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INSURANCE SAFETY NET
Protect Your
Economic Security Through Careful Insurance Planning
Rising unemployment and tighter budgets are making
it more difficult for individuals and families to cope with everyday
emergencies. When resources are already stretched thin, it is important to
be prepared in case of a car accident or sudden illness. The National
Association of Insurance Commissioners (NAIC) provides these tips for
protecting yourself and your family during these uncertain financial
times:
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1. Bolster Your Emergency Fund
It is critical to have an emergency fund for small crises or to cover
living expenses in case you lose your job. In addition to examining your
budget for ways to save, you might be able to identify savings in your
insurance policies.
- Find hidden savings in your family’s auto policy. There are ways to
keep costs down without forgoing necessary coverage. Ask your insurance
agent or company about these and other possible savings:
- Ask if you are eligible for any discounts. Here are some discounts
that might be offered:
- Two or more cars on a policy
- Participation in driver education courses
- Good student driver under age 25
- Mature driver (between 50 and 65 years of age)
- Airbags or other safety equipment
- Anti-theft devices
- Multi-line discounts if you have renter’s or homeowners
insurance on same policy or with same company that insurers your car
- Ask if it is possible to reduce costs by raising the deductibles
on physical damage (collision and comprehensive) coverages. Review
your current deductibles to determine whether you can afford to absorb
a larger portion of your loss in the event of an accident. Also,
consider lowering or eliminating physical damage coverages on older
vehicles — unless a lienholder, such as a bank, requires the
coverages.
- If you have college-age children on your policy, you might be
eligible for discounts if they attend school at least 100 miles away
and have minimal access to the insured vehicle.
- It pays to shop around before buying insurance because prices can
differ among companies. When getting quotes, be sure the policies you
are comparing have the same coverages and deductibles. In addition to
cost, you should also carefully consider other factors such as
service, dependability and the financial condition of the insurance
company.
- Take advantage of your Flexible Spending Account (FSA). Health
insurance policies do not always pay for such procedures as allergy
tests or braces, but an FSA can help you save on these out-of-pocket
costs by allowing you to set aside pre-tax dollars for uninsured medical
expenses and childcare. Ask your human resources department about your
employer’s FSA and what types of expenses can be reimbursed through the
program. If you opted out of the FSA program this year, consider signing
up in the next open enrollment period. Remember, however, that any
unused money in an FSA does not roll over to the next calendar year, so
try to estimate your costs carefully at the beginning of the year.
2. Conduct a Coverage Check-Up
You might have purchased your insurance policies when you had a larger
household budget and savings account. Review your insurance policies to
make sure you can cover all deductibles and that they meet your current
needs.
- Review your health insurance coverage. If you have an individual
health insurance policy, work with your insurance agent or broker to try
to reduce your premiums by modifying benefits or cost-sharing
requirements. If you are offered coverage under a high-deductible health
plan (HDHP), please note that — although HDHPs are one option for saving
money on health costs — such plans can leave you exposed to considerable
unexpected out-of-pocket expenses. Most important, do not drop your
health insurance coverage altogether, because you could lose
guaranteed-issue and pre-existing condition protections under state and
federal law.
- Consider COBRA. To help workers maintain their health coverage while
they are between jobs, the American Recovery and Reinvestment Act (ARRA)
provides a 65 percent reduction in the premiums payable by involuntarily
terminated workers and their families for health care continuation
coverage under the federal Consolidated Omnibus Budget Reconciliation
Act (COBRA). For more information, visit www.dol.gov/ebsa/cobra.html.
- Review your life insurance coverage. Now is also a good time to
review your life insurance needs to ensure you have the right policy for
your financial situation and your family composition. Life insurance is
an important way to cover the financial effects of an unexpected or
untimely death. When considering your coverage, be sure to factor in
life insurance you currently have, including group insurance where you
work or veteran's insurance. Don't forget to include benefits from
Social Security or survivor's benefits from a pension plan.
- Ensure your homeowners insurance policy reflects any recent
improvements. If you have updated areas of your home to make it safer or
have upgraded your heating or electrical systems, you could be eligible
for discounts that might lower your premium.
More Information
If you have questions or are confused about your insurance coverage,
contact your state insurance department. Visit www.NAIC.org to find contact information
for your state insurance department.
Get smart about your insurance needs! For more information about auto,
home, life and health insurance options — as well as tips for choosing the
coverage that is right for you and your family — visit www.InsureUonline.org.
April 2009 |
