What’s your “Insurance IQ”?

If you’re like most, you probably don’t know as much about insurance as you would like. According to the 2012 Insurance Barometer Study, 45% of consumers rated “knowledge” as either the first or second most important factor in purchasing life insurance. However, one-third have delayed their purchasing decision because they are unsure of how much and/or what type of life insurance to buy, and more than half who say they need more life insurance are holding off for the same reasons. And chances are, when it comes to other types of insurance, the knowledge gap is probably just as universal.

If you’re in the “I wish I knew more about insurance, but don’t know where to look” category, National Consumer Protection Week (March 3 to 9) is the perfect time to educate yourself. NCPW is a coordinated campaign that encourages consumers nationwide to take full advantage of their consumer rights and make better-informed decisions.

And when it comes to insurance, while a little knowledge is not a dangerous thing, a lot more knowledge is preferable. To make the right choice in coverage type and amounts, you need to first know what you don’t know—and then get answers.

Begin by answering the following questions:

Life Insurance

• Does someone depend on you for financial support or some other form of assistance, such as full-time caretaking or parenting?
• Do you have money set aside to pay your debts in the case of your death? Do you know how much your estate would owe if you died tomorrow?
• If you’re leaving a large estate, do your heirs have the financial wherewithal to pay the estate taxes?

Disability Insurance

• If you were unable to work due to a disabling illness or injury, how would you pay your bills?
• Do you know how to calculate your future earnings?
• Are you self-employed, or otherwise not covered under Workers’ Compensation?

Long-Term Care Insurance

• If you were to need long-term care, do you know what portion of the cost, if any, would be covered by your health insurance? By Medicare?
• Do you know the average annual cost of full-time nursing home care? Of a home-health aide?
• Do you know the difference between skilled, intermediate and custodial care? Between nursing homes, assisted living facilities and adult day care centers?

These are just a few of the questions that the LIFE website can answer; simply click on the link of the topic above. And once you have a more in-depth understanding of the various types of insurance, and the situations where they will come into play, you’ll be in a better position to make an informed decision. Finally, armed with your new-found knowledge, contact your local insurance professional to choose the right type and amount of insurance you need to protect your future and that of your loved ones.