come with a wide variety of coverage, with gold being the most expensive and catastrophic being the cheapest. If cost is your issue, even having catastrophic coverage is better than having nothing.
Pitfall #2: Having Too Little Insurance
Less comprehensive coverage or basic plans can lead to lower premiums each month. The issue with this is the deductibles and out-of-pocket expenses you will have to pay will equate to what you would be paying with a higher premium. If you do not have enough coverage, you gamble on whether you’ll actually need it. If you end up getting in a bad car accident or having a bad injury, it could cost you more than if you had paid the higher premiums in the beginning.
Pitfall #3: Having Too Much Insurance
You should speak with an insurance agent to ensure the coverage you seek is the right amount for you.
Pitfall #4: Not Asking for Discounts
If you don’t ask, you may never know if there was an opportunity to see a cost decrease in your coverage option. Without knowing it, there are some cost discounts you may qualify for. If you don’t tell your agent and ask what is available, you will never realize they need to apply them to your account.
Pitfall #5: Not Searching for New Policies
You should be looking at new policies every few years. Sometimes, you can save money by switching providers or updating your plan.
Pitfall #6: Misunderstanding Your Policy
It’s essential to understand what your policy covers, when it can be used, and what you can expect to pay out-of-pocket. This can help avoid surprises when you find it time to file a claim.
Pitfall #7: Automatically Choosing Group Life Insurance
If you use your company’s group life insurance option, your rates aren’t locked in and could go up. Care carefully at any additional life insurance offerings offered through the workplace before choosing this option. You should be able to know what you’re paying for and if the premiums are worth the potential benefits in your situation.
Pitfall #8: Eliminating Long-Term Care Insurance
If you are notified that your premiums rise, you may be inclined to drop your long-term care policy. It’s important to consider that purchasing a new plan may cost even more, especially now that you’re older than when you initially purchased your policy.
Pitfall #9: Picking a Policy Based Solely on Premium
Insurance companies, when using low premiums, can find other less obvious ways to make their money back. This can include:
- Higher copays during doctor visits.
- Out-of-pocket costs when visiting a doctor who is out of network.
- Higher prices for prescription drugs.
Be sure to consider how often you go to the doctor and any medicines you currently take. This will help you be more educated and find a policy best suited to your needs.
No matter what insurance policy you are looking at, there is a lot to consider. If you choose to go with your work plan, please reach out to someone who works at the provider to answer your questions. Talk to a financial advisor today if your work doesn’t cover your insurance.