CHOOSING THE RIGHT INSURANCE

A person has four choices when dealing with risk:

1. Accept the risk.
2. Avoid the risk.
3. Reduce the risk.
4. Transfer the risk.

ACCEPTING THE RISK

Accepting the risk is of course the most economical course as it involves doing nothing. That is the way you usually accept risks with very long odds and against which you feel powerless at any rate, such asnuclear war or chances of a meteor striking you or your property.
You choose to avoid the risk when you sell a property at a discount with no guarantees ("AS IS"), or abroker decides to have no salesmen because he does not want to be responsible for their actions, or a family decides against keeping a dog because of the possible harm it may cause to other people or theirproperty, or one decides to take public transportation rather than drive to work to avoid freeway accidents

Transferring risk is the topic of our discussion. Transferring risk to a third party who agrees to take the risk form your shoulders in return for the payment of a certain sum of money, is what insurance is all about.Who reads an insurance policy? If I asked you what your limits of coverage are on your medical, health,homeowners or auto insurance could you tell me? Most of you are familiar with your deductibles. (The amount you yourself must pay before the insurance company pitches in.) Do you know what your health insurance elimination period is? (The time between the actual occurrence of the injury and the insurer'scoverage actually takes effect.)

It is not my intent to cast dispersion on insurance salesmen. The great majority of them are conscientious, do a good job and are indeed your "friend," a "good guy" and "honest"; that is not the point. You are a fool if you do not thoroughly investigate something which can play such a major role in your life plans.As well meaning as your professional may be, he is being pressured from several sides by his need to rise within his company, the economic needs of his family, the needs of many other clients to keep track of as well as his desire to give you quality service. As good as he may be no one knows your particularsituation like you do.

Choosing an insurance agent is much like choosing your other professionals, such as accountants, doctors, and lawyers. Initial contacts usually come about through referrals from friends or businessassociates. Service, conscientiousness and promptness are what you are looking for in an agent. You will also want a person you can feel comfortable with and whose personality is compatible with yours and your financial goals. Since you will be turning to him in times of trouble and emergency, you want a reassuring person who you can trust and confide in. In your agent has a designation such as a CLU (Chartered Life Underwriter), CPCU(Chartered Property Causal Underwriter), or CFP (Certified Financial Planner) it shows a commitment to his profession and a better than average degree of knowledge in his field. Although there are of course many competent and knowledgeable agents without any of these designations it should be noted that these titles are not given lightly and may take years to achieve by passing examinations on insurance,taxes and other related fields.

top