Insurance: Be A Savvy Consumer
General sources of insurance information include the American Council of Life Insurers, the Insurance Information Institute, the National Association of Insurance Commissioners, and your state insurance department. You can also visit www.insure.com.*
When buying insurance, whether it's home, life, auto, rental or other:
- Find out whether your state insurance department offers any
information concerning insurance companies and rates. This is a
good way to get a feeling for the range of prices and the
lowestcost providers in your area.
- Check several sources for the best deal. Try getting quotes
from a website such as www.insweb.com,* but be aware that many online
services may provide prices for just a few companies. An
independent insurance agent who works with several insurers in your
local area may be able to get you a better deal.
- Make sure the insurance company is licensed and covered by the
state's guaranty fund. The fund pays claims in case the company
defaults. Your state insurance department can provide this
information.
- Check the financial stability and soundness of the insurance
company. Ratings from A.M. Best (www.ambest.com*), Standard & Poor's (www.standardandpoors.com*), and Moody's
Investors Services (www.moodys.com*) are available online and at
most public libraries.
- Research the complaint record of the company. Contact your
state insurance department, or visit the website of the National
Association of Insurance Commissioners (www.naic.org*), which has a database of
complaints filed with state regulators.
- Find out what others think about the company's customer
service. Consumers can rate homeowner insurance companies at www.jdpower.com/homes/insuranceratings.*
- Once you pay your first insurance premium, make sure you receive a written policy. This tells you the agent forwarded your premium to the insurance company. If you don't receive a policy within 60 days, contact your agent and the insurance company. If you suspect fraud, call the National Insurance Crime Bureau's hotline at 1-800-835-6422. For more information, check out www.insurancefraud.org.*
The Insurance Information Institute offers a wealth of information on all types of insurance at www.iii.org.*
Auto Insurance
Requirements vary from state to state. Check with your state insurance regulator to learn more about individual requirements, as well as insurers you may be considering for your policy.
To get the best coverage at the best price, get several quotes from insurance companies. It may save you hundreds of dollars a year. Other ways to reduce your insurance premium are:
- Raise your deductible on collision and comprehensive coverages.
If you have an older car, you might want to drop these coverages
altogether.
- Take advantage of discounts. You may be eligible for a discount based on the number of miles you drive; your age (turning 25 or 50); your good grades if you are a student; your driving record (no moving vehicle violations or accidents in three years); or if you've taken a safe-driving course. You might also be able to get discounts if you insure more than one vehicle, insure your vehicle and your home with the same company, have anti-theft devices or have safety features such as air bags.
Disability Insurance
Disability can be more disastrous financially than death. If you are disabled, you lose your earning power, but you still have living expenses and often huge expenses for medical care. When purchasing disability insurance, ask:
- How is disability defined? Some policies consider you disabled
if you are unable to perform the duties of any job. Better plans
pay benefits if you are unable to do the usual duties of your own
occupation.
- When do benefits begin? Most plans have a waiting period after
an illness before payments begin.
- How long do benefits last? After the waiting period, payments
are usually available until you reach age 65, though shorter or
longer terms are also available.
- What dollar amount is promised? Can benefits be reduced by Social Security disability and workers' compensation payments? Are the benefits adjusted for inflation? Will the policy provider continue making contributions to your pension plan so you have retirement benefits when the disability coverage ends?
For more information on disability insurance, visit www.iii.org* and www.hiaa.org.*
Health Insurance
Most consumers have health care coverage from an employer. Others have medical care paid through a government program such as Medicare, Medicaid, or the Veterans Administration.
If you have lost your group coverage from an employer as the result of unemployment, death, divorce, or loss of "dependent child" status, you may be able to continue your coverage temporarily under the Consolidated Omnibus Budget Reconciliation Act (COBRA). You, not the employer, pay for this coverage. When one of these events occurs, you must be given at least 60 days to decide whether you wish to purchase the coverage.
Some states offer an insurance pool to residents who are unable to obtain coverage because of a health condition. To find out if a pool is available in your state, check with your state department of insurance. Most states also offer free or low-cost coverage for children who do not have health insurance. Visit www.insurekidsnow.gov* or call 1-877-KIDS-NOW (543-7669) for more information.
Healthcare Plans
When purchasing health insurance, your choices will typically fall into one of three categories:
- Traditional fee-for-service health
insurance plans are usually the most expensive choice. But they
offer you the most flexibility when choosing health care
providers.
- Health Maintenance Organizations
(HMOs) offer lower co-payments and cover the costs of more
preventative care, but your choice of health care providers is
limited. The National Committee for Quality Assurance evaluates and
accredits HMOs. You can find out whether one is accredited in your
state by calling 1-888-275-7585. You can also get this information,
as well as report cards on HMOs, by visiting www.ncqa.org.*
Medicare beneficiaries can compare HMO programs at www.medicare.gov* and www.medicarenewswatch.com.*
- Preferred Provider Organizations (PPOs) offer lower co-payments like HMOs, but give you more flexibility when selecting a provider. A PPO gives you a list of providers you can choose from.
WARNING: If you go outside the HMO or PPO network of providers, you may have to pay a portion or all of the costs.
When choosing among different health care plans, you'll need to read the fine print and ask lots of questions, such as:
- Do I have the right to go to any doctor, hospital, clinic or
pharmacy I choose?
- Are specialists such as eye doctors and dentists covered?
- Does the plan cover special conditions or treatments such as
pregnancy, psychiatric care and physical therapy?
- Does the plan cover home care or nursing home care?
- Will the plan cover all medications my physician may
prescribe?
- What are the deductibles? Are there any co-payments?
- What is the most I will have to pay out of my own pocket to
cover expenses?
