10/20/2011 - Claims not the only reason for insurance coverage
Insurance can be a confusing topic for many, and as a result, myths can spring up based on faulty assumptions.
To clear up what's fact from fiction, MSN recently clarified the truth regarding insurance and what it's meant for.
For instance, some people believe that they should be receiving the benefits of an insurance policy that are equivalent to the premiums they're paying. In other words, if they continually pay their premiums but never make a claim, they're somehow being cheated.
But as financial author Liz Pulliam Weston tells MSN, insurance is something that's purchased to pay for costs that they wouldn't be able to afford in the event of an emergency, not for minor accidents that can likely be paid for out of pocket.
Therefore, Pulliam recommends buying a homeowners insurance policy with a higher deductible - one that's between $500 to $1,000 instead of $100 to $250 - as it can lead to a cost savings of 35% for monthly premiums and limit claims to when they are needed.