Know Your Options: Be Wary Of Unsuitable Insurance Products

One of the many benefits of age, in addition to experience, is that you generally don’t need as much insurance.

For example, disability insurance, which replaces income if you become disabled, is moot when you stop working and have no earned income to protect. Homeowners’ insurance is irrelevant when you are no longer a homeowner. When others are no longer dependent on breadwinning, life insurance becomes less necessary.

So, during this time of transition, it is important to carefully study your insurance options.

Appropriate insurance

Renters insurance is a good idea even if you’re living in a retirement complex. Check to see what features are not covered by the association, and get a competitive quote or two. This will assure you that you’re getting the features you need at a reasonable cost.

You will likely want to purchase an insurance umbrella. Umbrella insurance covers claims in excess of your other policies. Injury caused by you or your property will be covered when the claims are larger than the limits of your regular policy. Since claims like these are less likely to occur, umbrella coverage has a more reasonable premium.

Questionable insurance

For the rest of the innumerable insurance company offerings, it depends. Annuities are an important case in point.

Basically, with annuities, you buy the product and, in exchange, the payer issues you specified periodic payments, usually for the rest of your life. Annuities satisfy the need for a guaranteed lifetime income. The investment return is quite low, but for those who don’t want to think about investing or worry that they’re spending too much, annuities can be a reasonable choice. If you have a paid-up whole life insurance policy that you no longer need, some insurance companies allow you to transfer the policy’s equity into an annuity.

The National Adult Protective Services Association warns that annuities are often inappropriate financial products for seniors and, at times, the sale of these products to seniors can constitute financial exploitation. Even worse, some unscrupulous sales people take advantage of seniors’ fear of depleting their savings, placing them in inappropriate insurance products.

Protect oneself

At a time in one’s life when income is fixed, financial abuse is a very real consideration when purchasing insurance products. Research your agent and take a trusted family member along with you to your meetings.

Helpful tips

The American Bar Association urges you to consider the following advice:

  • Never rush into a financial decision.
  • Trust your instincts. Exploiters and abusers often are very skilled at being charming and forceful in their effort to convince you to give up control of your finances.
  • If something doesn’t feel right, it may not be right. If it sounds too good to be true, it probably is.
  • Do not trust a “cold-call” rather you should contact an insurance agency to discuss your needs. Feel free to say “no,” after all, it’s your money.

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