Selection of a Good Insurance Policy

To choose a good insurance policy, the consumer must understand the need for insurance. Only then can it be determined whether a particular policy meets this need, By definition, a good insurance policy is one that meets the consumer's needs without providing more insurance than is required. In choosing a good property and liability insurance policy, the consumer's selections are standardized. The two largest non life, exposures are the home and automobile. The consumer's role is easier today, when one or two packaged plans of insurance can cover most property needs. Before 1950, it was necessary to buy several different policies and riders, and even then the consumer could not always be sure there were no gaps or overlaps in insurance coverage. Even today, insured’s with money making hobbies or unusual property such as expensive artwork, extensive gun or coin collections, or a large greenhouse may need to amend the standard policy to tailor the coverage to their needs.

Choosing a good life insurance policy is more difficult than choosing a good non life insurance policy because life insurance policies are not standardized. Some policies combine savings with protection; some policies are purely protection. Generic policies such as whole life or term insurance often come with fancy names such as extraordinary estate builder or junior executive heritage protector or super duper money maker. One company's universal policy may be different from another company's universal policy. Some companies' policies are combined with desirable riders, while others are combined with less desirable ones. Some companies provide for a substantial surrender charge, while others do not. Recognizing purchase substitutes in the life insurance market is not an easy task. The informed consumer knows the correct questions to ask and can understand the answers.