Finding the perfect insurance plan—whether it’s health, life, or auto insurance—starts with asking the right insurance questions.
That can be hard, as insurance policies are brimming with fine print and details. There are many options to consider, whether you’re looking for the Cadillac of health insurance or the cheapest auto policy for an old truck.
To help, here are answers to your most frequently asked insurance questions.
If you’re just starting out, it’s tempting to go with bare-bones auto insurance. But one bad accident can eat into your future earnings if you’re under-insured, so you need adequate liability insurance. You might also need renter’s insurance to safeguard your belongings.
Life insurance shields your family financially in the event of your death. You’ll need homeowners insurance in case of a disaster, hailstorm, or property loss. And if you have teen drivers, it’s time to add them to your car insurance policy.
Even if you work at home in your bathrobe, your business needs the same kind of protection as brick-and-mortar businesses have. If you’re selling products or services, you may need liability insurance. And if you have expensive equipment, it should be separately insured. You might be able to get an endorsement on your existing homeowner’s policy to cover some of the bases.
There are 3 main ways of obtaining insurance:
An online insurance broker.
With an online broker, such as PolicyScout, you can provide some basic information about the type of insurance coverage you are looking for and they will provide you with quotes from various insurance carriers.
An insurance agent.
Similar to an online broker, an agent can give you quotes for multiple insurance companies but they are usually seen in-person in an office.
Direct from the insurance company.
You can get a quote directly from an insurance company, though this route may only be best if you have an idea of what company you would like to go with.
Original Medicare pays for much, but not all, of your health care costs. A Medigap, or Medicare Supplement, policy can cover extra costs like:
With original Medicare, you’ll pay about 20 percent out-of-pocket just for coinsurance. That can add up fast if you need major surgery and don’t have gap coverage.
The government gives you a chance to test-drive your plan. After enrolling in Medicare Part B, you have six months to buy a supplement with no questions asked.
Most states require liability insurance in case of an accident. It covers your expenses and those of another driver or passenger.
Collision insurance covers damage to your car, and possibly to buildings and trees if there’s an accident. Car repairs are expensive, and it’s best to have collision insurance unless you have hefty savings.
Comprehensive coverage covers damage due to incidents like:
This insurance buys peace of mind in case of a natural disaster or if your car is new and repairs are pricey.
If the miles are showing on your Old Faithful car, check the Blue Book value. If it’s low, you can probably skate by with only liability coverage.
It can depend on the insurance carrier as well as how bad your record is. In most cases, insurance carriers have a 5 year look back period to look at your driving record to determine if they can insure you as well as your insurance premiums. Keep in mind that some go as high as 10 years and some as low as 3 years. Make sure to shop for multiple auto insurance quotes to get adequate coverage and the best rate.
These are all out-of-pocket medical costs you might pay, depending on your plan. A deductible is the amount you pay each year before your plan kicks in with coverage.
Coinsurance is a percentage of the bill you pay each time you use a service like physical therapy.
A copayment is a fixed amount you pay at the time of service, such as a $20 copay when you visit your doctor.
You can buy health insurance on the marketplace through a Special Enrollment Period if you have a qualifying life event. If you lose your employer-based health insurance, get married, or have a baby, you can buy insurance outside of the usual fall period.
You can apply for Medicaid and the Children’s Health Insurance Program (CHIP) at any time of the year.
The old rule of thumb is that the death benefit on a policy should be seven to 10 times the amount of your annual salary. But this is outdated because a family may have other sources of income.
Instead, take into account extra income like social security, pensions, or retirement accounts when arriving at a figure. To pinpoint exactly how much coverage you need, try this insurance calculator.
Read more: How Much Life Insurance Do You Need?
If your spouse is a stay-at-home parent, their contribution is valuable. The average hourly rate of a nanny in the U.S. is $19. If something happened to your spouse, you’d pay that and more: the cost of take-out meals, a cleaning service, and transportation. That’s why many at-home spouses have life insurance.
Term life insurance covers your family for a limited time (10, 20, or 30 years or more.) A benefit is paid at the time of your death.
An advantage of term life is that you need less life insurance as retirement nears. You can then let the policy lapse without paying the penalty. It also has the lowest premiums.
Cash value insurance can include whole life and other plans. These build up cash value as a part is invested or put into tax-sheltered savings accounts. You will pay extra fees like commissions and set-up charges. And it can take years to get a cash payout.
This type of insurance is especially helpful if you need to cover estate plans or endowments.
Some plans will give you a discount if you have a security system or deadbolts on your doors. You can also look into bundling your auto and home insurance policies for additional savings. Check with your insurance carrier to see what types of discounts they offer to help save you money.
The actual cash value is the depreciated value of your belongings at the time of the loss. It compensates you for the used value of the items. A replacement cost policy replaces the amount you originally paid, so you can buy the item again new.
Although plans differ, a discount plan gives you a percentage discount on pet care in exchange for an annual fee. A comprehensive plan is more like health insurance for people.
It’s best to have a vet with a caring, long-term relationship with your pet. Not all plans let you choose a vet, so this is one of the key questions to ask before buying a plan.