 If
you have ever wondered if it is worth paying those
insurance premiums month after month, just ask someone
who finds himself diagnosed with a terminal illness or
someone whose home has been ravaged by a tornado or
hurricane and the answer is a resounding yes.
While you hope that you never need insurance, it
protects you from personal loss in the event of a
catastrophe. When shopping for insurance, be sure you
match your benefits with the premiums you are asked to
pay. The Federal Reserve Bank of Dallas has some
suggestions to help you in your search for the insurance
policy to cover your needs.
Auto Insurance
State law requires that all motor vehicles have
liability insurance to cover property damage or injury
to other people. If you have a loan on your vehicle,
your lender also requires that you have collision
insurance. Premiums are generally lower if you select a
higher deductible, meaning you pay more out-of-pocket
before the insurance policy kicks in.
Homeowner’s Insurance
This insurance covers your home and possessions. Your
mortgage lender will require this type of insurance
until you pay off your home loan. As with auto
insurance, you can select a higher deductible to save
money on your premiums. Standard homeowner’s insurance
policies protect the owner from loss in fires and theft.
Flood insurance generally requires a special rider on
your homeowner’s policy.
If you rent, you need renter’s insurance on your
personal items. The landlord’s policy will cover only
damage to the building itself, not your personal
property. You may also want to consider liability
insurance in the event that someone is injured while in
your rental property. You would be responsible, not your
landlord. With the appropriate level of auto insurance,
your insurance agent probably offers a reasonably priced
umbrella policy that covers all types of liability.
Medical Insurance
While medical insurance will pay for part of your
hospital stays, doctors and prescriptions, there is also
a deductible for which you are financially responsible.
A serious illness without insurance can cause
significant debt if you do not
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have health insurance or do not have
adequate savings to pay out-of-pocket costs. Although
they may cost extra, you should consider whether you
will come out ahead by
purchasing dental and optical insurance.
Those who have insurance through their employer should
also consider participating in a “flexible spending
account”
(FSA) if offered. This allows you to save pre-tax
dollars to pay for those expenses not covered by
insurance.
If you do not have access to such a plan at your work,
you might consider setting up a “health savings account”
(HSA) at a bank or other financial institution to pay
for health-related expenses. An FSA requires you to
spend all of the money in your account by March 15 of
the following year. With a HSA, you can roll it over
from year to year.
Disability Insurance
According to statistics, there is a high risk of
becoming disabled before the age of 65. This type of
insurance helps pay your living expenses while you are
out of work for an extended period of time and is
offered for both long-term and short-term disability.
Life Insurance
This insurance will pay benefits to your designated
beneficiary in the event of your death.
Long-Term Care Insurance
This relatively new insurance policy will pay for
health-related items such as nursing home care, assisted
living or in-home care. These policies are somewhat
expensive. When shopping for this type of insurance, be
sure to take your time and research several policies to
decide which policy is right for you. Experts generally
agree that it is not cost effective to purchase this
policy until age 50, but each person’s circumstances and
needs may differ.
The National Association of Insurance Commissioners has
a website called “Insure U” with several sources of
information for purchasing all types of insurance. Begin
your research on the best type of policy for you by
going to www.insureuonline.org. While insurance premiums
can be high, the cost of not having insurance can be
catastrophic.
CONSUMER TIPS is provided as a public
service by the Missouri Independent Bankers Association
AND
Community Bank of the Ozarks
P.O. Box 43
Sunrise Beach, MO 65079
(573) 374-5245
1-800-927-4314
www.cbobanker.com
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