There are many things we do that we might not need a second opinion about. For example, we can always sample online games for free to determine if we like them. But for so many things we do regularly we do rely on the opinions of friends, family, and so-called experts in the field.

We’ll read a review of a new restaurant or movie. We’ll decide where to go on vacation, what to do there, where to stay, and so on based largely on other people’s opinions. After all, we wouldn’t think about investing a large sum of money on a trip only to find out that we really don’t like the place. Does anyone remember that Seinfeld episode about the weekend Seinfeld and his new girlfriend spent totally prematurely where it rained all the time and Seinfeld’s date was to say the least unhappy? A quick check of the weather forecast would have saved a lot of disappointment not to mention money.

It’s baffling that the only “expert” most people rely on when they buy insurance is the insurance salesperson! This article will seek to remedy that mistake.
Types of Insurance

Of course, there is insurance for almost any contingency but here we’ll focus on the types of insurance most average people buy or consider buying:
• Homeowners
• Renters
• Auto
• Health
• Life

Shop Around
The first quote you get might be the best offer you’ll get. Nevertheless, you need to shop around. You can also play one company against another. It might surprise you to discover that there is a wide gap in both coverage and price. In addition to wide price differences, for one price you might get a much higher or much lower deductible or co-pay.

Shopping around also involves asking family and friends for their opinion. Someone who had a terrible time getting paid by an insurance company should warn you against buying insurance from that company.

Another group of people to ask is lawyers. If you have lawyer friends or relatives, ask them which insurance companies are the most forth-coming when customers need them. The quickest to pay and the quickest to respond to your request may be more expensive. But then you’ll know what you’re paying for if you go for a lower premium instead of better service.

Shopping around also means asking to see a copy of the insurance policy you’re looking for. Insurance is a legal document. Some insurance contracts are a booklet in length. If the agent says you can’t have a copy until you buy the insurance that’s a clear sign not to buy that company’s insurance. Similarly, if the agent gives you a copy of the contract and you can’t understand it, that’s a clear signal to look elsewhere.

Here you buy insurance to protect your investment in your house. Since most people buy a house with a mortgage, the house technically belongs to the bank so they insist that you buy this type of insurance.

But the bank is interested only in the physical house itself—the structure. The bank has no special interest in the contents of the house—meaning your personal property. So, if you let the bank get the insurance for you, you’ll be making two insurance mistakes. The first is not shopping around and the second is leaving property worth thousands of dollars uninsured.

Always insure your personal property! Here, there are two definitions and it’s easy to make a big mistake. Insurance companies may have different terminology but they all refer to the same coverage for personal property as part of a homeowner’s policy: depreciated value versus replacement value.

Depreciated value is thousands of dollars less than replacement value. A ten-year old sofa may be worth less than $100 the day it’s damaged in a fire but it would cost over $1000 to replace. Make a list of everything you have and figure out how much it would cost to replace everything. The sum is staggering. Always buy replacement cost insurance on your personal property.

The insurance company may ask for a comprehensive list of everything you keep in the house. They might ask for pictures. Make sure you make the list and send the pictures within 24 hours. Otherwise you’ll forget and you’ll have problems collecting if you need to.

Renters only have to insure personal property and liability. Make sure you have a large sum of liability insurance in case the landlord decides that the fire started in your apartment and that you caused it.

This is the insurance most people understand best. Make sure you shop around and get enough coverage. One mistake many customers make is to buy insurance from a company that requires you to get your car repaired at their affiliated garage. This often ends up in shoddy repair work making the car less valuable on resale.

This is the most misunderstood insurance type by far. Only in life insurance are customers sold “savings plan” along with the insurance. The so-called savings plan is part of “Whole Life Insurance” which is actually not for your whole life.

The other type of life insurance is called Term Insurance. It runs for a specified term and then expires unless you renew it. When you buy term insurance, be sure to buy insurance that can be renewed with no questions asked until to final term expires, usually when you reach 100 years of age. Automatic renewability of term insurance means you can’t be denied a renewal even if you’ve had a major medical setback.

One big difference between Whole Life and Term Insurance is that Term Insurance costs a lot less money. That’s because it’s like every other insurance which covers your house or car for one year and then has to be renewed. Term life insurance may cover one year, five years, or longer but it is pure insurance, not insurance with a savings plan attached to it.

The savings plan in Whole Life Insurance is actually a term insurance policy that the company has hidden within the so-called Whole Life policy. Let’s say you’ve bought a $100,000 Whole Life policy and have $20,000 in the savings side of the policy, normally called the cash value. If you borrow the cash value, the company charges interest on the “loan” even though it’s really your own money! And, if you die before “paying back the loan”, your beneficiary will get only $80,000 from the insurance. The $20,000 is a term insurance policy within what you thought was a Whole Life policy for much more money and by “borrowing” the money you effectively gave up the term insurance element in your Whole Life policy.

We should all see life insurance as being exactly like every other insurance: as insurance only. Just make sure that you can renew your term policy every year.

Obamacare has changed the rules regarding health insurance but it is unclear how long those changes will remain in place.

In the past, getting insurance with prior medical conditions was difficult to impossible. So, the best advice was always to be sure to buy the most basic insurance for yourself and your children long before you expect to need it because life-long disability can occur at any time. By locking in renewability despite prior medical conditions, you don’t have to worry about getting insurance even if the rules change back to what they were before Obamacare became the law.

Author's Bio: 

I love to write.