Beginner's Guide To Auto Insurance

Insurance is one of life's odd purchases. We all buy it, and then afterwards we all pray that it was a waste of money, and that we will never need to use it. But accidents do happen, and when they do, insurance is what keeps our finances safe and sound.

Whether an auto collision is your fault or somebody else's, your auto insurance coverage should help you. How much it helps, however, is up to you, and this is determined by the combination of options that comprise your insurance policy. Despite what the TV commercials would have you believe, there is no one-size-fits-all insurance package, and it can be confusing to choose the best options for your situation.

In order to protect yourself without overpaying, let's explore what factors you should consider in putting together the right coverage for your vehicle, as well as how to select a good insurance company that will handle your claims if an accident happens.

Factors to Consider Before Buying Auto Insurance

    Personal Injury or Personal Liability - Always put you and your family's safety before anything else. Personal injury or personal liability coverage should be given great importance when putting together an insurance package. During accident situations, health insurance is the first thing requested by any medical facility treating you. If you don't have health insurance, load up this option with hefty coverage that will pay for any medical expenses incurred in a major accident. (For help with health insurance, read 20 Ways To Save On Medical Bills and How To Choose A Healthcare Plan.)
    Uninsured Drivers - According to an Insurance Research Council (IRC) study, if someone is injured in an auto accident, the chances are about one-in-seven that the at-fault driver is uninsured. Don't trust other drivers and don't take for granted that they will have as good of coverage as you do. Though it can be hard to digest that you must pay a premium and the deductible for someone else's mistake, it's better than forgoing this coverage and risking losing your vehicle.
    Major Accidents - You should never neglect the worst-case scenario when selecting insurance. What if your car is totaled and needs to be replaced? If the accident is not your fault, the other driver's insurance (or your uninsured motorist coverage) will pay for the vehicle. But, there are other situations and natural calamities that can also destroy your vehicle, and in those cases, you'll only be able to rely on your own insurance. In case such a situation arises, it is better to have enough coverage to fully repair or replace your vehicle.
    Getting Stranded - A vehicle is a combination of mechanical, electrical and rubber parts. Things can go wrong at any time and they are not always in your power to prevent. But being prepared for those events is in your power if you add towing and rental coverage to your insurance. This might work out better than having a separate towing club membership, which could save you those annual fees.
    Deductible Vs. Premium - The insurance deductible is inversely proportional to the premium amount. If the deductible goes up, the premium goes down and vice versa. This relationship reflects whether you prefer to pay more or less from your own pocket before stretching out your hand to the insurer. Whichever option you choose, make sure you can afford it. Some people are better off paying a higher monthly premium in exchange for a lower deductible to avoid any large payments after an accident.
    Quality and Age of Your Vehicle - A new vehicle probably will not break down for at least a year or two, so your towing coverage should be minimal (though flat tires are still a concern). Some dealers even offer free towing for mechanical breakdowns on new cars. However, a new car will also be expensive to fix or replace in the event of an accident, so make sure your choice of coverage reflects this. (To fix a sour deal on your car, check out Did You Buy A Lemon?)

    If you own an old vehicle or an out-of-warranty on one, you will need better towing and rental coverage. Rental coverage becomes important if you are at fault and your car is damaged. If you don't have a second vehicle and you need a car to get to work, rental coverage will tide you over while your car is being repaired or replaced.
    Driving Experience - Many insurance companies automatically recommend certain coverage for particular drivers. For example, if you have a teen driver at home, it is better to have good personal liability coverage with a lower deductible because new drivers are prone to making mistakes. On top of that, rates to cover teen drivers will automatically be higher because of their lack of driving experience. Try not to let the higher rates prevent you from getting ample coverage, though.

    Experienced drivers with past mistakes, such as moving violations or accidents, can also have higher premiums. Defensive driving courses help to offset some of the cost, but not all of it, so drive carefully and consciously to avoid paying higher premiums later in life.

In the next section we'll look at some quick tips to help you find the perfect auto insurer.

Choosing Your Auto Insurer

Choosing the right coverage is just the first step. You must also choose a good insurance company if you want to maximize the chance that your claims will be paid. Look for the following qualities when choosing your auto insurer.

    Reliable and Reasonable - Insurance companies should be reliable, and offer reasonable coverage for the prices they charge. In some states, there isn't much difference in price among insurance companies because of state mandates. In most states, however, companies will quote different prices for similar coverage.
    Covers the Vehicle at All Times - Many small insurance companies offer low rates compared to the big ones because of their lower overhead costs. But, when there is an accident and an insurance claim is filed, these small companies can sometimes be a pain. They may try to wash their hands and say, "it's not covered under your policy." That's not what you want to hear when you really need them after paying your premiums for months. Also, don't go with a local insurance company that doesn't cover out-of-state accidents. (An accident can mean higher insurance costs - even if it wasn't your fault; to learn more, read Will Filing An Insurance Claim Raise Your Rates?)

Be a smart buyer: do your homework and check out what a company's policy does and does not cover before purchasing your policy. When considering any company, big or small, whose costs are lower, also consider their customer service. Further, it's a good idea to investigate the company's financial strength (which directly impacts their ability to pay your claims) through a rating service such as A.M. Best.

Also keep in mind that a company offering a discount on the first month or two of premiums will probably make up for that discount with higher rates in the following months. Overall, you want to find the middle ground between price and quality.

