- March 23, 2018
- Posted by: MMB
- Category: Personal Insurance
When you first step into the world of insurance, it’s a massively confusing industry. The insurance business is comprised of various sectors, each with their own exceptions and benefits. Getting started can be intimidating and cumbersome, so we’ve outlined the five basic insurance facts everyone should know.
There is an algorithm to determine prices.
An agent’s role is to ask questions and enter the information into the system. A formula comprised of multiple variables based on hundreds of current statistics will create the price. Depending on the insurance you are looking for, the variables could be: accidents in a certain zip code, the age of your vehicle (or house), your credit score, amount and type of previous claims filed, etc. Insurance agents will find you the best discounts and deductibles that may lower your cost, or recommend a plan that may better suit your budget. It’s all based on data and statistics.
Your credit score may influence your premium.
This fact varies from state to state, consult an agent if you are concerned about your credit score. Your credit score can influence many aspects of your life – from renting apartments to buying a car or applying for a loan. Insurers use a “credit-based insurance score” (CBI for short) to see the correlation between the person’s financial risk and the likelihood of filing a claim. This improves the premium’s accuracy, which in turn could slightly raise or lower your premium. If you reside in a state that uses this practice, you have a right to obtain your credit score and learn which factors can affect your policy.
If anyone relies on you financially, you need life insurance.
If you are retired with a stable income, financially independent, and have no dependents (children or otherwise) then you may not need life insurance. Otherwise, if you are a parent or guardian, spouse, life partner, the sibling of a dependent adult, a business partner, employee, or have some responsibility for the financial status of another individual – you will need life insurance.
There are four roles in life insurance – the insurer, the owner, the insured, and the beneficiary. The insurance company is the insurer and is responsible for paying claims in case of death. The owner pays the premium for the policy. The insured is the person the policy will cover. The beneficiary is the person, organization, or trust that will receive the death benefit in the case of the insured passing away. It’s recommended to regularly review your life insurance policy and the roles within your policy.
Insurance companies pay the settlement or verdict, not the individual being sued.
Insurance is a written contract that defends and pay for any damages awarded within the contract for the limits of coverage. Regardless of the individual being named in the lawsuit, the insurance will pay for the damages, not the individual. For example, if you file a lawsuit or make a claim for injuries suffered, the person’s insurance company may pay for the hospital fees. This is all based on your policy and what your limits and coverage may be. Consult an insurance agent if you have questions about your current insurance policies.
COBRA may provide you health-care coverage if you lose your job.
COBRA or the Consolidated Omnibus Budget Reconciliation Act of 1985, states if you resign or are terminated for any reason aside from “gross misconduct,” you may continue to be covered under your former employer’s health-care coverage for up to 18 months. In most cases, COBRA will additionally cover spouses and dependent children. This Act is only in place to give you some time to find another form of health insurance. The premiums are generally expensive as you are paying both you and your former employer’s share.
If you have any questions about insurance or want to find the best policy for you, contact McInturff, Milligan & Brooks via the form below or at (423) 639-5171.