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Money Management - Head Matters


4.    Protect Against Financial Loss

c.    Insurance and risk management: Types of insurance (continued)

Do you want to get the most protection for the dollars you spend on insurance? Then follow these tips:

Tip What Does That Mean?
 The large loss principle. Small losses, such as a dented fender, can be paid for with savings. It’s not the frequency of a loss that matters but the dollar amount of potential loss.
 Ask about insurance discounts. You may get a lower premium if you complete a driver education course, install a car anti-theft system, drive only short distances, or buy more than one type of insurance from the same company.
Know that a person's past record influences insurance premiums. Young male drivers generally pay higher premiums for car insurance than females because, as a group, males are involved in more accidents. But, males can lower the cost of their insurance by having clean driving records and buying cars that are less likely to be stolen.
Just because auto insurance is required by state law and homeowner's insurance is required when people get a mortgage (a loan to buy a home), doesn't mean you have enough coverage. Car insurance liability limits required by many states are very low and don’t begin to cover the real liabilities for injuries or property damage. You should buy at least a minimum of $300,000 bodily injury and $50,000 property damage liability.
When looking for a job, ask about types of insurance that are provided by an employer, such as health insurance or life insurance. Employee benefits often can be worth thousands of dollars you otherwise would have to pay for yourself.
Shop around for insurance as you would any consumer product. Compare the cost of a specific amount of coverage with at least three companies. Ask about premium costs, lifetime maximums, and special discounts.
Many young adults are covered by their parent’s health insurance until a specific age. Before you are dropped from your parent’s policy, find replacement coverage. Ask your parents if they would keep you on their policy.  If not, possibilities include a student health insurance policy or health insurance as a job benefit.
 Buy it when you don't need it. After you have a car accident or have become ill, it may be difficult and expensive to buy insurance.
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