Most of us will purchase over $100,000 in insurance over our lifetime to protect us from financial loss from owning a home and a couple of autos. It’s not hard to understand why insurance is frustrating to some people. We have to buy it if we have a home loan or auto loan, and we have to buy it to legally drive our auto; and in a given year, few of us will have a big house fire, auto accident, or lawsuit. Yet insurance is critical to bringing financial security to our lives, and it allows us to use our home or auto as collateral for our home and auto loans.
People tend to fit into three categories when it comes to approaching insurance:
- It’s all the same so I’m going to get it as quickly and cheaply as possible
- I don’t get it, so I’m going to find someone I trust and do what they tell me to do
- I want to participate in these decisions, so I’m going to find someone I trust to help me understand how it works and I will make informed decisions that best fit ME.
Each of these three groups might pay the same for their insurance. However, the third group is more in control of what they spend on their insurance, and their insurance decisions are better aligned with their life plans and priorities.
Before I got into the insurance industry, I fell into the second of the above groups. Important decisions were made for me that I didn’t understand by a nice guy (with better hair than I have). I’ve since come to appreciate the value of being more informed and involved in my personal insurance decisions. I also discovered that I had been overpaying for my insurance; moreover, my belief that “I have insurance, so I’m covered” was WAY overly simplistic.
Four truths about insurance:
- It doesn’t “cover” everything
- It’s not all the same
- You can understand more about it if you’re willing to expand your comfort zone a bit
- You don’t need to be a rocket scientist to participate in making good insurance decisions
Make 2021 the year you have a good conversation with your insurance agent and participate more in making good insurance decisions that better protect your financial future! You can do it!