What You Don’t Know About Insurance Can Hurt You

A recent study shows that most Americans just aren’t as smart about insurance as they think they are. Whereas the majority of individuals consider themselves to have “above average” knowledge of insurance policies (particularly those that they own), polls have shown a shocking lack of knowledge.

However, this is more than just a matter of pride or trivia. What you don’t know about insurance can end up costing you in the long run, up to thousands of dollars. Your financial security may well depend upon your knowledge one day! With that in mind, bone up on your knowledge of insurance policies and standards by keeping the following points in mind.

When it comes to auto insurance, does your policy automatically cover a rental car if you should ever need one? Are you sure about that? The poll conducted shows that 41% knew that the majority of auto insurance policies don’t cover rental cars. It’s easy to imagine how this could quickly turn into an unexpected expense that could have you tapping into your savings.

Health insurance is another vague area for many. A bit less than half of the people surveyed in the pool knew that health insurance policies typically don’t cover living expenses when one is injured and unable to work. Unless you have a contingent policy set up to take care of that, it can be quite disastrous, with even a minor layup from work resulting in missed payments and a ruined credit rating.

Home owner’s insurance is required by law, right? Not so! In reality, while most lenders demand that you have home owner’s insurance, there is no state that legally REQUIRES it! Moreover, did you know that the cost of home owner’s insurance is dependent entirely upon the size of your down payment and the lender you go with? Keep this in mind when you’re deciding on how much to pay down; it could really help you out in the long run to spend a bit more upfront.

Trying to decide how much of a life insurance policy to take out? The research shows that most people are confused about this, with only 14% of individuals knowing that the recommended amount is 5 to 7 times your annual salary. It can take your loved ones longer than you might think to recover, and you don’t want to leave them unprepared.

The National Association of Insurance Commissioners, the sponsors of the poll, are taking the results quite seriously, and have quite a few suggestions for those individuals who would like to improve their understanding of insurance matters. For one, they highly recommend shopping around, whether you’re looking for a new policy, or considering possible improvements to your existing policy. The more policies you look at, the more you’ll come to understand the details that distinguish them from one another.

In today’s society, insurance can make or break your financial life. It’s really nothing to play around with. For that reason, please be sure that you know as much as possible about matters of insurance, so that you don’t end up investing for years in a policy that’s just going to let you down when you need it most. Your insurance is supposed to be there for you, but don’t take anything for granted; make no assumptions, and research everything!