Don't Overdo It

When you talk to any insurance agent or service provider, they are going to try to sell you more coverage so they can make more money. In general, you don't a need high amount of coverage unless you own an expensive vehicle, drive extensively or don't have adequate health insurance. Many insurance companies are able to make easy money off of uneducated buyers who don't know what they want. By using the tips from this article, you won't have to let a smooth-talking agent steal money from your pocket.

Having ample and reliable insurance coverage is a very important component of auto ownership: you don't want to experience money problems when you are already going through the trauma of an accident. Be a smart buyer, do the proper research, compare quotes and create a package that suits both your coverage needs and your budget.

What Happens If Your Insurance Company Files Bankruptcy

Insurance companies go through a rehab process which helps protect you

As a policy owner of a life insurance, annuity, long-term care, or disability policy, it is natural to be concerned about what would happen to your benefits if your insurance company goes bankrupt. It may not be as bad as you think.

Rehabilitation - prior to an insurance company bankruptcy

Prior to an insurance company bankruptcy, the insurance company will go through a process called rehabilitation dictated by the laws of the state whereby the state insurance commission will make every attempt to help the company regain its financial footing.

If it is determined that the company cannot be rehabilitated then the company is declared insolvent, or bankrupt, and the court orders the liquidation of the company.

Guaranty Association takes over in the event of insurance company bankruptcy

When an insurance company goes through bankruptcy insurance coverage will continue and policy claims will be covered and paid by state insurance guaranty associations, subject to each state's coverage limits. Guaranteed coverage amounts typically vary from $100,000–$500,000 in benefits, but you will need to check with your state insurance guaranty association to see what amounts are covered for which types of benefits in your state.

There are both general and state-specific laws which must be followed. You can get additional information from the National Organization of Life and Health Insurance Guaranty Associations (NOLHGA), which provides a summary of each state's laws and link to the state's guaranty association.

How do I check on my insurance company's rating?

You can check on the ratings of your insurance company at any time. In terms of ratings, the three main companies who keep tabs on the insurance carriers are:

    A.M. Best
    Standard & Poor's

Each of the companies offers a rating system which clearly defines which companies have more risk than others.

Generally speaking, A++, AAA, and Aaa are the superior scores respectively, while D, CC, and Ca are the lower end of the spectrum which is indicative of the weakest or poorest ratings. Strong ratings mean the company is considered to be financially stable.

Be careful--each company uses slightly different methodology in their ratings calculations. There's no guarantee that if a company receives the highest rating that you're money is safe. There are plenty of instances when one of these ratings companies gave a company a high rating that proved to be wrong. Enron is a prime example.

Maybe the most useful indicator of your policy or carrier is whether or not it has received any recent downgrades. When you are meeting with your agent or advisor, ask them what the current rating is. Compare this rating to where it originally began.

The ratings you hope to not hear include A.M. Best ratings called E, F, or S. This would mean the company is under state supervision, in liquidation, or carries a suspended rating (which indicates info is not available.)

For Standard and Poor's ratings, you would be concerned if the rating had changed to R. The R tells you that the carrier is under the supervision of insurance negotiators.

Lastly, if Moody's has issued a Ca or C rating, it means the carrier is extremely risky or in default. A company rated this low offers poor financial security, the opposite of what you want to see. To use the Moody's website, you will need to register to get free access by creating a user name and password.

Your insurance agent should be accessible and can help you assess company ratings and policy needs.

A financial planner can also help you learn how to spread risk out over several carriers (something you might do if you were buying an annuity) so that your future retirement income is not dependent on only the guarantees of one insurance company.

Be Cautious But Don't Worry

It's quite rare for insurance companies to fail. Often, instead of going out of business, they find a buyer and its policy holders only experience the headache of re-enrolling with the new company.

Signing with a highly rated company is certainly best and it makes sense to keep up with the health of the company but more than likely, you're policy is safe.

How To Review An Insurance Policy

Insurance policy reviews should be part of a financial plan

It is important to review an insurance policy on a periodic basis. All too often we set insurance policies aside in a file drawer and forget that some items in them need to be updated from time-to-time.

The easiest way to organize and review your insurance policies is to create a one-page policy summary for each policy. Most insurance policies contain a page in front of the insurance contract that is called a " declarations page" or "policy summary." It will contain most of the information you will want to review.

You can also create your own policy summary template on a pad of paper, in a word document, or in an excel file. By writing down the relevant information in your own template it can help you understand it and remember it.

Either way, start by reviewing the basics below:

    Type of Policy - Is it ​health insurance, life insurance, long-term care insurance, disability insurance, property and casualty insurance, or auto insurance? If you are reviewing or summarizing a life insurance policy, specify what type of life insurance policy it is: term life, whole life, universal life or variable life.
    Insurance Carrier - Who is the insurance company that provides the insurance? Keep track of a customer service number you can call, or the contact information for your insurance agent.
    Policy Number - You will always need your policy number when you call and ask questions about an insurance policy.
    Date Issued - It is important to know the date the insurance was issued, especially when it comes to life insurance, as term insurance has an expiration date, and permanent insurance will have a surrender charge that may apply if you cancel the policy in the first five to twenty years.

    Premium Required - Always keep track of the premium you pay and how frequently it is paid. In the case of a whole life insurance policy, the policy could be paid up. In that case, if you were creating a policy summary you would write "No premiums required at this time as premiums are being paid by the dividends inside the policy." For other types of insurance, you might list something like “Premium of $225 per month paid by automatic deduction from checking account.”

    Insured - Who do the benefits apply to; you, your spouse, or a dependent child?
    Beneficiary - For life insurance, who is the beneficiary? If it is an ex-spouse or a beneficiary you named prior to marriage, contact the insurance company for a change of beneficiary form to get the information updated. A will or trust will not take care of this. You have to fill out the proper form and send it back to the insurance company.

