Hello everybody! We hope you enjoyed the first part of the series “Common insurance mistakes to avoid”. So without babbling more let’s straight begin part 2 and give you some more bite.

6) Eliminating long-term-care insurance: Recently, many people with long-term-care policies were badly hit by rate hikes of around 45%-95%. If your insurance carrier also notifies you that you rates are too going to soar, you might get tempted to drop that policy and avail a new one. But if you are older, getting a new policy would be much more expensive than the existing one (sometimes even with the hike). Apart from this, nowadays, rates of new policies are just skyrocketing if compared to the rate-hikes of older ones. If you want to make the premiums of the existing policies affordable, just reduce the benefit period to three years.

7) The COBRA never bites: As per Consolidated Omnibus Budget Reconciliation Act (COBRA), you can stay within the group insurance policy offered by your employer for up to 18 months after you leave your job. However, the dark side of the act is that you need to pay 102% of the cost yourself (most employers pay 60%-70% of the premiums). However, if your health is good and living in a state with a competitive insurance marketplace, you can easily get a few better deals on your own.

8) Relying on life insurance rules of thumb: In general, it is advised to get such a life insurance that could equal 8-12 times of your annual income. However, if there are two earners in the household, they might require very different amount of coverage. On the contrary, if there is a single earner in a family along with several dependents, the coverage should be different. The thing that you need to determine is how much your family will need to sustain their lifestyle when you won’t be there.

9) Insurance coverage is your home’s market value: Your home’s market value and the insurance price are not the same. You can never make a comparison between the two. You always need sufficient insurance coverage so that you can rebuild your house in case it is destroyed somehow.

10) Choosing health policy based on premiums: Nowadays, in addition to heightening the premiums, health insurance carriers have also been boosting rates in every possible ways – such as by advancing coinsurance rates (percentage that you pay for doctor’s visits and other procedures) and adding new pricing slabs for prescription drugs. You can also drain more if the doctors you are consulting are outside of your plan’s network. So before you determine, compare overall costs and limits. Make sure there are sufficient qualified doctors in the network. Moreover, don’t forget to check the insurer’s complaint record.

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