Insurance Do’s and Don’ts

It’s no fun to pay for insurance, but we all need it to protect the things we value: our health, our homes, our cars and so on. This guidance can save you money and hassle.

• Life insurance: For starters, understand who does and doesn’t need it. Be sure to buy it if anyone, such as your spouse, children or even parents, depends on you financially; if you’re single and childless, you can probably skip it. There’s generally little point in insuring the lives of children, either. And don’t think of a life insurance policy as a lottery ticket. You needn’t buy the biggest policy you can afford; you just want your loved ones’ needs to be met if you perish. Term policies, which last for a number of years, are generally better than whole life policies, which are touted as investments — but aren’t very good ones.

• Homeowners insurance: Don’t skimp and insure your home for less than it would cost to rebuild, no matter what its current market value is. If you lose your home, you don’t want to come up short.

• Specialty insurance: Buying flight insurance is rarely wise, as air travel is safer than driving — and don’t bother with rental car insurance if your own car insurance covers rentals. Instead of buying mortgage life insurance (that pays off your loan if you die), factor mortgage costs into your life insurance. Think twice about insurance covering various specific diseases you might develop, and instead aim to have solid overall health insurance.

You can often save money on insurance policies by buying two or more from the same insurer, or opting for higher deductibles (that you can afford to pay, in case you make a claim). Call around for the best rates for the coverage you need, and don’t assume that the least expensive policy this year will be your best bet next year. Calling several insurers each year to get the best price can save you a lot over time.

Above all, don’t go without coverage that you need.