Once you have the basics down, you'll want to look at the details of the policy so you understand how the benefits work, and what restrictions may apply. Looking at the details can help you spot areas where you may have duplicate coverage, too much coverage, or areas where you are under-insured.

To conduct a thorough insurance review call your agent, or set an appointment with them, and have them walk you through each feature of your policy, explaining when it would apply, how you would qualify, and how much you pay for it. Below is a brief overview of the details you'll want to review for each type of insurance you may have.

Life Insurance Policy Review

For life insurance, keep track of the total death benefit, and any additional riders such as a waiver of premium in the event of disability, or the ability to access the death benefit early in the case of being diagnosed with a terminal illness.

If you have a term policy, put a reminder on your calendar the year the policy is set to expire. You'll need to evaluate options at that time and see if you still need the life insurance coverage.

In addition, if your policy has a cash value, track the performance of investments inside it, and call the insurance company to request something called an "in-force illustration." An in-force illustration will project how the policy should perform from now throughout the rest of your life. If the policy has performed well and is expected to continue to do so, you may be able to forego premiums. If the policy has not performed well, you may have to pay higher premiums to keep it in force. Reviewing policies on a regular basis can help you anticipate these future changes.

Long Term Care Insurance Policy Review

For long-term care insurance, you should know the “per day” benefit, and how long the benefit would last.

For example, your policy may pay $100 per day for up to 500 days in the event that you qualify for long-term care benefits. You'll also want to know if your policy covers in-home care or only services provided in an assisted living facility. To be eligible for benefits, most policies require that you need assistance with two out of six activities of daily living and will have some type of waiting period such as 90 days or 120 days. The longer the waiting period, the more of your own funds you'll want to have set aside so you could pay out-of-pocket if a short-term care need occurs.

Health Insurance Policy Review

For health insurance, make sure you know your deductible and maximum out-of-pocket costs. For example, if the policy has a $3,000 deductible and a $6,000 max out-of-pocket cost, you'll want to have $9,000 set aside in an emergency fund or Health Savings Account to use for that purpose. You'll also want to know details such as “policy pays 80% of covered services after I make a $50 co-pay.”

Disability Insurance Review

For disability insurance, you want to know the monthly benefit that is payable, how long it would pay you, and how the insurance company defines disability. A policy that only pays if you lose an arm and a leg is not very useful for most people. Many disabilities are not of that nature.

Professionals want a policy that protects their ability to work in their specific career. For example a surgeon needs all ten fingers; if they were to be injured and lose the use of a finger, perhaps there are many jobs they could still do, but the best disability policy for them will still provide a benefit at least for a period of time, because they can no longer perform surgery.

Property and Casualty Insurance Review

For property and casualty insurance, take a look at your total coverage relative to what you own, and to your net worth. As your net worth grows, the amount of insurance protection you have should also increase. If someone were to be injured on your property and sue you, would your coverage hold up? It helps to know what items are excluded from coverage. Best to review this with your insurance agent and adjust coverage as needed. If you run a business out of your home, be sure to bring this up to your agent. Yes, additional coverage may be needed, but it is better to pay a small premium to have things covered than to experience a devastating uncovered loss.

Reviewing policies isn't exciting, but it is part of a sound long-term financial planning process.

Shop for New Car Insurance Policies to Save Money

When you first sign up for a car or home insurance policy, you will be given a new customer introductory rate. It means you will receive a fairly competitive rate on your car insurance, especially if you have a good driving history, and you shopped around for insurance. Each year at renewal, you will likely receive notification that your car insurance will increase. It can be very discouraging, especially if you have not received a ticket or otherwise filed a claim. Car insurance companies do raise rates on policy holders each year. You can keep your car insurance rates lower by shopping around every few years for new car insurance.

01 Check Out the Competitors
You really can save on car insurance by shopping around.

With the Internet, it does not take long to get quotes on various car insurance policies. You just need to be sure that the quote you are receiving is for the same coverage. You need to make sure that you have the same per accident coverage limits for damages and medical expense per person and per accident. Sometimes the calculators will default to a different amount than what you actually want, and then your quotes on are not accurate. Once you have compared quotes across several different policies, you can contact your current insurance agent to see if they can match the current rates that they offer. They may be willing to lower your premium rates. If they do this, you will need to decide if the rate that you will receive is worth staying with the company. Shopping for car insurance can save you a lot of money. Do not go with the first quote you get.

02 Use Bundling to Save Even More

You can save on your home insurance and car insurance by bundling the policies. It works even for renter’s insurance. When you are switching over your policy, be sure to check that they are giving you a discount on bundling your insurance with them. Many companies do it automatically, but asking will ensure that you receive the savings on your policy. If you own your own business, you may want to find out if you can save money by bundling these policies together too.

03 Take Advantage of Discounts

The discounts you can get through your employer or your alumni association are worth using. These discounts can lower your entire premium by about ten percent, which adds up over time. When you fill out the application, it will ask for any discounts that you qualify to use. You can look online at your alumni association or on the human resource section of your company’s website to find out what insurance discounts you qualify to use.

04 Don’t Get Substandard Insurance

There are a number of insurance companies that you can purchase a policy from. Some insurance companies are notorious for denying claims or making it difficult to get all of the money you are entitled to. In the case of an insurance company, you need to carefully research the company to make sure that it is reputable. Generally, going with an established national insurance company is the best option.

