Why Insurance Is Only Worth It If You Choose Coverage Carefully
If you are like most people, you own at least a few different types of insurance products. Home or renter’s insurance as well as auto insurance are the most common.
Life, health and other insurance products are also available. Buying insurance may be required in some cases, such as when a mortgage company requires a homeowner to purchase property insurance.
However, regardless of whether coverage is required or not, keep in mind that it is only financially worthwhile when you select the right coverage for your needs.
Included Perils
Depending on the type of insurance policy that you are preparing to buy, you may notice that only some events are covered.
For example, a typical health insurance policy may cover wellness exams in full and may cover general physician appointments and lab services at 80 percent.
However, maternity coverage and mental health services may not be covered at all.
Many policies only cover included perils, services or other related items.
Read the fine print on your policy to ensure that you understand what your coverage includes.
Excluded Perils
Some policies are written in a different way. Rather than specifically naming the coverage that they provide, they specifically name the events or services that are excluded from coverage.
For example, it is common to find a homeowners’ insurance policy written so that it excludes damage from nuclear disasters, floods and earthquakes.
Any perils that are not specifically covered in the policy may be included.
While this sounds similar to an included perils policy, it actually is very different and can have a major impact on when you can file a claim.
The Selected Deductible
While you are reviewing coverages, pay attention to limits and deductibles.
Insurance pays out up to the limits of coverage that are defined by the policy.
When claims exceed coverage limits, you must pay the difference. In addition, you are required to pay the deductible out of your own pocket.
When your deductible amount is too high, you may find that it is not beneficial to file a claim at all.
You can see that limits and deductibles directly affect how beneficial coverage is.
In some cases, you may be able to eschew coverage options with a high deductible if your home or vehicle is under warranty.
When you are buying, it is important to understand the risks that you may face and why you are buying coverage in the first place.
Each policy is unique, and each provider may offer various options. You may have flexibility to adjust coverages, limits and deductibles to meet your unique needs.
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Category: Insurance
