Why Just Basic Insurance is not Enough

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Why Just Basic Insurance is not Enough

Most of us protect the two most valuable possessions – our life and health, with an insurance policy. While this is the right thing to do, many people make the mistake of buying just a basic policy with inadequate coverage. Especially if you are self-employed or are the owner of a small business, in which case you have to pay for your own insurance.

Basic Coverage can be Inadequate

For example, you may think that your health insurance has wide coverage and there is no need to take a separate accident insurance. But you never know how bad an accident will be. Your regular health insurance may not be enough to cover the prolonged recovery from an accident-related injury. You need a disability insurance policy in case you are unable to earn your living because of your disability. The risk increases for self-employed people or small business owners because they are not covered by any group insurance through their employer.

On the same lines, a basic fire insurance policy for your house may not be enough. In this case, a basic fire insurance policy will not cover the cost of the damaged goods inside your house. That policy will pay for the structural damages not the things inside the house. When you have to replace all the damaged goods, the amount can be astronomical. You may be one of the small percentages of unfortunate people whose house catches fire and there are huge damages. Is it worth taking that chance?

Hence it is always a wise decision to buy these smaller insurance policies just for that extra protection. When you consider the cost of these policies it is really not much, in fact, pretty minimal. For this small price you get a huge security in the long run.

Which Insurance Policies should You Consider

After life and health insurance, you should consider the homeowners insurance if you own a home and auto insurance. There is a huge variety of health insurance policies offering different extents of protection. You should consider your needs carefully and try not to take huge risks by taking just basic coverage.

An insurance policy to specifically protect against accidental injuries is very essential. This will protect you and your family against minor to major injuries caused due to accidents. The huge financial strain caused by a prolonged disability due to an accident can be mitigated if you have a personal accident insurance.

How to Buy an Insurance Policy

Buying an insurance policy requires some effort and time and this makes people procrastinate this purchase. You buy an insurance policy as a financial protection against unfortunate events in the future. So, wrong decisions can defeat the whole purpose of buying an insurance policy.

Keep these points in mind when you decide to shop for an insurance policy.

  • Compare – You should always compare the policy benefits, rates and terms of several plans from different companies before you buy.
  • Review you policy – When it is time to renew your policy, you should review the new rates or terms carefully.
  • Correct Amount – You have to choose the amount against which you buy the policy. Calculate this amount carefully after considering the present and future value of the asset which are insuring. There is no point buying a policy which is not enough to cover your damages, whichever type of insurance it is.
  • Don’t settle for cheap policies – In order to make you buy, insurance companies will give you options which may cost very less. There may be catches hidden in such polices and may not be beneficial in the long run when you actually need the benefits.
  • Understand the policy terms clearly – Even after you buy the policy, be aware of every clause and company regulations.

It has become much easier to do all the research before buying an insurance policy – thanks to the internet. You can request quotes from different companies or agents or from websites which will give you several quotes at the same time. For a little sum of money or a small sacrifice from your daily life you can buy big protection when you purchase the right amount of insurance.