Get the insurance coverage you need. No more. No less.

There are a lot of reasons to get insurance. And there are a lot of ways to end up with the wrong coverage. The policy you want is the one that fits your needs without extras that cost more. Read and understand your options here, first.

INSIDE THIS SECTION

• Overview
• Automobile Insurance
• Homeowner's and Renter's Insurance
• Life Insurance
  
• Disability Insurance
  
• Long-term Care Insurance
  
• Special Policies

Drive a bargain when you buy the car.
Not when you insure it.

Automobile insurance is probably the most important policy to have because vehicles represent the highest amount of risk the average person will face in his or her life. Having the right protection here is critical, so don't go for the cheapest coverage. Go with what's right for you.

The cost of your policy will be based on:

• Your age. Under 25 is the most expensive group. Aren't you glad you're older?
• Where you live. The more crowded the area you live in, the higher your rates simply because congestion leads to more incidents.
• Number of miles driven per year. The average car sees 12,000 miles a year. If yours gets less, you could save money.
• Type of vehicle. Some vehicles may cost more to cover, even if they cost the same to buy. Sports cars top the list. But SUVs and luxury sedans may cost extra, too.
• Age of vehicle. As cars age, they become worth less. Accordingly, the cost to insure goes down. Unless it's a collector's car.
• Your driving record. Simply put, the better a driver you are, the less you may pay. Have tickets or accidents, though, and prepare to shell out.
• Your credit history. A correlation has been found between financial risk and insurance risk. So keep your bills up to date to avoid paying extra.
• Others on policy. If you're not the only driver, expect your rates to take into account everyone else's experience, record and miles driven, too.

Your policy should cover the following:

1. Liability. Covers property damage or physical injury to others caused by you. Consider more than the minimum to protect yourself in a lawsuit.
2. Collision. Pays for repairs to your vehicle. It's required by banks if you have a loan on your car, or lease it. Save money by choosing a larger deductible.
3. Comprehensive. Anything other than accidents, or excluded events is covered here: theft, fire, vandalism, flooding and hail, for example.
4. Uninsured and Underinsured Motorist. Fills in if the other party in the accident has too little, or no insurance, or leaves the scene.
5. Medical or Personal Injury Protection. Covers medical expenses no matter who's at fault. It may also extend to non-medical payments for lost wages, childcare and other important expenses.

Want more information?

• www.edmunds.com - find out insurance requirements by state.
• www.choicetrust.com - get a free report of your accident record.

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Protect your home — and the people and things inside it.

Homeowner, Condo, Townhouse or Renter's insurance does more than protect your home and possessions. It also protects you, your family and your way of life. But not all coverage is created equal, so make sure you know what to expect when you go looking for a policy. This is a good place to start.

What's covered?

• Dwelling. This is for damage to your house and outbuildings such as detached garages or sheds. Choose a policy with automatically increasing coverage, or do it yourself as your home's value goes up.
• Personal Property. Covers household items such as furniture, clothing and appliances. If you have anything unusual or valuable, such as art or antiques, get a rider that specially covers those items.
• Liability. Protects you from financial loss if found responsible for someone else's injury or property damage. You can typically get up to $1 million in coverage.
• Medical payments. This covers medical payments for people injured on your property or injuries away from home you're responsible for. Such as your dog biting someone.
• Loss of use. Covers living expenses if your home is not inhabitable during repairs. Typically this coverage provides up to 20% of the total your home is insured for, but you can get higher limits.

What's not?

• Earthquake. If you live in an earthquake-prone area, or a home on a slab with pipes buried in the foundation, consider adding this.
• Flooding. Water from above is covered in regular policies. Water from below is not. If you live in a potential flood area, look for extra coverage.
• Landscaping. Even though landscaping adds to the beauty of your home, it's not covered for damage by wind or hail.
• Termites. Yes, they can do a number on your home. But no, it's not covered.

A home's history may impact the price you pay for insurance. If the previous owners made a lot of claims, your new house may have been tagged as "high-risk." So you'll pay higher premiums - or maybe not be able to insure it at all. Be sure to check the claim history before buying.

Inventory valuables before there's a problem. Photos of the items taken in your home can help prove their existence. So be sure to keep the pictures in a safe place that you can access after a theft or fire.

