Insurance, Protecting What You Have
By Mark Teale
General insurance is a “boring” subject and not a matter we have discussed much, however, protecting what you have is just as important in your retired life as it was in your working life. Let’s discuss in more detail insurance, protecting what you have.
So, here are a couple of thoughts to get you started:
Shop around for insurance like you shop around for a car or plan a holiday
When you’re buying a car or planning a holiday, insurance is probably the last thing you want to think about. But you may need it and it’s important to spend a little bit of time shopping around.
Having a good insurance policy can make all the difference to your pocket – both now and if the worst happens and you need to make a claim.
Don’t just accept the insurance policy that is offered by the car yard or the travel agent. Remember, the agent may be getting a commission for selling you a particular policy, even though it may not be the best one for you.
Shop around. The Internet and telephone call centres make this easy. Even if you make just three or four quick telephone calls to different companies, you’ll find that the price might vary by $100 or $200 or more. And that’s even before you look at the coverage and exceptions on the policy.
Before you sign a policy, make sure you understand what the insurer will and will not cover. For example, some travel insurance policies might not cover you if you are injured when bungy-jumping or white-water rafting. If you don’t choose a policy with the right coverage for you and your circumstances, you could end up with hefty expenses to pay.
When you apply for insurance, you’ll have to provide lots of details to the insurance company. For example, if you are getting car insurance, you may be asked about your driving record, whether the car has been modified and other things. Your answers will help the insurance company decide how risky it will be to insure you and therefore how much your policy will cost.
Don’t be tempted to massage the facts! If the worst happens and you need to make a claim on your policy – your insurer may have grounds for refusing to pay your claim.
And this goes for renewals as well. You must tell the insurance company about any changes in your circumstances each time you renew your policy. The type of questions that were asked in the original policy application will be a good guide to the information you might need to disclose when you renew. And if you have any doubts – ask your insurer! (And keep a written record of what they told you.)
Think about insurance before you choose your car
If you are buying a car, it is good to think about insurance before you choose the type of car that you want.
You might think that, if two cars cost the same amount to buy, they would cost about the same amount to insure. But the cost of insurance often depends as much on the type of car, as it does on the cost of the car.
For example, a sporty car might look great, impress your friends and satisfy the midlife crisis, but it might cost you $200 or $300 more to insure than a basic car. If your dream car has got modifications, like mag wheels or has a bigger engine, insurance might cost you more again. It’s better to be prepared for these extra costs than to get an unpleasant surprise after you have bought the car.
Home insurance – building and contents
For most of us, our largest and most important asset is our home. So, are you financially prepared for a flood, storm or fire, or even the minor mishaps such as broken windows, theft or appliance mishaps?
Building and contents insurance are in fact two different policies. Depending on your circumstances, you can purchase a combined policy, or you could purchase just a policy for your building or just your contents. For example, if you are renting your current home you will probably only need to purchase contents insurance, the landlord should have their own building insurance policy to cover the actual property.
Do not underinsure your home or the contents on the false premise of saving money because of cheaper premiums. If a fire or cyclone were to strike you home and you needed to rebuild, having an insurance policy which only covers 50 or 60 per cent of the rebuild cost would create a huge hole in your retirement savings.
I can understand that it is not a very interesting issue to discuss or even think about, but it is still a very important matter which should not be avoided just because one has retired.
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