Five Tips for Purchasing Insurance [Government Technology]

Mar. 22—Most people have some form of insurance. It could be property insurance for a home or car, life insurance or some other peril insurance, even simple personal liability.

People are making insurance decisions every day. How much risk are you willing to accept? What size deductible are you comfortable with? Maybe you are choosing to be "self-insured," which means you have sufficient financial means not to need insurance, or perhaps you discount the risks of you personally being impacted.

In just the past few weeks I learned of a retired medical doctor who had recently purchased a home and paid cash. He did not need a mortgage and so there was not a requirement from a lender for him to have insurance, so he didn't have any!

Even Eric Holdeman has an insurance decision to make coming up in April. How much life insurance do I need? FYI, I often call "life" insurance the greatest marketing ploy ever! It is not life insurance, it is "death" insurance. The question is now that the kids are gone and we don't have a home mortgage, how much life insurance does my wife need? You can "over insure" and we'll be making a decision on that coming up soon.

Here below are some purchasing tips about insurance that I think are quick and good things to consider.

These come from Christophe Bourguignat, CEO and co-founder of insurance tech provider Zelros, and Jim Kane, senior vice president of personal risk for USI Insurance Services:

The insurance industry is as complex and old school as they come when it comes to giant industries. For people who are buying their first cars and houses, they know exactly how convoluted it can be. Let's take a look at some things to keep in mind when buying any kind of insurance in 2022.

Christophe Bourguignat, CEO & Co-founder of Insurance tech provider Zelros and Jim Kane, SVP Personal Risks of USI Insurance Services lists their top 5 things to look out for/ keep in mind when purchasing insurance in 2022.

Tip #1: How you manage risk can be a factor impacting your premiums and coverage

Many factors are considered in the acceptability and pricing of your insurance. For example, coastal properties present the risk of storm damage, California residents face higher exposure to wildfires and earthquakes and are underwritten with that in mind. Each insurance company creates its own formula for the risks that they face for each client from financial stability to exposure to catastrophic events.

The way risk is assessed is different from company to company, making it critical that you have a professional agent and reputable company to provide the best protection. Look for companies that prioritize creating personalized insurance coverage for you rather than just returning a fast quote. Companies that customize this for you have likely implemented technology that assesses risk more accurately and uses more data that is current, increasing your ability to get the lowest premiums. Also, make sure you check in with your insurance provider regularly to share any life changes and see if that changes your risk category. It is in your best interest that your policies are accurate reflections of your life circumstances.

Tip #2: Honesty is the best policy

When applying for insurance, your coverage and premiums are determined based on information that is known about you. Trying to get cheaper insurance by stretching the truth about your true policy needs is only going to cause a bigger headache for you down the road when you may actually need that specific coverage. Depending on the severity of the misinformation you give, you may find the coverage is suspended for material misrepresentation or (worse case scenario) be reported to insurance clearinghouses for fraud.

Tip #3: Cheap sometimes proves to be expensive

We all want to spend only what we need to for our insurance. When designing your personal risk plan, start with the risk that represents the largest potential financial impact and work backwards from there. Our biggest threats are where we need to spend the most time and money, otherwise we could possibly find ourselves facing financial ruin in the event of a disaster. Paying attention to the fine print — and all associated dollars attached — is smart for everyone to do.

Tip #4 Life is short, start planning now

When we're young and invincible, life insurance is typically thought of as something only older folks need. Life insurance is more accessible and affordable at a younger age. Securing coverage on your life at an early age allows you to plan for future events with peace like taking out a mortgage, raising children or setting aside money for college tuition. As we grow older the need for disability and long term care become increasingly more important in the financial and risk management plan.

Tip #5: Your appetite for risk matters

What often gets dismissed when purchasing insurance is the option of agreeing to a higher deductible in order to get a lower monthly premium. Instead, it's worth considering: if you can set aside the money for your deductible in an emergency fund, you can then use the funds you would have paid towards the higher premium to instead pay off debts or invest in stocks. This practice can be applied across any of your insurance policies including home, auto, and business.

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