05 Remember to Have Your Insurance Agent to make Changes on Your Policy

People under the age of twenty-five are charged a higher insurance rate than older drivers. When you turn twenty-five, you can ask your insurance agent to run your information again and adjust the rate on your policy accordingly. If you have a ticket that is set to expire on your record, you can have your premium reduced once it has dropped off. Simply contact your insurance agent and ask them to do another check on your license. These little steps can be done at any time and can save you quite a bit of money in the long run.

Who Needs Life Insurance? 10 Ways You Can Use Life Insurance

Your Life Insurance Strategy - How to Know if You Need Life Insurance

Life insurance is designed to protect your family and other people who may depend on you for financial support. Life insurance pays a death benefit to the beneficiary of the life insurance policy.

Over the years, life insurance has also evolved to provide options for building wealth or tax-free investments.

Who Needs Life Insurance FAQ

Is life insurance only for people who have a family to support?

When should you buy life insurance? We'll go through these questions and common scenarios of when life insurance is a good idea to buy based on different situations. This list will help you decide if it's time for you to contact your financial advisor and start looking at your life insurance options.

Do I Need Life Insurance If I Have No Dependents?

There are instances where life insurance can be beneficial even if you have no dependents, the most basic of which would be covering your own funeral expenses. There may be many other reasons too. Here are some guidelines to help you decide if life insurance is the right choice for you:

At What Life Stage Should You Buy Life Insurance?

The first thing you need to know about life insurance is that the younger and healthier you are, the less expensive it is.

The Best Life Insurance Choice For You Will Depend On:

    Why you want the life insurance (to build wealth, to protect assets, provide for your family?)

    What your situation is
    What stage in life you are in (do you have kids, are you in school, are you starting a business, buying a home, getting married, etc.)
    How old you are

10 Different Situations and Ways You Can Use Life Insurance

Here is a list of people who might need life insurance at different life stages, and why you would want to buy life insurance at these stages.

This list will help you consider various reasons to purchase life insurance and help you figure out if it is time for you to look into buying life insurance or not.

A financial advisor or life insurance representative can also help you explore different life insurance options and should always be consulted for their professional opinions to help you make a choice.

1. Beginning Families

Life insurance should be purchased if you are considering starting a family. Your rates will be cheaper now than when you get older and your future children will be depending on your income. Learn more at Parents: How Much Life Insurance Do You Need?

2. Established Families

If you have a family that depends on you, you need life insurance. This does not include only the spouse or partner working outside the home. Life insurance also needs to be considered for the person working in the home. The costs of replacing someone to do domestic chores, home budgeting, and childcare can cause significant financial problems for the surviving family. Learn more at Parents: How Much Life Insurance Do You Need?

3. Young Single Adults

The reason a single adult would typically need life insurance would be to pay for their own funeral costs or if they help support an elderly parent or another person they may care for financially.

You may also consider purchasing life insurance while you are young so that by the time you need it, you do not have to pay more due to your age. The older you get, the more expensive life insurance becomes and you risk being refused if there are problems with the life insurance medical exam.

Otherwise, if one has other sources of money for a funeral and has no other persons that depend on their income then life insurance would not be a necessity.

4. Homeowners and People With Mortgages or Other Debts

If you plan on buying a home with a mortgage, you will be asked if you want to purchase mortgage insurance. Buying a life insurance policy that would cover your mortgage debt would protect the interest and avoid you having to buy extra mortgage insurance when you buy your first home. 

Life insurance can be a way of securing that your debts are paid off if you die.

If you die with debts and no way for your estate to pay them, your assets and everything you worked for may be lost and will not get passed on to someone you care about. Instead, your estate may be left with debt, which could be passed to your heirs.

5. Non-Child Working Couples

Both persons in this situation would need to decide if they would want life insurance. If both persons are bringing in an income that they feel comfortable living on alone if their partner should pass away, then life insurance would not be necessary except if they wanted to cover their funeral costs.

But, maybe in some instances one working spouse contributes more to the income or would want to leave their significant other in a better financial position, then as long as purchasing a life insurance policy would not be a financial burden, it could be an option. For a low-cost life insurance option look into Term Life Insurance or consider first-to-die life insurance policies where you pay for only one policy and the death benefit goes to the first to die.

6. People Who Have Life Insurance Through Their Work

If you have life insurance through your work, you should still buy your own life insurance policy. The reason you should never only rely on life insurance at work is that you could lose your job, or decide to change jobs and once you do that, you lose that life insurance policy. It is not strategically sound to leave your life insurance at the hands of an employer. The older you get the more expensive your life insurance becomes. You are better off buying a small backup policy to make sure that you always have some life insurance, even if you lose your job.

7. Business Partners and Business Owners

If you have a business partner or own a business and there are people relying on you, you can consider purchasing a separate life insurance policy for the purpose of your business obligations.

8. Buying Life Insurance on Your Parents

Most people don't think of this as a strategy, buy it has been used and can be a smart thing to do. Life insurance on your parents secures a death benefit to you if you put yourself as the beneficiary of the policy you take out on them. If you are paying their premiums you will want to make sure you make yourself an irrevocable beneficiary to secure your investment.This way when your parents die, you secure the amount of the life insurance policy. If you do this while your parents are young enough, it may be a financially sound investment.

You may also want to protect your own financial stability by looking at buying long-term care for them as well or suggesting they look into it. Often when parents fall ill as they get older the financial burden on their children is enormous. These two options may provide financial protection that you might not have otherwise thought of.

9. Life Insurance for Children

Most people would suggest that children do not need life insurance because they have no dependents and in the event of their death, although it would be devastating, life insurance would not be beneficial.

