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Buying Insurance
If you asked most Americans to list “buying insurance” on their to-do lists, it would probably fall somewhere between “going to the dentist” and “listening to fingernails on a blackboard.” Young working adults, for the most part, don’t even have it on their lists at all, content to take whatever health or life insurance is offered by their employers or parents. At some point in their working careers, though, even young people start thinking about things like insurance and retirement, and the sooner the better, too.
It was not that long ago that buying insurance meant calling around town, making appointments and going out to insurance agents’ offices to listen to dry, dull facts about actuarial tables and risk management. This is just one more task that has been “obsoleted” by the information superhighway. With an Internet connection and a $50 used computer, you can now shop for insurance of all kinds, from companies and brokers all over the world. Of course, having too many choices can be almost as problematic as having too few.
Study first, then shop
Buying insurance is not something you should do on a whim, in a hurry or without adequate study. This is always and ever a recipe for disaster, no matter what it is you are shipping for. You have to approach every financial decision – and make no mistake, buying insurance is part of your de facto financial plan, whether you’ve written it down or not – with up-to-date facts and information.
The fact is, you don’t go buying insurance without making a variety of calculations, depending on the kind of coverage you are looking to get. If you are buying life insurance, you need to calculate how much your survivor(s) will need for support for both determinate and indeterminate periods of time. If you are not up to making these kinds of calculations, by all means get some help.
Various types
Life insurance is only one kind of protection that you will need. You may, especially when younger, decide to save money by relying on employer-provided health insurance, and some companies also buy (usually modest) life insurance policies for their employees, sometimes with a face value that represents annual earnings. You may need other types of coverage, though, and you may have to pay for it yourself.
If you are not satisfied that the state- and/or employer-funded disability insurance will pay you enough if you are too ill or injured to work, you can augment your coverage with other personally purchased policies. Again, you cannot know the amount to buy, or what constitutes a “good deal,” unless you can see your various insurance coverages as part of your larger financial situation. You need to delay buying insurance of any kind just long enough to get good advice in the matter, and not so long that you start forgetting you need it!
Overall coverage
Once you get in the habit of assessing your financial situation, making plans for the future and buying insurance as part of those plans, you can begin the process of continuous review. That is, you will need to revisit your insurance policies at least annually to ensure that the coverage is sufficient for your changing needs. Families grow, careers advance and your net worth will increase, too, so you need to stay abreast of the mechanisms, like insurance, that help keep your plan (and life) safe from the vagaries of the modern world.
You can protect yourself against death, disease, injury and unemployment with a solid and sensible financial plan. This plan will include any number of insurance policies for various purposes, so buying insurance will be something you will do a number of times over your lifetime. Once you take the mystery out of it, and understand how insurance works with investments and tax planning to maximize and protect your life and livelihood, you will consider buying insurance just another one of the many small tasks that, taken together, add up to a comfortable and secure existence.
Topics: Insurance |
