How to Shop for Insurance

By Larry Lane for InvestorZoo.com

There are a number of ways to shop for insurance and many types of insurance products available.

Life Insurance
Life insurance pays your beneficiaries (in most cases a spouse) a set amount of money when you die. This money is used to pay for living expenses, retirement etc.

Do you need life insurance?
This can usually be answered with one question. Who is relying on my income and how would it be replaced if you died? If one of the wage earners in your family dies, would the other spouse have to quit their present job and take a lower paying one to stay home with children? If you are single with no dependants, you simply don’t need life insurance. If you’re married with children, you need to plan for the worst.

How much life insurance do I need?                                                    There are a number of factors in determining the amount life insurance you’ll need. Issues such as your current income, the mortgage on your home, college expenses for kids, average cost of yearly living expenses, and retirement goals should all be accounted for. The general rule of thumb is ten times you’re annual salary.
Shopping around for the best price on life insurance may seem as exciting as watching grass grow, but spend a little time searching the best rates while watching your favorite TV show and it will be well worth your while.

Life insurance rates have been falling steadily in the last 20 years. If you haven’t checked around to make sure you’re receiving the best rate within the last several years, chances are you’re throwing money out the window every month. If you find an insurance policy that is appropriate for your needs, it usually takes just a few hours to switch life insurance providers. Those few hours could put several hundred dollars in your pocket every year. To receive up to date pricing, go to your favorite search engine such as Google or Yahoo and  search for “life insurance quotes”. When you are comparison shopping, make sure you have your policy out to make sure you are comparing apples to apples.

Playing it safe
If you decide to switch insurance companies, make sure you pass the medical exam before cancelling your current policy. Switch too fast and you’ll be out of luck if a health issue is found and you’ve already cancelled your old policy. Before signing on the bottom line, you’ll want to check out the financial stability of the life insurance company you’re purchasing your policy from. Check out www.standardand poors.com or www.ambest.com. You’ll want to purchase your life insurance policy through an AAA rated company.

Car Insurance
The average car insurance cost the average household $1830. This number will vary depending on a number of different factors:

1) Driving record
2) Number of cars on the policy
3) Age of drivers
4) Deductible
5) Miles driven
6) Type of car
7) If the policy includes full coverage with collision
8) State where you reside

Once again, the internet is a great tool to reduce your car and insurance rates. Shopping sites such as Progressive.com can be a great time saver. .

Get your discounts!                                                                                           1)If you are a shareholder of Berkshire Hathaway, (which I am), you are entitled to an 8% discount of your Geico insurance policy. Please don’t invest in Berkshire Hathaway solely to obtain a discount on car insurance.

2)You can get a 15-30% discount on your car insurance by raising your deductible. Your deductible is the amount of out of pocket money you’ll have to pay should you experience an accident. Raising your deductible could conservatively save you 15% and put an additional $275 per year in your pocket.

3)Are you a member of AAA? Call your local AAA chapter and get a quote on your car insurance.

4)Are you a business owner and a member of a small business organization? Contact your local chapter to find out if you’re eligible for discounts.

5)Are you driving an older vehicle? Check your car’s value at Kelly Blue Book (www.kbb.com). Call your insurance company to find out how much you’re being charged for collision insurance. You’ll have to make a judgment call if you believe you won’t be in an accident anytime soon. Of course if you’re wrong, you car will be worthless if you are involved in a wreck. Definitely consider dropping your collision insurance if you car is valued under $3,000.

6)Have you been a long time customer of your current insurance company? Discounts may be available if you have been with the same insurance carrier for a number of years.

7)Multi product discounts: You may be eligible for discounts if you bundle your home owners’ insurance, and car insurance. This may save you an additional 10-15%.

8)You may receive discounts if you have air bags, an anti theft device such as a car alarm. Do you have a teenager who is driving? If your child is an excellent student, you may be eligible for a discount. Make sure you ask your insurance agent or company if you are eligible for additional discounts.

Other Insurance Benefits:
Do you have AAA to insure against a break down? You might have towing and lock out insurance through your current car insurance. This may save you an additional $50 per year or more.

Before switching insurance companies, make sure there is 24/7 customer service. Accidents can happen anytime and you’ll want to make sure there is someone answering the phone to file a claim over the weekend at midnight if needed.

Follow these tips and I think you’ll find you’ll be able to shave 10-20% off your insurance costs. This savings can reflect $250-$500 or more per in your pocket.

Larry Lane is the editor for InvestorZoo.com, a social networking site, dedicated to personal finance. Questions and comments can be sent to Larry.Lane@InvestorZoo.com