3 Reasons to Buy Life Insurance For Children

    If you worry about your children eventually getting an illness. Some families have concerns about their children's long-term health due to hereditary risks. If parents fear that eventually, this may make them uninsurable later in life, then they could consider buying their children life insurance so they don't worry about failing medical exams later when they need life insurance for their own families. Some people look at critical illness insurance for children as well.
    Some people purchase life insurance for children as they reach early adulthood to help them get a head start on life. A permanent life insurance policy may be a way to build savings for them and give them an opportunity to have a life insurance policy that pays for itself by the time they have a family of their own, or if they want to use the cash portion to borrow against for a major purchase. Life insurance for children may be purchased as a gift to them.
    If you would want to receive some sort of death benefit to help you deal with the death of a child and cover funeral expenses if something were to happen to them. The loss of a child is devastating and although children do not provide financial support, they play an important role in the family and their loss can have effects on many levels.The loss may make it very difficult for you to work, and you may suffer financial losses, require psychological help, or require help with surviving children as a result of their passing.

Children, for the most part, do not need life insurance, but if it is part of a strategy, life insurance for children may be something you consider for the above reasons. Always weigh the option of the above reasons with the other possibilities of savings or insurance you could consider for your kids.

10. Elderly

As long as you do not have people depending on your income for support, life insurance at this stage in life would not be necessary, unless you do not have any other means to pay for your funeral expenses or decide you want to leave money as a legacy. One useful thing about life insurance if you are older, is the tax savings elements if you want to preserve the value of your estate. You should speak with an estate attorney or financial planner to understand if buying life insurance in your later years may provide tax benefits. Purchasing a life insurance policy at this age can be very expensive.

Life Insurance as a Strategy to Protect and Build Wealth

When you buy life insurance you are looking to protect the lifestyle of your family or dependents if you should die.

If this is your primary goal then low-cost life insurance may be a good starting point for you.

You might also look at it as a way to build your or your family's wealth either through potential tax advantages or if you want to leave money as a legacy, like in the case of  Survivorship life insurance.

You may also buy life insurance as a way to secure your own financial stability, in the case of whole life insurance, or universal life insurance policies that also offer cash values and investments. These types of policies, along with survivorship life insurance policies also offer the potential of borrowing money from your life insurance policy.

3 Types of Insurance Policies That You Don't Need

There are undoubtedly some types of insurance that everyone absolutely should have. Car insurance, health insurance and homeowner's insurance (if you own a home) are easily in the top three.

Insurance is big business and new products and policies are routinely created to meet all sorts of needs. Some may obviously be a wrong fit, while others might sound like a good idea. Short of working with a fee-based financial planner, how do you determine what insurance you and your family should have?

I recommend starting with the types of insurance policies you need to make sure you're covering the most important bases. Once those policies are in place, you can branch out and consider other insurance types that might be important to your unique situation (like key man insurance for business owners or long-term care policies to offset the rising costs elderly care). And of course, you can determine which insurance policies don't belong in your financial plan.
3 Insurance Policies That You Don't Need

While there are certainly more than a few types of insurance policies that have their place in people's portfolios, there are just as many that you're probably better off without. While they may sound appealing in theory, in reality, you may be wasting money on the premiums. The following insurance types fall into the category of coverage types most people don't need.

1. Mortgage Life Insurance

This type of insurance is receiving more media coverage lately, but it's probably a policy you can do without.

Mortgage life insurance is a policy that promises to pay your mortgage payment in the event you become disabled or die. If you're married this sounds like a pretty good idea, right?

Well, not exactly. This type of policy really only overlaps with your existing insurance policies that you hopefully you already have through your employer or through a separate policy (remember the list of insurance everyone should have?).

In the event of death with a standard life insurance policy, the beneficiary of the policy receives the benefit that can be used for any expense they choose, including paying off your shared mortgage.

It's typical for financial planners to recommend that a life insurance policy be taken out for an amount that not only covers the lost income of the deceased, but some additional amount to cover other costs. Mortgage life insurance can be an expensive -- and unnecessary -- supplement to traditional life insurance. In the end, why pay an additional premium for something that a cost-effective life insurance policy can coverr?

What it comes down to is that mortgage life insurance is very narrow in its coverage and, therefore, probably not the best use of insurance premiums. You're generally better off sticking with a good life insurance policy. You can always increase your life insurance coverage to offset your mortgage balance if that's something you're especially concerned about.

2. Travel and Flight Insurance

Travel and flight insurance policies offer another type of coverage that may require you to pay a premium for insurance that could overlap with coverage or benefits you already have.

Before you spend money on travel insurance, check your current health and life policies to see how accidents or injuries during travel or flights are covered. More than likely there's some sort of coverage included. And in the event of a catastrophe, your life insurance policy should cover you if you pass away while traveling.

If you use a credit card to book tickets or travel arrangements, you'll also want to check with your credit card company to see if any travel protections are included with your account. Many credit card companies automatically provide benefits like car rental insurance, lost baggage insurance or travel accident insurance as part of your cardmember agreement. If you find that you still need some additional insurance to keep your mind at peace, you can always purchase a small travel policy to cover the gaps in your existing coverage.

3. Cancer Insurance/Disease Insurance

Critical illness coverage like cancer insurance is becoming more popular as cancer rates and awareness rise. But is it really a worthwhile investment? While cancer treatment can come with some astronomical medical bills, you might want to hold off on taking out a cancer-specific insurance policy.

