Insurance reality check

When it comes to insurance, many people face the Goldilocks dilemma: Am I buying too much coverage, not enough, or just the right amount? How do you determine your proper insurance levels while ensuring you don't waste money on unneeded coverage – or worse, leave your family exposed?

Here are a few considerations:

Everyone needs medical insurance. One serious accident or illness could wipe out your savings and plunge you into debt or bankruptcy. If covered through your employer, carefully compare all plans offered. The one with the lowest premium may not be your best option. Consider how other factors add up – deductibles, copayments, allowed/disallowed benefits, out-of-network charges, medication charges, etc. Also compare options available through your spouse's job.

If you're not covered, explore other options:

• If recently laid off, ask about COBRA continuation coverage through your former employer.
• If under age 26, you may be able to enroll in a parent's plan. Visit www.healthcare.gov for details.
• High-deductible plans provide comprehensive coverage for catastrophic illnesses at much lower premiums than comparable low-deductible plans.
• Most states provide high-risk insurance for people who don't qualify for private insurance. It's costly, but no one can be denied. Visit www.naschip.org for information.

Life insurance. If you're single with no dependents, you may get by with minimal or no life insurance. But if family depends on your income, many experts recommend buying coverage worth at least five to 10 times your salary. After your kids are grown you may be able to lower your coverage; but carefully consider your spouse's retirement needs.

Car insurance. Most states require car insurance for good reason: It protects you financially should you cause an accident or be hit by an uninsured driver. Rates vary considerably depending on: coverage and deductible levels for liability, uninsured motorist and collision; age and driving record; vehicle year and model; number of insured family members; and security features (alarm, airbags, secured parking, etc.)

To lower car insurance costs, Ruth Stroup, a Farmers Insurance Group agent from Oakland, California, suggests:

• Comparison shop with other carriers.
• Increasing your deductibles from $250 to $1,000 might lower your premium by 15 to 30 percent.
• Ask about discounts for safe drivers, age 55+, linked homeowners/renters insurance, etc.

Stroup adds, "My biggest tip on auto insurance is to make sure your liability insurance relates to your net worth and income. It only takes one accident to wipe out your savings. Transferring this risk to an insurance company is very inexpensive for good drivers."

Homeowners insurance. Your home is probably your largest investment, so don't risk losing it and its contents through an unforeseen disaster, accident or robbery. Renters also need insurance: Although the building is insured by the owner, your contents are not. A few tips:

• Review your coverage periodically to adjust for inflation, home improvements, new possessions, change in marital/family status, etc.
• Compare your rate with other insurance carriers, but get "apples to apples" quotes, since policies may have varying provisions.
• Buy additional coverage on expensive items like jewelry, art and computers, which may have limited coverage.

Don't forego critical coverage to save a few bucks: It's not worth it in the long run.