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:

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
  • 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 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

April 2009

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About the NAIC

Formed in 1871, the National Association of Insurance Commissioners (NAIC) is a voluntary organization of the chief insurance regulatory officials of the 50 states, the District of Columbia and five U.S. territories. The NAIC has three offices: Executive Office, Washington, D.C.; Central Office, Kansas City, Mo.; and Securities Valuation Office, New York City. The NAIC serves the needs of consumers and the industry, with an overriding objective of supporting state insurance regulators as they protect consumers and maintain the financial stability of the insurance marketplace. For more consumer information, visit

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