The reason? In most cases, your primary health insurance policy covers medical expenses related to cancer treatment. If you're worried potentially expensive treatments, like cancer treatment, leaving you with out-of-pocket costs once you reach the lifetime coverage limit, review your current coverage to see how much the policy pays.

One shocking reason cancer insurance policies can be a waste of money is that most cancer insurance doesn’t even cover skin cancer, a leading type of cancer. Not only that, but cancer insurance typically doesn’t cover outpatient expenses related to the cancer treatment. And, there's always the possibility that you may not get cancer at all. In those scenariso, you have to question exactly what you're paying for with these types of policies. 

Unless your health insurance specifically does not cover cancer-related expenses or you have a high likelihood of getting a specific type of cancer that could be covered by a policy, you're more than likely wasting money on a premium you could be using elsewhere. And in some cases, your primary medical policy may not cover you if you have supplemental coverage elsewhere for the same types of treatment. As with any type of insurance, be sure you understand the benefits and limitations before buying a policy.

Lower Your Homeowner's Insurance Premium

Homeowners face a lot of expenses, but a hefty insurance bill doesn't have to be one of them. Bring your homeowner's insurance premium down to a more reasonable level with these eight strategies.

01 Get a Quote Before You Buy

Consider the cost of insuring a home before you buy it, and you could save yourself from a hefty bill. Why? Because even seemingly identical homes can carry substantially different premiums. It may sound crazy, but since there are so many factors that go into determining the cost to insure a home, including the proximity to emergency services – fire department, police station and hydrants, and even the age of the home's systems – heating, electrical and plumbing, the difference between two homes – even two identically priced homes – can be as much as 15%. Now, that's a pretty good reason to comparison shop, wouldn't you say?

02 Don't Insure the Land
 Homes can be damaged in fires, floods, and other mishaps, but there's not much that can go wrong with land. Purchase enough insurance to cover the value of your home, and let the land take care of itself.

03 Give Up Smoking 
 According to the National Fire Protection Association there were 17,600 residential fires caused by smoking in 2011. With statistics like this one on the books, it's not surprising that homeowner's insurance costs more for smokers. If you smoke, and are serious about lowering your bill, consider quitting.

04 Install an Alarm System 
Add an alarm system to your home, and your insurance company is likely to reward you with a discount, usually 5-10%. Include water sensors, and you could save even more. With all the smart home alarm systems that are now available, installing an alarm doesn't have to be a big expense, or even require any outside help.  

05 Protect Your Home Against Disasters

 Do you live in an area that's prone to earthquakes, hurricanes or other natural disasters? If so, you may be able to protect your home and lower your insurance premium by adding features like a reinforced roof, storm shutters or a hard-wired generator. Even upgrades to your heating, electrical and plumbing systems can sometimes net a discount. Talk to your agent to find out if there are upgrades that you should consider.

06  Use One Insurance Company 
Purchase all of your insurance policies – auto, homeowner's, etc. – from one insurance company, and you'll qualify for a multi-line discount, worth about 10% off of your total premium. 

07  Raise Your Deductible

Give your homeowner's premium a major trim by raising your deductible. That's the amount that you're responsible for paying when you make a claim. If you can afford to raise your deductible from $500 to $1,000, you could save as much as 25%. Just sock that money away in a savings account, and it'll be there if you ever need it.

08 Improve Your Credit Score

 What does your credit score have to do with getting a good deal on insurance? More than you might think. Insurance companies frequently check your credit score to determine how much they should charge you for insurance. Consider it one more reason to stay on top of your credit.

Types of Insurance Policies You Need

The Right Insurance Is Critical to Your Financial Plan

You can find an insurance policy to cover almost anything imaginable but some are more deserving than others of a place in your financial plan. You work hard throughout your life to build wealth and live a happy and comfortable life and your insurance coverage should offer protection for your possessions, income and for the loved ones you'll someday leave behind. As you map your financial future, these four types of insurance should be firmly on your radar

Health Insurance

Health insurance is easily one of the most important types of insurance to have. Your good health is what allows you to work, earn money and otherwise enjoy life. If you were to develop a serious illness or have an accident without being insured, you may find yourself unable to receive treatment or even in debt to the hospital. While health insurance will no longer be mandated by the government beginning in 2018, it's not something to discount.
Thankfully, many employers provide health insurance benefits to full-time and even some part-time employees. If you do not currently have health insurance coverage this is the first place to check as it will generally be the most affordable. If you're married, you may both be able to receive coverage under just one of the employer plans. When both employers make health insurance available, a careful comparison can help you decide which plan to use.
Consider the co-pays, deductibles, premium costs, network coverage and covered expenses to determine which plan yields the most benefits. 
If your employer does not offer health insurance or you're self-employed, you'll need to explore your insurance options. The federal healthcare marketplace is a good starting point; alternately, you can contact insurers directly to see what type of coverage is available in your state.
Again, the same criteria used to evaluate an employer's plan would need to be taken into account as you compare policies, in terms of the cost and coverage. 

Life Insurance

This type of policy is more important if you are married and/or have children, but even single people can benefit from having life insurance. Life insurance can meet several financial needs. In the case of someone who's married with a family, it can replace lost income, help to pay any lingering debts after your death or pay for your children's college education. If you're single, life insurance could pay for burial costs and pay off any debts you leave behind.
If you do not currently have life insurance your best bet is to check with your employer first. Many employers offer a basic life insurance as a benefit and some even allow you to purchase additional coverage at a very affordable rate. Outside of employer plans, there are hundreds of insurance companies that can provide the right coverage for you.
One thing to consider is whether to purchase term or permanent life insurance. Term life insurance covers you for a specific time period, typically five to 30 years. Permanent insurance covers you your entire life, as long as premiums are paid.

