The Process of Buying Insurance

Insurance is sometimes a necessity, as it is with buying a car, or beneficial to your welfare, such as health insurance. Insurance lingo can seem like another language, which may cause you wonder how in-depth the process of buying insurance actually is. You don't need a degree to buy insurance, but you do need to have some understanding of what you're dealing with, otherwise you'll end up with a policy that's not right for you.

Types of Insurance

• The process of buying insurance varies depending on which type of insurance you want. Life insurance, for example, requires you to undergo a medical exam, whereas applying for health insurance involves writing down your complete medical history. Home insurance applications tend to be less involved, but you still must provide the insurance company with your employment history and basic personal information. Auto insurance companies typically ask the fewest questions compared to other types of insurance.

Online vs. In-person

• Nearly every insurance company has utilized the Internet as a basis to do business. Some insurance companies even offer discounts for applicants who apply online. In addition to potential discounts, you can also get your questions answered in the site's frequently asked questions section and browse through multiple insurance policies. Applying in-person is obviously more personal, and you also have the option of getting answers to specific questions that may not be on the website. Some insurance companies operate online only and do not have paper applications.

Comparing Insurance Companies

• The rules and policies for each insurance company vary, as does the company's customer rating. You can often browse the Internet for opinions and reviews on the insurance company you're interested in dealing with. Some insurance websites even have their own "Customer Review" sections for you to read.

Selecting a Policy

• There are different tiers of insurance policies that you'll have to choose from. One health insurance policy, for example, may offer a $70 premium but a $6,000 deductible, while another policy offers a $140 premium but $500 deductible. Generally, the higher the insurance premium the better coverage you'll receive. For example, liability-only coverage for your vehicle is cheaper than full coverage, but your insurance company will only cover the damage you do to someone else's car; not the damage done to your car.

Payment Methods

• You'll have the option of paying for your insurance policy with a check, credit or debit card or cash. Cash is only accepted at companies that you can visit in-person. For example, you cannot pay an Internet-only insurance company in cash. You'll also have the option of whether you want installments or you want to pay the policy balance all at one time. Some insurance companies offer discounts if you pay the balance at one time, but if you cannot afford to do that, then you can pay in monthly installments.