- Are there any limits on expenses covered in a year? In my
lifetime?
- If there is a dispute about a bill or service, how is it handled? In some plans, you may be required to have a third-party decide how to settle the problem.
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Appealing Health Insurance Claim Decisions |
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If your health insurer has denied coverage for medical care you received you have a right to appeal the claim and ask that the company reverse that decision. You can be your own health care advocate. Here's what you can do: Step 1: Review your policy and explanation of benefits. Step 2: Contact your insurer and keep detailed records of your contacts (copies of letters, time and date of conversations). Step 3: Request documentation from your doctor or employer to support your case. Step 4: Write a formal complaint letter explaining what care was denied and why you are appealing through use of the company's internal review process. Step 5: If the internal appeal is not granted through step 4, file a claim with your state's insurance department. For more information visit nclnet.org* or statehealthfacts.org.* |
Homeowner/Renter's Insurance
You may be able to save hundreds of dollars a year on homeowners insurance by shopping around. You can also save money with these tips.
- Consider a higher deductible. Increasing your deductible by
just a few hundred dollars can make a big difference in your
premium.
- Ask your insurance agent about discounts. You may be able get a
lower premium if your home has safety features such as dead-bolt
locks, smoke detectors, an alarm system, storm shutters or fire
retardant roofing material. Persons over 55 years of age or
long-term customers may also be offered discounts.
- Insure your house, NOT the land under it. After a disaster, the
land is still there. If you don't subtract the value of the land
when deciding how much homeowner's insurance to buy, you will pay
more than you should.
- Don't wait until you have a loss to find out if you have the
right type and amount of insurance.
- Make certain you purchase enough coverage to replace what is
insured. "Replacement" coverage gives you the money to rebuild your
home and replace its contents. An "Actual Cash Value" policy is
cheaper but pays only what your property is worth at the time of
loss -- your cost minus depreciation for age and wear.
- Ask about special coverage you might need. You may have to pay
extra for computers, cameras, jewelry, art, antiques, musical
instruments, stamp collections, etc.
- Remember that flood and earthquake damage are not covered by a
standard homeowners policy. The cost of a separate earthquake
policy will depend on the likelihood of earthquakes in your area.
Homeowners who live in areas prone to flooding should take
advantage of the National Flood Insurance Program.
- If you are a renter, do not assume your landlord carries insurance on your personal belongings. Purchase a separate policy for renters.
Life Insurance
Your need for life insurance will change with changes in your life. For example, the arrival of children usually triggers a sharp increase in the amount you will need. As children grow older and leave the nest, you will probably need less protection.
Term life insurance policies are the least costly. They pay death benefits but have no cash value if you decide to stop making payments. As the word "term" suggests, these policies are in effect for a specific period of time -- one year, or until you reach a certain age are common. Visit www.accuquote.com* for online comparisons of term life insurance.
Whole life, universal life, and other cash value policies combine a long-term savings and investment product with life insurance. Canceling these policies after only a few years can more than double your life insurance costs.
Long-Term Care Insurance
Medical advances have resulted in an increased need for nursing home care and assisted living. Most health insurance plans and Medicare severely limit or exclude long-term care. Here are some questions to ask when considering a separate long-term care insurance policy.
- What qualifies you for benefits? Some
insurers say you must be unable to perform a specific number of the
following activities of daily living: eating, walking, getting from
bed to a chair, dressing, bathing, using a toilet, and remaining
continent.
- What type of care is covered? Does
the policy cover nursing home care? What about coverage for
assisted living facilities that provide less client care than a
nursing home? If you want to stay in your home, will it pay for
care provided by visiting nurses and therapists? What about help
with food preparation and housecleaning?
- What will the benefit amount be? Most
plans are written to provide a specific dollar benefit per day. The
benefit for home care is usually about half the nursing-home
benefit. But some policies pay the same for both forms of care.
Other plans pay only for your actual expenses.
- What is the benefit period? It is
possible to get a policy with lifetime benefits, but this can be
very expensive. Other options for coverage are from one to six
years. The average nursing home stay is about 2.5 years.
- Is the benefit adjusted for
inflation? If you buy a policy prior to age 60, you face the
risk that a fixed daily benefit will not be enough by the time you
need it.
- Is there a waiting period before benefits begin? A 20 to 100 day period is not unusual.
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Beware: Insurance Fraud |
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Other Insurance
- Travel Insurance. There are four
kinds of travel insurance: Travel Cancellation Insurance, Baggage
or Personal Effects Coverage, Emergency Medical Coverage and
Accidental Death. One helpful website is www.insuremytrip.com.*
- Identity Theft Insurance. This type
of insurance provides reimbursement to crime victims for the cost
of restoring their identity and repairing credit reports. Some
companies now include this as part of their homeowner's insurance
policy. Others sell it as a stand-alone policy. Ask your homeowner
policy company for information.
- International Healthcare Insurance. A
policy that provides health coverage no matter where you are in the
world. The policy term is flexible so you can purchase only for the
time you will be out of the country. Check online or write your
current healthcare provider for coverage information.
- Liability Insurance. Insurance for
what the policyholder is legally obligated to pay because of bodily
injury or property damage caused to another person. Search online
or ask your personal insurance agent for more information.
- Umbrella Insurance. A policy that supplements the insurance you already have for home, auto and other personal property. Umbrella insurance can help cover costs that exceed the limits of other policies.
* Links to external sites are provided
solely as a courtesy to our members.
Source: U.S. Consumer Product Safety Commission, 2010.
This publication is for general informational purposes only and it is not intended to provide any reader with specific authority, advice or recommendations. Where you deem necessary, we suggest that you seek advice regarding your particular situation from the appropriate professional.
Consumer Product Safety Commission (CPSC).
