Having at least a basic insurance plan is essential. While many jobs cover your insurance needs, not all of them do. It’s important to figure out what insurance plans you need and what works best for you and your family.
Choosing an insurance plan can be complicated, so when doing so, try to avoid these mistakes.
Mistake #1: Not Having Insurance
Whether you’re trying to save money or think you’re young enough to get by without it, foregoing basic insurance coverage can be an incredibly costly mistake.
When it comes to health insurance, you have options. If your employer does not provide coverage, you can choose to obtain a policy through the Healthcare.gov Marketplace. There are different coverage levels, from catastrophic (cheapest) to gold (typically the most expensive). If cost is an issue, even obtaining catastrophic coverage can be better than nothing. As you compare plans, look into what premium tax credits may be available to use, as these can help offset your monthly premium costs.
For those approaching or already in retirement, understanding Medicare enrollment timing is critical. Missing initial enrollment deadlines can result in permanent premium penalties or coverage gaps.
Mistake #2: Not Having ENOUGH Insurance
Less comprehensive coverage or basic insurance plans can equate to lower premiums every month. The problem is – you’re likely to make up the difference anyway when it comes to your deductibles and out-of-pocket expenses. By not giving yourself enough insurance coverage upfront, you’re taking a gamble on whether or not you’ll actually need to use it. One broken bone or a fender bender could quickly cost you more than if you had paid the higher premiums upfront.
As assets grow, liability exposure often increases as well, making it important to regularly review coverage limits to ensure they still align with your overall financial situation.
Mistake #3: Over-Insuring Yourself (Having Too Much Insurance)
Talk to an insurance agent or financial advisor to figure out the right amount of insurance for your specific circumstances. Just as you don’t want to under-insure yourself and your possessions, over-insuring can be just as costly. Coverage needs often change in retirement, so policies that made sense earlier in life may no longer be necessary or cost-effective.
Mistake #4: Not Asking for Discounts
If you don’t ask for a discount, then you may never know if you’re eligible for one. There are sometimes hidden discounts you can qualify for, but if you don’t ask your agent about them, they will never know to apply them to your account.
Mistake #5: Not Looking Around for New Policies
You should shop around for a new basic insurance policy every few years. In some instances – especially if certain circumstances have changed – you can save money by updating your coverage or switching providers. Some insurance companies may even offer discounts based on things like where you work or where you went to college.
Mistake #6: Misunderstanding Your Policy
Make sure that you understand what your policy covers, when it can be used, and what you can still expect to pay out-of-pocket. Having a thorough understanding of your coverage now means avoiding unwelcome surprises when it’s time to file a claim.
Mistake #7: Opting Into Group Life Insurance Automatically
If you choose to take advantage of your company’s group life insurance policy, remember that your rates aren’t locked in – they could go up. Consider any additional life insurance offerings provided through your workplace carefully before signing on. You should know exactly what you’re paying for and if the premiums are worth the potential benefits in your particular situation.
Mistake #8: Getting Rid of Long-Term Care Insurance
If you’re notified that your premiums are about to increase, you may be inclined to drop your long-term care policy. However, it’s important to remember that purchasing a new plan may cost even more, especially since you are now older than when you first purchased your original policy. And foregoing long-term care coverage altogether puts you and your family at greater risk of future financial turmoil.
Mistake #9: Picking a Health Policy on Premium Alone
You may think that you are saving money because the premium is low on your insurance. Insurance companies, however, can sometimes find less obvious ways to make their money back.
Some examples include:
- Higher copays during doctor visits
- If a doctor’s visit is out of your network, out-of-pocket costs may be higher
- Prescription drugs may be more expensive
Consider how often you visit the doctor’s office each year and any prescriptions you’re currently taking. This can help you find an insurance policy that covers what you need without breaking the bank.
Whether you’re looking at health, auto, life, or any other insurance policy, there are plenty of things to keep in mind. If you choose a plan through your work, make sure you are speaking to someone who works at the insurance provider to get all the answers you need. If your work does not cover your insurance, talk to representatives at the insurance company and your financial advisor to help make these decisions.
If you’d like to learn more about how we help families navigate financial decisions with clarity and confidence, we invite you to explore our approach or reach out for a conversation.
