Trick or Treat? Debunking 7 Common Insurance Myths
The world of insurance can be scarily confusing. Understanding different terms and coverage levels only adds to the horror.
But insurance is something we all need to protect our assets and, most importantly, family. That legendary importance inevitably leads to insurance myths. While some seem too good to be true, others can leave you perplexed, wondering if you’ve encountered a trick — or a treat.
A little knowledge sheds light on even the murkiest matter. Don’t get tricked by these common insurance myths! We’ve debunked seven of the most common insurance misconceptions.
Myth No. 1: My homeowners policy will protect everything inside my home.
While this might be a comforting thought, it’s not true for every homeowner. It depends on the value of your home and assets. Also, most homeowners policies have a dollar limit on coverage limits. That means you’ll want to ensure you have enough coverage to repair your home — and replace what’s inside — should disaster strike.
Ask your Texas Farm Bureau Insurance Agent about your policy’s coverage limits. A review of your coverage and your home’s inventory may help you find areas to update. If you have high-value items that exceed the limits of your policy, you might consider supplementing it with an inland marine policy, which casts a wide net of protection over assets ranging from cherished antiques to fine jewelry.
Myth No. 2: I don’t need to buy life insurance. I’m covered through work!
Many companies offer life insurance as part of their benefits package. But a one-size-fits-all policy may not work for everyone. Unfortunately, many people assume that they’re completely covered through their job’s coverage. But the truth is that, should something happen to you, your family may need more coverage than a blanketed company policy offers. Plus, if you change jobs, you might not be able to take your life insurance policy with you. Purchasing a separate policy ensures that you’ll have coverage no matter your employer or employment status as long as you keep up with the premium.
Myth No. 3: The minimum amount of required liability coverage for my vehicle is just fine.
Sure, you can buy the basic liability policy required by the state of Texas. Also known as “30/60/25” coverage, this type of policy provides standard coverage should you be found responsible for an accident. (That breaks down to $30,000 of liability coverage for injuries per person, up to $60,000 per accident, and $25,000 for property damage per accident.) But, in order to protect yourself and your assets, you might want to consider auto coverages such as collision and comprehensive auto insurances.
Myth No. 4: A basic auto insurance policy will cover your car if it’s stolen, vandalized, or damaged by weather.
This is a common misconception. For this wide range of coverage, you’ll need comprehensive auto insurance, which can help protect your vehicle against non-collision accidents and other “acts of God.” Keep in mind: A comprehensive auto policy will not cover you if you hit another vehicle or an object. That’s a job for collision insurance, which is often bought with comprehensive auto insurance.
Myth No. 5: I’m too young/old to buy a life insurance policy.
No matter the number of candles on your birthday cake, there’s a need for life insurance coverage at every stage of life. If you’re young, life insurance is generally more affordable. Plus, if you opt for a term life insurance policy, you might be able to roll it over into permanent coverage. For more seasoned policyholders, you can apply for whole life insurance up until your 80th birthday.
Myth No. 6: My beneficiary has to pay taxes on life insurance money.
Good news: Generally, proceeds from a life insurance policy are not considered taxable income. That means, the beneficiary listed on your policy would not have to pay taxes on money received from your life insurance policy.
Myth No. 7: You should always file a claim.
It might feel like a natural next step to file a claim when your home or vehicle is damaged. But that’s not always the best plan of action! Depending on your deductible, it might make more sense to pay for the repairs out of your own pocket. Let’s say your auto insurance deductible is $500. If you find yourself in a fender bender in the Buc-ee’s parking lot and damages end up totaling $300, it would make more sense to pay the $300 rather than going through the claim-filing process. Of course, it’s not always that cut-and-dry. Your Texas Farm Bureau Insurance Agent can help you understand when filing a claim is in your best interest.
A Parting Treat
Don’t fall for tricks this season! Your Texas Farm Bureau Insurance Agent can help you navigate the tangled web of insurance tricks and treats. Here’s a parting gift: Texas Farm Bureau members have several treats up for grabs through member benefits. There’s a benefit that fits nearly every aspect of life, from deals on amusement parks and hotels to savings on prescriptions and farm equipment. Choose your treat: Browse Texas Farm Bureau’s member benefits.
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