There are a lot of very well meaning insurance agents and companies that work diligently to provide top levels of coverage for their clients. They don’t actively or intentionally oversell insurance but, through the years and if people change policies, add to coverage and randomly enroll in policies, you can end up being over-insured.
What is Over-insured?
The term over-insured can be a bit confusing for many people as they only think about the benefits that they can obtain in the event that they had an insurance claim. However, often the monthly, quarterly or yearly cost of the insurance is not as great as taking those payments and investing them in a high interest investment account that will earn you money you can access as needed.
Key Factors to Consider
The most common issues that a financial adviser will review to see if you are over-insured include:
• Health Insurance –depending on your health conditions and those of your family having the top of the line, unlimited type of coverage may not be reasonable. When people are younger opting for top quality coverage that addresses your specific requirements, which typically won’t include comprehensive drug coverage and gold or platinum policies, can help you to save that additional cost.
• Homeowners Insurance – your homeowner’s insurance plan should not cover everything in your home, just the larger items that are going to be costly to replace. Having more coverage than you need for homeowner’s insurance will not result in larger claim settlements as it is based on replacement or actual value. In addition, homeowner’s insurance extra policies that cover jewelry or art items should only be considered if you have substantial investments in these assets.
• Vehicle Insurance – while you have to have vehicle insurance to be legal, you don’t have to cover all types of issues with your coverage. For example, if you have an older vehicle that is paid off and that you only use occasionally you may not want to pay for the more costly comprehensive coverage.
Other types of insurance from high levels of disability insurance to separate types of riders or policy additions to cover items you could live without or afford to repair or replace out of pocket may also be draining you financially.
By having a financial adviser review your coverage you can get tips and ideas on how to cut coverage you don’t need as well as specifics on coverage that you should consider.