Insurance

If you're about to buy insurance protection for your valuables, it's rational to find a policy that suits your budget. After all, you'll have to pay the premiums regularly on monthly, half-yearly or annual basis. However, an affordable insurance policy might not guarantee the best protection for you always. Read along to know why:

1. Might not offer sufficient coverage - The coverage limits of any forms of insurance policy is directly proportional to its price.

You may not have saved enough to buy your own home yet. What if you come across a good property deal at this point of time, and your financial resources aren’t even enough to make the down payment? It’ll be disheartening to let go of the deal, especially if the house or the property is almost the way you had wanted it to be. You can opt for a mortgage, but lenders usually don’t allow the loan if the down payment amount is less than 20% of the total loan amount.

It's pretty obvious that nobody would want to leave their valuables unattended. An insurance policy acts like a guardian for the individuals or objects that you hold dear to yourself. Even though it may not be able to prevent the damages or loss, yet it offers the required financial compensation for repairs, replacement or treatment of insured entities or objects. Gradually, people have recognized the importance of having insurance protection – be it for their near and dear ones or for their assets.

A fire insurance claim on Thanksgiving! Well, it doesn't surprise the insurers at all. Thousands of fire insurance claims are filed every year on Thanksgiving Day, most of the damages being caused by kitchen fires.

Every young adult may not get a sound financial footing as they step out to earn their own living. The competition in the job market makes it difficult for the youngsters to establish themselves in a short span of time. The recession has its effect on the job opportunities and the earnings of each working adult as well. Thereby, many adult children seek monetary assistance from their parents when they lose control over their finances. If you’re a parent yourself, you would definitely want to see your children living off comfortably.

The insurance industry works mainly on the principle that the insurer takes over the risk of the policyholder, and gets paid for it. In case the insured individual or property gets involved in an accident or faces a mishap, the insurer compensates for the damages and losses. However, it’s evident that the insurers set up their business to earn profit.  They evaluate the risks before allowing insurance coverage to an applicant.

Why risk is evaluated?

Your risk is assessed by the insurer when you go out to buy a policy.

Insurance companies offer financial protection to the policyholders. In spite of all the precautionary measures and underwriting rules, the insurers themselves fall prey to the insurance frauds and end up paying for the inflated claims. Reports suggest that insurance frauds cost the industry more than 10 billions of dollars per year.

The 9/11 attacks chilled the Americans to the bone. The losses associated with the attacks awakened the country, and the insurance industry stepped up with the Terrorism Risk Insurance Act (TRIA) in 2002. What is TRIA? The Terrorism Risk Insurance Act was brought into force by the Congress in 2002, and acts as a federally backed reinsurance program. It originated as a short term solution that would help the insurance industry to recover after the September, 2011 attacks.

The Insurance Information Institute, more popularly identified as the III, has forecast that the auto insurance expenses for the US are going to drop in 2012. It’s apparently good news for the Americans since their expenditures on auto insurance is going to be the lowest in the last 8 years, since 2004. The experts point towards the rise in the market competition amongst the insurers as the cause behind such reduction.

Insurance agents try their best to sell their products to you. The sales techniques used by them might be so convincing that you'll be swept right off your feet. Subsequently, you may end up buying a coverage that you may not even need. Thus, it’s advisable to stay on your own guard so that the insurance agents can’t hurt you financially. Several tactics are used by the agents when they play on their own ground.