You might be able to get a discount for some or all of the following:

• Impact-resistant roof
• Noncombustible roof
• Personal property marked with identifying number
• Burglar, fire and smoke alarm systems
• Fire extinguishers
• Home security devices
• Senior Citizens discount
• House insured to full replacement cost

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Life insurance — for your loved ones.

The question to ask yourself when considering life insurance is this: would your family have enough money to carry on without you? If the answer is, "yes," you may not need it. If the answer is, "no," you probably do. Try to get it through work, a union or association to save money with group rates. If not, individual policies are available, too.
Term Insurance vs. Permanent Insurance. Which is right for you?

Deciding between term and permanent insurance can be tricky. Term is cheaper right away, but the premiums usually increase every year and it only pays out if you pass away within the stated time (term). Permanent costs more during the early years, but includes a savings feature that may end up being worth more than the amount you pay in premiums - and pays your beneficiaries no matter when you pass away. So how do you decide? Generally speaking, if you're going to have the policy for 10 years or less, choose term. If you'll keep it 20 years or more, choose permanent. In between 10-20 years, consult a professional.

Want more information? Try these sites:

www.naic.org - National Association of Insurance Commissioners

www.pueblo.gsa.gov - Federal Citizen Information Center

People usually select term insurance to cover specific financial obligations, such as mortgages or college tuition, because it only pays if the covered person passes away within the stated period of time (the term). Die the day after and your family doesn't get a dime. So what's the point?

Let's say you have 5 years left on your mortgage, at $1,200 a month. That's a $72,000 obligation your family might not be able to meet without your paycheck. But by purchasing a five-year term $75,000 policy, your family may not have to move.

Term is cheaper than permanent insurance because short-term coverage is lower risk for the insurer. However, the longer the term the more expensive it becomes. In fact, your premiums may increase every year, unless you choose a version that locks the premium in.

There are four versions of term insurance available:

1. Convertible. This version can be converted into permanent coverage at any time without a medical exam. Premiums may increase if you do.
2. Term. When it expires, you can create a new term policy without a medical exam, but the premium may be higher. The premium is also likely to increase every year.
3. Level. The cost of this version stays the same every year, as do the benefits. If you want to renew at the end, you can expect a significant increase in premium, however, as you will have aged.
4. Decreasing. In exchange for premiums that remain the same during the term, the benefit of this version decreases the more time passes.

People usually select permanent insurance (or Whole Life, as it's also called) for the peace of mind of knowing their beneficiary will receive money no matter when they die. And because it includes a savings feature that builds up cash they can tap into while they're still alive. Permanent insurance is more expensive than term, but has four variations to fit different needs:

1. Whole life. You pay a fixed premium your entire life for a fixed benefit at death. It includes a cash savings feature that may, over time, grow to a substantial amount.
2. Universal life. This gives greater flexibility than whole life as you may be able to change the amount of coverage you get as your needs change. Some changes may require a medical exam.
3. Variable life. This invests some of your premiums in the market to try to increase your benefit. It usually includes a minimum guaranteed death benefit, but not a minimum cash value.
4. Variable-Universal life. This combines the premium and death benefit flexibility of universal life with the investment flexibility and risk of variable life.

Take Action

Use these interactive tools to find out how much life insurance you may need: moneycentral.msn.com and www.bankrate.com.

Answer these questions to find out what type of life insurance suits your needs at www.bankrate.com.

Look for an insurer in your state for any type of insurance, using an online service from the Insurance Information Institute. See the box titled "Individuals" at www.iii.org. (Note, the box rotates three different content messages, so wait for the one you want to appear, then click.)

Be sure that the insurance company offering the policy will be financially sound when, or if, it comes time to pay your claim. Use these services:

A.M. Best
908-439-2200
www.ambest.com

Moody's Investors Services
212-553-0300
www.moodys.com

Standard & Poor's Insurance Ratings Service
212-438-2000
www.standardandpoor.com

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You want to work. But what if you can't?

If you get sick or hurt and can't work for an extended period of time, disability insurance may be the difference between your family maintaining its lifestyle and making serious changes.

Disability insurance replaces a portion of your regular income when accident or illness keeps you from working. It's usually offered as short-term coverage - which lasts up to 6 months, and long-term coverage - which covers situations lasting six months or more. Often it will be included in benefit packages employers offer, so check at work to see if it's available to you and at what level. Typical policies provide about 60% of your gross (before tax) salary, but you can usually purchase additional coverage for a small increase in cost.

