Buying Insurance Is About More Than Cost

When it comes to buying insurance it is easy to get focused on just the cost. That can be a big mistake because buying insurance is about more than cost. I looked at the process of buying insurance in the earlier postings Shopping Insurance and Shop Around to Find Quality Insurance for Less, but now I want to look at this from a different angle that many people overlook.

On a Personal Level

Think about trying to buy health insurance. If you are buying as an individual you will quickly learn that prices go all over the place. Each insurance company has a range of offerings and trying to compare “apples to oranges” is difficult to say the least. You may get quotes on a lower level bronze plan, a slighter more comprehensive silver plan, and the highest level gold plan. The prices will increase in general as you get to higher level plans, but don’t let that be all you consider. For example, you may find that a silver plan looks more appealing than a gold plan because the premiums are much lower. However, depending on your particular health and needs the gold plan may actually be a better plan when you consider deductibles and copays. Yeah, a plan may be much cheaper, but if the coinsurance amount you pay is 40% versus 20% for the more expensive plan and the deductible for the cheaper plan versus the more costly is $5,000 versus $2,000 then the comparison is not so straight forward. You really need to recognize that buying insurance is about more than cost and individual needs must be considered. In the end what at first appears to be less costly can easily end up costing you more. This is particularly true when the premium difference is only a small amount. So, you not only must compare the different plan levels, you also have to consider the differences between individual companies and what your particular needs are. That raises another issue. Be sure you know if your doctors and hospitals are in the network of a plan you are considering.

On a Business Level

Every company needs adequate insurance protection and those needs are generally dictated by the industry and risk involved. If your business is involved in something where there is significant risk of injury to employees then you need to be diligent in selecting workers compensation coverage. The prices can vary significantly. Not only that, when you work with your agent to shop for workers compensation insurance be aware that you may realize savings by challenging classifications of employees. The insurance company may automatically want to classify someone in production in the highest risk class when in fact what they do is very low risk.

Also, you may be told you are classified as a manufacturer when in fact you have products made by someone else specifically for you that simply bear your company’s name. That is also an opportunity as you may qualify as a distributor rather than a manufacturer and the insurance should be much less.

The Bottom Line

As you can see, buying insurance is about more than cost both on the personal level and in the business arena. It is unfortunate that shopping for insurance coverage has to be so confusing, but you owe it to yourself to make sure your agent is working in your best interest. Don’t forget that what at first seems like the best deal may not be so once all the factors are considered.

If you want to know more, contact AimCFO – Contact

As always, your comments are welcomed.

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