6.3.5 Video: Tips for buying insurance

Introduction

Managing your finances can sometimes be like riding a roller coaster with its ups and downs. Managing the "downs" is the toughest part. Smart risk-takers manage the "downs" by limiting their losses. Insurance is one way to limit losses from unexpected events such as a house fire, car accident or illness.

Segment 2: Problem identification

A major house fire, for example, can cost you hundreds of thousands of dollars. But you can limit that loss by paying a few hundred dollars a year in insurance premiums. Insurance can cover many kinds of risk, and the coverage that you choose depends on your needs.

Segment 3: How to assess your insurance needs

What kind of insurance do you need? That depends on your life situation, how comfortable you are with the risk of a loss, how much you can afford and several other factors. You are the best person to assess what type of insurance is best for you.

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For example, if you rent, you should consider tenant's insurance. If you travel outside the country, look into travel medical insurance. If you have a child, you may want to get life insurance that will provide a payment to your spouse or child if you die. If you own a home-based business, you should consider commercial property insurance, which pays for damage to or loss of business premises. If you have a vehicle, you must have insurance.

Needs for insurance vary, and your own insurance needs will change during your lifetime depending on your age, income and the assets that you own.

Segment 4: The right insurance for the right price

How can you get the insurance you need at the best price? To do this you'll need to:

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1 – Shop around and compare both coverage and prices.

2- Buy enough insurance to cover the full financial impact of the loss, or the amount you want to be protected from. But don't get insurance you don't need or may already have through your credit card, an existing plan or your group plan at work.

3. Think about the deductible you want. The deductible is the part of the claim that you will have to pay. A higher deductible will usually reduce the cost of your insurance premiums, but it will also reduce any insurance benefits that you receive.

Segment 5: Choosing an insurance agent

One way to make this decision easier is to work with a licensed insurance agent or a registered broker who can help you choose the right insurance that meets your needs. But remember – an agent or broker gives you advice. Only you can decide what best meets your financial needs. Don't be rushed into a decision you have not thought through.

Segment 6: Managing your policy

When you purchase insurance, you need to read your policy carefully to know what is and isn't covered. And you need to keep it in a safe place.

Remember that it's essential to be completely honest and act in good faith when you buy insurance and when you make a claim. If you don't, the policy could be void.

If your policy insures your property, keep a list of property you own, together with receipts, in a safe place, and remember to update your insurance coverage every few years.

Conclusion

Insurance helps you control financial risks so that they don't cause a catastrophe, just like that roller coaster's brakes bring it to a smooth stop. So shop around and choose carefully to get the insurance you need at the lowest cost.