Because people get very different insurance policies based on individual circumstances, it’s hard to find solid advice when it’s time to pick a policy for yourself. One of the common mistakes that people make when getting insurance is believing an all-too-familiar myth. Protect yourself by learning what these myths are so that you can avoid making a mistake when it comes to your coverage.
Auto Insurance Myths
Auto insurance is unavoidable – if you drive, you have to have it. The following are some of the most common myths about auto insurance.
- You only need minimum coverage. Many people mistakenly believe that minimum coverage will be fine for their auto insurance needs. However, you need to think about how you’d pay if you were to get in an accident. In many cases, your assets can be pursued if you can’t cover the damages from an accident that results in a lawsuit.
- Cheaper cars cost less to insure. Saving money on a vehicle purchase won’t necessarily save you in insurance costs. Heavy cars, cars with large engines and unusual vehicle models often cost more to insure that a more expensive small car.
- You’re not responsible if someone driving your car causes an accident. This isn’t always the case. If the vehicle’s insurance limits are too low and don’t cover the total cost of the damages caused by the accident, your insurance may be tapped to pay the difference.
- If you get a speeding ticket, your insurance rates will be increased. Fortunately, this isn’t usually true for a single speeding ticket. Depending on how long you’ve been insured and how much faster you were going compared to the speed limit when you were ticketed, you may not experience a rate increase. Many insurance companies don’t raise your rates unless you get two tickets.
(Also read: 7 Car Insurance Myths You Should Know.)
Life Insurance Myths
Many people are confused about whether or not they need a life insurance policy. Check out the common myths associated with this type of insurance to help you make a decision.
- Single people without dependents don’t need life insurance. Some people think if they aren’t supporting anyone but themselves then life insurance is unnecessary. However, even singles need to consider the costs they’ll leave behind, such as personal debts, medical bills and funeral costs.
- Life insurance coverage should be equal to twice your annual salary. In reality, no set formula like this can determine what your life insurance policy should be. Each person needs to consider their own personal financial circumstances. For example, are you the sole provider for a family? Do you have a mortgage that needs to be paid off? Talk to an insurance provider or financial advisor to get a better sense of how much you need in coverage.
- If you get life insurance coverage at work then you’re all set. This isn’t true for everyone, unfortunately. Many employer-paid or -provided coverage just isn’t sufficient for an employee with a spouse or dependents. You may have to get additional coverage to supplement your work coverage.
- Life insurance premiums are tax-deductible. In most cases, this is false. Life insurance costs are generally only tax-deductible for self-employed policyholders who use coverage for asset protection.
Health Insurance Myths
Health insurance is one of those costs that many people dread, but not having it can be far scarier. Here are some of the common myths about health insurance that you need to know.
- You don’t need health insurance if you’re young and healthy. Not getting health insurance can be a huge mistake, even if it doesn’t seem like you’ll need if for anything. If you fall into this category, the key is to limit your coverage only to the necessities so that you don’t overspend. One car accident or other major injury could cost you your financial security, so it’s important to at least get coverage for major hospital expenses.
- Employer-sponsored health insurance is always the best option. While it’s true that most Americans get their health insurance coverage through their job, that doesn’t mean that it’s always the best choice. For healthy individuals without a lot of medical costs, some of these plans are costly and offer unnecessary coverage. If this applies to you, shop around for an individual plan that meets your needs and compare rates with your group plan.
Homeowner’s Insurance Myths
Homeowners insurance is vital to your financial security. Make sure you understand these common myths about homeowners insurance so that you get the right coverage.
- My homeowner’s insurance policy covers all of my valuables. Most people will find that the broad coverage for personal property is sufficient for their belongings. However, people with larger collections or unusual items may want to consider additional coverage. For example, coin collections may only be covered up to $200, while jewelry could be limited to $1,500. Be sure to look into the details to make sure your special belongings are covered.
- Homeowners insurance covers all types of damage. Many people are surprised to learn that things like flood, earthquake and landslide damage aren’t covered in a typical homeowner’s policy. Most of these things you have to purchase as additional coverage. Make sure you know exactly what types of damage will be covered when choosing a homeowners insurance policy.
Getting insurance can be confusing and complicated, but it’s critical that you get the right coverage to protect your finances. If you’re having trouble deciding which type of coverage is right for you, talk to an insurance representative in person or speak with a financial advisor.