Americans buy insurance so they’ll be reimbursed in case of theft or accident or to leave money to their heirs. Unfortunately, many are unsure if they have the right kind of insurance or enough coverage. The Pennsylvania Institute of Certified Public Accountants (PICPA) shares some tips on the best ways to make sure you’re getting the most bang for your insurance premium buck.
All Policies: Shop Around
No matter what type of insurance you’re buying, begin by checking out a range of providers. You can locate information about insurers online and through consumer guides or other sources. Ratings of insurance companies are available from independent rating agencies, such as A.M. Best, Fitch, Moody’s, and Standard & Poor’s. When it comes to price comparisons, get all the details on each policy to be certain you’re comparing similar options.
Life Insurance: Consider a Trust If You Have Kids
Many people name their children as the beneficiaries of a life insurance policy. That can be a bad idea for a variety of reasons. If your kids are under 18, the insurance company can’t pay until a court appoints a guardian, which takes time and money. One solution is to name an adult custodian to take care of the inheritance, under the Uniform Transfers to Minors Act, until the child reaches legal adulthood. A disadvantage to this is that it gives your child complete control of the money when he or she does receive it, and they might go on a spending spree or make bad investment choices. Another answer is a trust. This solution is not just for the rich. A trust can manage the money based on rules you set, helping to protect your child’s inheritance until he or she is mature enough to use it wisely.
Life Insurance: Consider Accelerated Death Benefits
Usually life insurance benefits become available after you die, but many companies allow policy holders to receive payments beforehand in certain situations. Known as accelerated death benefits, this option makes it possible for you to get cash to cover the costs of medical conditions, disabilities, or long-term care. When researching life insurance choices, consider whether a policy offers this. Remember, each insurer may have different rules about how much of the policy value you can receive in advance and what qualifies you to get the money. Be sure to get information on all the details.
Auto: Ask about Insurance Discounts
Do you use your car mainly for local driving? If you drive less than a set number of miles per year, some insurers will charge lower premiums. You may also be eligible for discounts if you have a car alarm, if you’ve taken a defensive driving course, if a child covered under the policy has good grades, or if you have a record of accident-free driving. Find out what kinds of discounts each insurer provides when choosing a policy.
Home: Document Your Possessions and Your Loss
When you face a disaster or burglary, you want to be able to get the funds you need to restore your property with as little hassle as possible. That will be easier if you keep records of what you have, both in the form of photos or videos and in documents or receipts that detail valuable items. Store these records and copies of all your insurance policies in secure locations that will be easy to access when you need them.
Do You Need Umbrella Liability Coverage?
Umbrella liability insurance is a good backstop in the event of a catastrophic event affecting personal liability. It is relevant coverage where meaningful personal assets might, as the result of some injury to another person, be exposed to a lawsuit. Similarly, umbrella coverage or another policy might be attractive if you are a member of not-for-profit boards (typically directors’ and officers’ insurance).
Your CPA Can Help
Have questions about your insurance needs or about any other financial concerns? Be sure to contact your local CPA. He or she can provide personalized answers. To find a CPA in your area or for more financial tips, visit www.picpa.org/moneyandlife