Top 10 Insurance Policy Misconceptions
No matter who you talk to about insurance, you’re bound to hear things about the various types of insurance policies that aren’t always true. In some cases, not knowing the absolute facts about your insurance policy can be costly in the event of a loss claim, especially if you don’t have the coverage you thought you did. Review the top 10 insurance policy misconceptions to separate fact from fiction.
- Insurance is a giant waste of money. Although you may never experience a house fire, you’ll be glad you have homeowners insurance with fire, smoke and water damage coverage if you do face a fire.
- Contact your insurance company about every issue. Yes, your auto insurance company may cover the cost of fixing a chipped car window, but your premiums may rise as a result. If you can pay for damage out of pocket, skip the insurance claim.
- Everyone needs life insurance. If you don’t have income or anyone depending on you for care, life insurance may be unnecessary.
- Social Security Disability covers all disabilities. Unfortunately, not everyone with a medical disability will qualify for federal social security benefits.
- Insurance won’t pay out more in claims than you’ve paid in premiums. If your policy is in good standing and you aren’t in a waiting period, your insurance policy should pay up to maximum allowed damage or injury benefit, barring any policy exclusions.
- Auto insurance policies will always pay for a rental car while yours is in the shop. Unless you’ve added rental car reimbursement, most auto insurance policies pay nothing towards rental cars.
- You can get the lower nonsmoker rate for life insurance if you lie on the application. While that may be true, your life insurance company can refuse to pay the claim if they discover you lied on your application, especially if you die from a smoking-related disease.
- The insurance adjuster is there to make sure you get all the damages your claim is due. While most insurance claims adjusters are fair and ethical people, they still work for the insurance company and will try to settle the claim for as little as possible.
- If it doesn’t offer a copay, it’s not real health insurance. Although many health insurance plans and policies let you pay a copay, other medical insurance plans may ask you to pay a percentage of the total bill instead of a fixed fee. Still other insurance plans make you pay out of pocket and file forms for reimbursement. Each is still legitimate health insurance.
- Young people shouldn’t buy long-term care insurance. Even though older individuals are at a greater risk of needing nursing home care, the young can fall victim to debilitating accidents and illnesses as well. Premiums are also less expensive the younger you are when you start the policy.