AARP Financial

Insurance

Overview

Part of assessing your insurance coverage is making sure you have all the insurance coverage you need and that you actually need all the coverage you have. If you have any kind of insurance policy, a good place to begin is to read them. If you don't understand them, call your insurance agent (or the insurance company's customer service line) and ask for an explanation.

Basic Questions to Ask

As you review each policy, ask yourself these questions:

  • Do I need this policy?
  • Is the maximum coverage adequate for my situation? For example, many people find that they never increase the replacement cost coverage on their house, even as the value of the house rises dramatically.
  • Am I getting the best value for the premium I'm paying? For example, would I save money and still keep adequate coverage if I raised my deductible(which will lower your premium)? Should I spend a little time searching for the same coverage at a lower price with another insurance company?
  • Are there gaps in my coverage? In other words, are there situations that very possibly could occur but that my policy wouldn't cover?
  • How much of a discount would I get if I bought all of my policies from the same insurance company (assuming I could get coverage as good as or better than I have now)?
  • Does my current insurance agent understand my needs and provide good service? If I don't have an agent, is the insurer's customer service helpful when I need them?

Don't go "claim-happy."

Be careful about filing claims for small issues. Small claims may lead to premium increases or possibly even to having your policy cancelled as too risky for the company to insure. Having a high deductible is one way to stop yourself from filing too many claims.

Take Action

  • Look for an insurer in your state for any type of insurance, using an online service from the Insurance Information Institute. See the box titled "Individuals" at www.iii.org. (Note, the box rotates three different content messages, so wait for the one you want to appear, then click.)
  • Be sure that the insurance company offering the policy will be financially sound when, or if, it comes time to pay your claim. Use these services:

    A.M. Best
    908-439-2200
    www.ambest.com

    Moody's Investors Services
    212-553-0300
    www.moodys.com

    Standard & Poor's Insurance Ratings Service
    212-438-2000
    www.standardandpoor.com

Additional Resources

For state insurance information, visit the National Association of Insurance Commissioners at www.naic.org/state_web_map.htm



These articles are not meant to be a financial plan. A financial plan generally addresses a wide spectrum of financial needs including insurance, savings, investments, tax and estate planning.