This type of coverage also allows you to build cash value that you can borrow against or invest for growth. Of the two, term life insurance tends to be more flexible and less expensive but if you're looking for an investment component, you may prefer permanent coverage. 
Remember, that with most types of life insurance your ability to get covered depends on your age and health profile. The younger and healthier you are, the lower the cost is likely to be but be prepared to take a brief medical exam as part of the application process.

Property Insurance

One type of policy that for most people that is actually mandatory to have is homeowners insurance when you have a mortgage. If you borrow money from the bank to purchase a home they will require the asset to be insured. For many people,​ this insurance premium is built into the mortgage payment.
For many people their home is their greatest asset so it is vital to adequately protect it.
If you rent instead of own, a renters insurance policy is just as important. Your belongings inside the dwelling can add up to a significant amount of money. In the event of a burglary, fire or disaster you should be able to at least have a policy that can cover most of the replacement costs. Both homeowners and renter's insurance can also protect you against personal liability if someone is injured at your home.

Auto Insurance

Another type of policy that is often required is auto insurance. Most states require by law that you have basic auto insurance that covers liability. If you're buying a car with a loan, you may also be required to add collision coverage to your policy. If you're in an accident, liability insurance covers damages to the other vehicle, while collision covers damage to yours.
The most common reason to have auto insurance is to cover the replacement of an expensive asset. Like a home, automobiles can be quite expensive and if it gets damaged you want to be able to repair or replace it. But there is more to auto insurance than just covering the car itself.
Most automotive insurance policies cover bodily injury or death of another person in an incident that you are legally responsible. While it generally pays for medical expenses related to the incident it can also cover legal defense costs. You will also generally find medical payment coverage that pays for medical treatment for you and your passengers during an accident regardless of who was at fault. You can also include rental car coverage in your policy in the event that an accident leaves your car undriveable. Remember, the more coverage you add onto your policy, the higher the premium costs may be.

compare car insurance companies

Comparing car insurance companies is easy, once you know what to look for.
The cutest mascot shouldn't be the deciding factor.
Car insurance companies evaluate and appeal to different drivers. For instance, some companies specialize in families, others in older drivers and some in drivers with tarnished driving records. So comparing car insurance companies is just as important as comparing car insurance quotes.
By doing your homework, you can save hundreds of dollars by comparing car insurance companies and rates. And that's easy with's quote comparison tool.
Our online quote comparison tool let's you see side-by-side car insurance rates:
  • By completing one form, you will remove the hassle of filling out multiple forms from various carriers.
  • You will get online car insurance quotes directly from top carriers in our network.
  • You will see multiple quotes from major insurance companies all on one page that will allow you to compare rates and make an educated choice.

Here are five ways to compare car insurance companies and find your best match.

1. Research the car insurance company’s consumer track record.

To narrow down your search among car insurance companies, Hunter recommends starting with your state insurance commission's website (State car insurance information).
"Most states have a buyer's guide for auto insurance that lists the companies that sell insurance in your state," says J. Robert Hunter, director of insurance for the Consumer Federation of America in Washington, D.C.
For an overall rating of company performance, including complaint ratios and financial ratings (A.M. Best),'s "Best insurance companies" will give you a great summary of top companies.
Hunter says state complaint ratios are more important than financial ratings for car insurance. Every state has an insurance guaranty fund that will pay some claims if the insurance company goes bust. It's still prudent, though, to check up on the insurer's financial health.
"However, if you're only shopping every few years, then you should look at the A.M. Best ratings just to make sure the insurance company is financially solvent and can pay you if you need to make a claim," he says.
"The two most important things to look at when choosing an auto insurance company are the price and the claims service," says Hunter. "Choose the company that has both a low level of customer complaints and low prices."

2. Compare complaint ratios.

Hunter suggests choosing five to seven companies and checking their complaint records on the National Association of Insurance Commissioner's (NAIC) website or on your state’s insurance department website. "You can quickly knock out the companies with the highest number of complaints, because you never want to work with an insurance company that doesn't offer good customer service," says Hunter.
To access this information, go to the National Association of Insurance Commissioners' Consumer Information Source. The site shows reports of insurer’s national complaint statistics. Enter the company name and type of insurance in the search box and you'll see a list of reports.
You can find complaint ratio reports that show the ratio of the company's U.S. market share of closed complaints compared to the company's market share of premiums. Using this formula prevents larger insurance companies from being unfairly graded for having more complaints simply due to customer size. Compare the company's complaint ratio number with the national median provided. You can also review the complaint trend report to see whether the company's complaints have been increasing or decreasing over time.
As of late June, auto insurance complaints accounted for 29 percent of those investigated by state insurance departments, ranking second behind accident and health with 47 percent, according to the National Association of Insurance Commissioners.
Claims-handling delays topped the complaint list, (16%) followed by denial of claims (14%) and unsatisfactory settlement offers (11%). Claim-handling/prompt payment ranked fourth, with 6 percent. When comparing car insurance companies, check to be sure ones you’re considering do not have lots of complaints in these areas.
Hunter also recommends checking the most recent Consumer Reports survey of car insurance providers.

3. Compare the exact same coverage when comparing car insurance companies.

The best way to save on your car insurance is to buy only what you need, says Hunter. Use's calculator to get a recommendation of how much car insurance to buy.