What you should know about disability insurance:

• The definition of disability varies. Make sure any policy you consider covers situations you view as likely, or possible.
• Look for non-canceling policies. You want a policy that cannot be cancelled and guarantees renewals as long as your premiums are up to date - no matter how your health is.
• Some benefits are taxed. Not all. If you pay for disability coverage with a before-tax payroll deduction, the benefits will be taxed. Pay for it after taxes (usually an individual policy) and they won't.
• You may want increasing premiums. If the coverage is too expensive, you might consider a policy that charges less while you're young and more as you age. As earning power generally increases, you should be able to afford the increased expense later on.
• Social Security disability is hard to qualify for. If you intend to rely on Social Security Disability coverage, know that you may have to prove yourself unable to perform any job, not just yours. Even types of work not available in your area.
• Social Security Riders. It can take months to see a check from Social Security if your claim is accepted, so you may want a Rider to bridge the gap.

Want more information?

• Read the non-profit Health Insurance Association of America's (HIAA) Guide to Disability Income Insurance.
• Assess your need for disability insurance at the Life and Health Foundation for Education.

• Fill out the checklist on what things to consider when deciding on a disability policy from the Consumer Federation of America.
• For a simple assessment of your need for disability insurance, go to the Life and Health Foundation for Education.
• Read entries or join in discussions at the Disability Insurance Forums message board.
• The Health Insurance Association of America (HIAA), a nonprofit association of insurance companies, has published a "Guide To Disability Income Insurance."
• Look for an insurer in your state for any type of insurance, using an online service from the Insurance Information Institute.

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Long-Term Care Insurance

Be sure that the insurance company offering the policy will be financially sound when, or if, it comes time to pay your claim. Use these services:

• Long-term Care Insurance
  
• Long term Care Coverage
  
• Good to have if you need help

Long-term care insurance doesn't cover medical care for people with disabilities or long-term illness. It covers the related expenses that health insurance doesn't: In-home help, adult day care, assisted living services, visiting nurses, even care in a nursing home.

So what should you know and look for?

• Long-term care is expensive. You could easily spend your life's savings on long-term care in a short amount of time.
• Medicare doesn't cover long-term care. Medicaid will, but only after you've already spent most of your money, leaving little to live on.
• Don't wait to buy. If you wait until your 70s - or later - you'll likely be deemed high risk. You'll either be denied or charged astronomical premiums. Consider getting it while middle-aged - and premiums are lower.
• Consider the cost. If the premiums will lower your standard of living now, or you'll have difficulty affording them in the future, this coverage may not be for you.
• Coverage. You can select nursing-home care only. Home-care only. Or mixed-care that includes nursing homes, assisted living, adult day care and maybe even care in your home by a friend or family member.
• Benefit amount. The daily or monthly benefit is the maximum the coverage will pay for each day or month you are covered. If your expenses are higher, you'll be responsible for the difference.
• Benefit period. This determines how long your coverage lasts. Choose as little as two years, or as long as the rest of your life.
• Waiting period. The waiting period is like the deductible on your auto insurance. The longer it is, the lower your premium. But the more you'll spend on care, yourself. Waiting periods are usually from 0-100 days.
• Inflation protection. With health care costs rising every year, a policy without inflation protection is unlikely to provide sufficient coverage by the time you actually need it. There are two types of protection: right to add coverage later and automatic increases.
• Non-forfeiture benefit. If you have this benefit, your policy will continue to pay for your care even if you stop paying the premium. It can add 10%-100% to the cost of your policy.

As with any insurance policy, the details are what make or break the coverage.

Be sure your policy:

• Clearly explains when you are eligible for coverage and how it is determined.
• Does not require hospital stay before receiving benefits.
• Cannot be cancelled as long as you pay the premium.
• Lets you stop paying premiums once you begin receiving benefits.
• Has one deductible for the life of the policy.
• Covers pre-existing conditions if you disclosed them when you applied.
• Offers automatic inflation protection on an annual basis, or a guaranteed right to increase your benefit.
• Allows a downgrade in coverage if you cannot afford the premium.
• Covers dementia.
• Provides at least one year of nursing care and home health care coverage.
• Allows cancellation and full refund for any reason within 30 days.

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