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AREAVOICES: Insurance can protect you from financial loss

When we think of insurance, we think of it as something that we should or must have. We are required to have car insurance if we are going to own and drive a vehicle. Many believe it is essential to have health insurance. Some people carry umbrel...

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When we think of insurance, we think of it as something that we should or must have. We are required to have car insurance if we are going to own and drive a vehicle. Many believe it is essential to have health insurance. Some people carry umbrella policies that can dramatically increase their liability coverage just in case. Insurance, no matter the kind, has one purpose: to protect yourself from financial loss. But that protection has a cost and sometimes it is significant.

You've probably heard the advertisements that say "there's an app for that." Well, as it turns out, there's insurance for that too. You can buy insurance for nearly everything: health, life, disability, long-term care, cancer, accidental death and dismemberment, car, house, renter's, flood ... and the list goes on. It's overwhelming to understand everything and to know what kind and how much you should have.

These five tips can guide you in your pursuit of protecting yourself and your family:

1. Insure only what you cannot afford to lose: Insurance is costly, so you have to make priorities on what to cover. Look at the items that if lost or damaged may cripple you economically. Your vehicle, home, life and ability to work are probably going to be at the top of the list.

2. Be aware of coverage: Understand what your policy covers and what it does not. If your home is destroyed in a tornado, you do not want to find out that your home insurance policy does not cover natural disasters after the fact. If your policy does not cover things you think it should, contact your insurance agent to review your coverage.

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3. Save with higher deductibles: Having a low deductible may mean less out-of-pocket expense when you need to make a claim, but it also means higher premiums. Consider going to a higher deductible, and the savings in premium can be put into a savings account to help you meet that deductible. Once you have saved up enough to meet your deductible, you can use that extra money for other needs.

4. Work with agents and companies you can trust: There are hundreds of insurance companies out there who fight to give the lowest prices and biggest discounts. But if you cannot count on your agent or the insurance company when it comes time to make a claim, what good are all those discounts? Do not be sucked in by a good sales pitch. Do your homework and spend some time researching not only rates, but also customer service satisfaction.

5. Bundle your insurance to save: Most insurance companies will give you a significant discount if you have multiple policies and/or multiple insurance lines with them. Also, it may be much more convenient to have to deal with only one person for all of your insurances.

Tran is a Certified Financial Counselor with the Village Family Service Center. Real Money is a featured blog of the Areavoices online community, part of Forum Communications Co., which owns the Herald.

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