"If you have good health insurance you don't need to pay extra for PIP (Personal Injury Protection), and if you have an older car, you don't always need to pay for collision insurance."
Hunter says most people only need liability coverage and uninsured motorist coverage of $100,000 per person and $300,000 per occurrence.

He says you should establish your desired coverage limits before shopping and then be sure to use those same limits for every car insurance quote.

Auto insurance companies average rates by state

 Below you'll see how major car insurance companies compare in your state for price for full coverage ($100,000 per person in liability, up to $300,000 per accident, with $100,000 in property damage liablity; comprehensive and collision carrying a $500 deductible). Enter your state in the search field to see major insurers ranked cheapest to most expensive.

*Rates were fielded by Quadrant Information Services from up to six major insurers in nearly every ZIP code of each state. Driver profile: male, age 40, married, clean record and good credit, driving 2016 Honda Accord.

4. Check for car insurance discounts.

Before you begin comparing car insurance quotes, make sure you know about your potential car insurance discounts for things like bundling home and auto insurance with the same company, good grades, a good driving record, anti-theft devices and anti-lock brakes. Ask each insurance company for any other possible discounts so that you are comparing the lowest possible rates.

You can also raise your car insurance deductible on collision and comprehensive coverage to reduce your premiums. If you do this, make sure you are using the same deductible with each company so that your rate comparison is accurate.

5. Compare optional auto insurance coverage.

Many insurance companies offer optional coverage for things like rental car coverage while your car is being repaired, towing and labor coverage or even CD/DVD replacement costs if these items are stolen from your car.

"Don't take any optional insurance coverage unless you really think you need it," says Hunter.
 However, if one company offers optional coverage that you want at the same price or close to the price of another company's insurance policy without the optional extras, it may be worth choosing the policy with the options, says Hunter.

What is auto insurance?

Understand your car insurance and what it covers

Basic personal auto insurance is mandated by most states and provides you with some financial protection in case of an accident. But is it enough? What are the options? Learn how car insurance works and what types of coverage are available.

Understanding auto insurance—the basics

Auto insurance is a contract between you and the insurance company that protects you against financial loss in the event of an accident or theft. In exchange for your paying a premium, the insurance company agrees to pay your losses as outlined in your policy.
Auto insurance provides coverage for:
  • Property – such as damage to or theft of your car
  • Liability – your legal responsibility to others for bodily injury or property damage
  • Medical – the cost of treating injuries, rehabilitation and sometimes lost wages and funeral expenses
Basic personal auto insurance is mandated by most U.S. states, and laws vary. Auto insurance coverages are priced individually (a la carte) to let you customize coverage amounts to suit your exact needs and budget.
Policies are generally issued for six-month or one-year timeframes and are renewable. The insurance company sends a notice when it’s time to renew the policy and pay your premium.

Who is covered by my auto insurance—and under what circumstances?

Your auto policy will cover you and other family members on your policy, whether driving your car or someone else’s car (with their permission). Your policy also provides coverage if someone who is not on your policy is driving your car with your consent.
Your personal auto policy only covers personal driving, whether you’re commuting to work, running errands or taking a trip. It will not provide coverage if you use your car for commercial purposes—for instance, if you deliver pizzas.
Personal auto insurance will also not provide coverage if you use your car to provide transportation to others through a ride-sharing service such as Uber or Lyft. Some auto insurers, however, are now offering supplemental insurance products (at additional cost) that extend coverage for vehicle owners providing ride-sharing services.

Is auto insurance coverage mandatory?

Auto insurance requirements vary from state to state. If you're financing a car, your lender may also have its own requirements. Nearly every state requires car owners to carry:
  • Bodily injury liability – which covers costs associated with injuries or death that you or another driver causes while driving your car.
  • Property damage liability – which reimburses others for damage that you or another driver operating your car causes to another vehicle or other property, such as a fence, building or utility pole.
In addition, many states require that you carry:
  • Medical payments or personal injury protection (PIP), which provides reimbursement for medical expenses for injuries to you or your passengers. It will also cover lost wages and other related expenses.
  • Uninsured motorist coverage reimburses you when an accident is caused by a driver who does not have auto insurance—or in the case of a hit-and-run. You can also purchase underinsured motorist coverage, which will cover costs when another driver lacks adequate coverage to pay the costs of a serious accident.
Even if PIP and uninsured motorist coverage are optional in your state, consider adding them to your policy for greater financial protection.

What other types of auto insurance coverage are typical?

While most basic, legally mandated auto insurance covers the damage your car causes, it does not cover damage to your own car. To cover your own car, you should consider these optional coverages:
  • Collision reimburses you for damage to your car that occurs as a result of a collision with another vehicle or other object—e.g., a tree or guardrail—when you’re at fault. While collision coverage will not reimburse you for mechanical failure or normal wear-and-tear on your car, it will cover damage from potholes or from rolling your car.
  • Comprehensive provides coverage against theft and damage caused by an incident other than a collision, such as fire, flood, vandalism, hail, falling rocks or trees and other hazards—even getting hit by an asteroid!
  • Glass Coverage provides coverage from windshield damage, which is common. Some auto policies include no-deductible glass coverage, which also includes side windows, rear windows and glass sunroofs. Or you can buy supplemental glass coverage.

What is gap insurance and do I need it?

Collision and comprehensive only cover the market value of your car, not what you paid for it—and new cars depreciate quickly. If your car is totaled or stolen, there may be a “gap” between what you owe on the vehicle and your insurance coverage. To cover this, you may want to look into purchasing gap insurance to pay the difference. Note that for leased vehicles, gap coverage is usually rolled into your lease payments.