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Thursday, July 16, 2015

Is the cheapest insurance worth it?


By Lautaro Martinez

Chances are you will purchase insurance at some point in your life. Whether you are purchasing car insurance, home insurance, life insurance, health insurance or another kind of insurance, it is important that you choose the right policy for both your needs and your budget. Unfortunately, some people are unsure of how to find this balance. Here are the pros and cons of buying the cheapest insurance, the possible dangers you should look for, and how you can be sure that you are getting the best deal for your price.

Pros and cons

There is one obvious advantage to choosing the cheapest insurance: it has the lowest monthly premium. While this seems great, when you choose the cheapest insurance without reading the finer details, you may not be getting the coverage that you expect. For example, the minimum coverage for your car is significantly cheaper, but it will not cover a lot of costs if you get into an accident. This could have you replacing your car at your own cost, or worse, paying out-of-pocket for medical expenses. If you have medical insurance that does not cover long-term hospital stays and you become chronically ill, for example, then you could end up in debt from hospital bills.

Dangers of cheap insurance

One of the biggest dangers in going for the cheapest insurance policy is a coverage gap. This means that your insurance will not pay any money until you have already paid a certain amount in out-of-pocket expenses. You can see this in both prescription and automotive insurance policies.

Another danger associated with cheap insurance is a lack of coverage where you need it most. If you do not thoroughly read the details of your insurance agreement, you may not even realize that you are getting bare minimum coverage until it came down to paying the costs of an event by yourself. While there are certainly other issues at play, unexpected medical costs continue to be the single most common cause of personal bankruptcy in this country and having inadequate coverage can accelerate a personal disaster.

A third danger when you choose cheap insurance is the risk of a rising premium after you have reached a certain limit or filed a claim on it. This is something you should be aware of when choosing an insurance plan. Look for a company and policy that gives you a guarantee that they will not increase your premium if you request repairs or visit the doctor several times.

The final danger we will discuss is poor customer service. Some of the companies offering the lowest payments for insurance may be cutting costs by hiring fewer employees to process claims or take phone calls. This becomes a problem if you ever need to verify insurance or have questions about your coverage, or worse, if you actually have to file a claim.

Getting the best deal

To get the best deal for your automobile, home, health, or life insurance, start by making a list of the things that you require from your insurance. For example, if you are in need of health insurance, you might want low payments for hospital visits or prescription co-pays. Once you understand your needs, shop around for plans that meet them. Agents at Insurance Land in Central Florida can even help you find the perfect company and policy for any asset or situation. With a little diligence, you can make sure that you're protected without having to break the bank.

About the author: Lautaro Martinez is a freelance writer and professional student who contributes articles and insights on a variety of issues affecting student and everyday life -- distilling a complex world into practical, down-to-earth advice.