Separating Fact from Fiction
While insurance is essential to our financial well-being, it’s often surrounded by myths and misunderstandings that can lead to confusion – or worse, financial mistakes. Let’s set the record straight and debunk some of the most common insurance myths so you can be confident that your coverage is exactly what you need.
MYTH 1: You don’t need life insurance if you’re young and healthy.
The truth is, buying life insurance when you’re young and healthy can lock in lower premiums and provide financial protection for your loved ones in case of the unexpected. Plus, it can give you peace of mind knowing that your family won’t be burdened with expenses should something happen to you.
MYTH 2: Homeowners insurance covers all types of damage.
While homeowners insurance provides valuable protection against common threats like fire, theft, and vandalism, it doesn’t cover everything. For instance, most standard policies don’t cover flood damage or earthquake damage. If you live in an area prone to such risks, you may need to purchase additional coverage to ensure you're fully protected.
MYTH 3: The least expensive insurance is the best option.
While a lower premium may seem appealing up front, it could result in inadequate protection or higher out-of-pocket costs when you need it most. Always ensure that the policy offers the coverage you need, even if it means a slightly higher premium.
MYTH 4: Your car insurance will cover all the costs after an accident.
Depending on your policy, you may only be covered for certain types of damage in the event of an accident, whereas other costs might not be fully covered.
It’s important to review your policy to understand your coverage limits and what’s included – and consider supplemental options like Guaranteed Asset Protection (GAP), Mechanical Repair Coverage (MRC), or Debt Protection to help with the rest.
MYTH 5: You’re covered for everything with health insurance.
Health insurance is vital, but it doesn’t cover every health-related expense. Depending on the plan, there may be exclusions for certain treatments, prescriptions, or specialist visits.
Whether you’re on an employer’s plan or Medicare insurance, it’s essential to understand your policy's limitations and the specific services covered by your plan to avoid unexpected out-of-pocket costs. For Medicare, our team of experts can help you review your coverage and potential exclusions.
MYTH 6: Renters insurance is only for expensive items.
Renters insurance covers more than just personal belongings. It also provides liability protection in case someone is injured in your rental home or apartment, and it can help cover living expenses if your home becomes uninhabitable due to a covered event, like a fire.
MYTH 7: Your health insurance is the same as long-term care insurance.
Health insurance typically covers medical care and treatments, while long-term care insurance helps cover the costs of extended care services, such as nursing home stays or in-home assistance. Consider planning ahead for later in life and unexpected medical needs.
MYTH 8: Filing an insurance claim will always result in higher premiums.
While it’s true that certain claims, like auto accidents, could lead to higher premiums, that’s not always the case. It’s essential to evaluate whether the potential benefit of filing a claim outweighs the cost, but don’t let the fear of premium increases stop you from getting the compensation you need.
Get the Facts, Stay Protected
Myths and misunderstandings can easily lead to under-coverage or unnecessary expenses. By debunking these common myths, you can ensure you’re making well-informed decisions about your policies.
Review your insurance coverage with a fresh perspective. It’s a simple way to ensure you’re fully covered and prepared for whatever life throws your way. Easily compare policies for auto, home, life, and more by requesting a free quote with no obligations.
Request a quote or get in touch with our insurance experts at visionsfcu.org/insurance.
This article first appeared in MoneyMatters Magazine. Click here to continue reading our current publication.
