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Insurance

What does it take?

"...Whatever happens, I've kept my insurance up."
-Edgar Lee Masters

The best-laid financial plans can easily be undermined by sudden disaster-an accident, death, illness, natural catastrophe, acts of terrorism, or even a lawsuit. I have seen people lose hard-earned money and long-held investments in a single moment.

Fortunately, you can obtain financial protection and peace of mind by carrying the right kinds of insurance. True, insurance is often costly, and you may be one of the lucky people who never have a claim. But consider what assets you would lose if you don't carry the insurance and, tragically, disaster of any kind does happen. You may not need every type of insurance discussed in this chapter. But I suggest that you review it all to see where your needs lie and learn about cost-effective ways of obtaining the appropriate protection.

What Is Insurance?

Insurance-for your health, your home, your car or other needs-is a form of financial protection that shifts the risk of loss to a larger pool that is able to bear the risk of loss, something you can't do on your own.

The insurance industry is a state-regulated one. Companies must meet state-set requirements to sell insurance within that state. Some states set stricter standards than others. Generally, however, most state standards are sufficient to protect consumers for any liabilities under their policies.

Check an insurance company's financial soundness and other factors as they are rated by certain independent companies. These companies provide rating reports, which reflect their opinion about the financial strength or weakness of an insurance company. These ratings services include:

? A.M. Best Company (www.ambest.com, 908-439-2200)
? Duff & Phelps (www.duffllc.com, 212-450-2800)
? Moody's (www.moodys.com, 212-553-1653)
? Standard and Poor's (www.standardandpoors.com, 800-400-4303 or 212-438-7280)
? Weiss Ratings (www.weissratings.com, 800-289-9222)

Strategy: If you have any questions about a particular carrier, contact your state insurance department.

When buying any insurance, shop around. Premiums can vary greatly from company to company. Just make sure you're comparing similar coverage and that the coverage offered for a stated premium by one company is the same as that offered by another carrier.

Strategy: Don't buy coverage you don't need or don't want. To make sure you're buying only the coverage you need, check the itemized coverage included in each policy you review.

There are different ways to shop for coverage:

? You can work with an insurance agent or broker-an insurance professional-who may be able to provide guidance or raise issues you might otherwise overlook.

? You may also be able to purchase insurance directly from an insurance company (for example, GEICO sells car insurance directly to the public) or through an insurance broker (for example, Quotesmith). You can find insurance companies, brokers and agents in your area through Insure MIND (www.lhui.com).

Strategy: Whichever method you use to buy insurance, you may wish to do online comparison shopping to see what rates are offered.

Here are some places to look:

? E-insure (www.einsure.com, 888-374-7500 or 312-663-9663)
? Insweb (www.insweb.com, 916-853-3300)
? Morningstar Insurance Center (www.morningstar.com/aboutus/insweb.html, 800-735-0700)
? Quick Quote (www.quickquote.com, 800-867-2404)
? Quicken.com Insurance (www.quicken.com/insurance, 800-811-8766)

Strategy: Always pay premiums on time to prevent any lapse in coverage. Some insurance, such as life insurance, may have a 30-day grace period for premiums. Other types of coverage do not have similar grace periods. You could lose your coverage by not paying on time.

To learn about insurance in general and to keep up on insurance developments, check out:

? Insurance Information Institute (www.iii.org, 212-346-5500)
? Insure.com (www.insure.com, 800-556-9393)
? Insurance.com (www.insurance.com, 877-808-3435)