The Myth of Saving Money on your Insurance Premiums

I advise families every week regarding websites advertising how much they can "save you" on Insurance Premiums (whether life/health/home/auto). 

In my opinion they are misleading and is all a myth.  

The two ways to save actual money on your premiums is to lower your risk by being healthy, having a good background check (including good credit and low or none traffic violations/accidents)... and of course taking advantage of any discount programs offered by some companies for "bundling" their products. 

Otherwise, it won't happen since most reputable Insurance companies (A and B rated) use about the same information as a guide to decide what premium you as an individual will be charged. 

The "quotes" you receive over the phone, online OR even face to face with your favorite agent are not going to vary "wildly" (if they do there's a red flag for you) and are ALL pending the ACTUAL information that comes after you've put in an application and the company is able to do a background/credit check and or a physical. 

The way I explain it to my clients is this: "the application is just that... an application.... NOTHING MORE..." 

Based on your answers in the application a seasoned agent should know whether there's reason for concern or not even before submitting it. 

Once the application is "turned in" and they take a look at your background/credit records (and/or physical if required for Life/Health policies) one of three things can happen: they can accept you at the price quoted, they can give you a different (usually higher) offer OR in the worse case scenario they can decline to issue a policy at all.

Each company has a set amount of "risk" that they're willing to take with each new policy. Remember, the Insurance Companies are "betting" that you will not need this policy. You are betting that you will... 

For those clients that have questionable backgrounds (whether that's health/credit concerns) there are reputable companies that would care of "higher risk" individuals for a higher fee.

Remember that applying to a lot of different insurance companies "willy-nilly" would hurt your "background check"... much like it would hurt your credit report to apply to many loans/credit cards...  

In the next blog I'll discuss how to get "good quotes" so you avoid getting "surprised" when your actual policy arrives and what makes a "good Insurance company".