Got you covered?

Insurance can be a complex subject. It can be dizzying, even. 

For that reason, many of us put off asking the tough questions that we know we should. But considering what may be at stake, it’s worth getting the answers before you’re confronted with an emergency.

Here are six questions you may want to ask your insurance provider before the need arises.  

 

Do I need insurance when I rent a car?

If you’ve rented a car, you’ve probably been asked whether you want to pay extra for coverage offered by the agency. If your experience has been anything like mine, the process can be downright uncomfortable.

The fact that the agent is working hard to persuade you to buy the coverage tends to make you question whether you need it. If you have auto insurance, your own policy typically extends to a rental car. So, subject to the terms, limitations and deductible of your policy, you may have coverage for the vehicle and any liability you incur from damaging property or harming others. But not so fast – that’s only part of the story. 

If you are in an accident, the rental car company may also suffer a loss from not being able to rent the vehicle while it’s being repaired, a loss from its decreased value and the administrative expenses associated with the process. These would typically not be covered by your auto policy, so accepting the coverage, or at least the part associated with the rental company’s losses, may make sense.

There’s one final consideration before you sign on the dotted line: some credit cards also offer protection in coordination with your auto policy for rental company losses. Of course, you must use that card to rent the vehicle for those to apply.

Before you rent a car, do your homework. Check with your auto insurer and credit card company to see where you stand. 

Will my auto insurance policy cover items stolen out of my car?

It seems reasonable to assume that if your laptop, cellphone or even your vintage baseball card collection was stolen from your car, your auto insurer would reimburse you. That’s not likely in most cases. 

Instead, your homeowners or renters policy would protect your stuff. With a homeowners policy, this can be a bit of a challenge because deductibles and exclusions often limit the value of the protection. Check with your property insurance company to evaluate your coverage. If you regularly cart around high-dollar items in your car, consider a valuable personal property or personal articles floater to provide appropriate coverage. Luckily for me, it only took losing a laptop, not my baseball cards, to learn this lesson.

Does a spouse who doesn’t work outside the home need life insurance?

Probably. This is one of the biggest life insurance blind spots I’ve encountered in decades of advising families on their finances. While replacing a
breadwinner’s income is a primary purpose of life insurance, it’s not the only one.

Think about it. If something happens to a stay-at-home parent, especially one with young children, the remaining family members will need to adapt. The surviving parent may need to curtail work plans, aspirations and income potential to spend more time with the kids. He or she may also need to pay more for child care. 

About 15 years ago, VA recognized this and began offering Family Servicemembers’ Group Life Insurance (FSGLI) for spouses. Make sure your life insurance covers both of you. A life insurance calculator like the one at usaa.com/lifeinsurance can help you answer the most important question: do we have enough?

Does my mortgage insurance premium pay off my mortgage if I die? 

If ever there was a misnomer in the world of insurance terms, it’s private mortgage insurance (PMI). Those three words could leave you with the dangerous misconception that if you died, your mortgage would be paid off. That couldn’t be further from the truth. Instead, this insurance, usually required for conventional mortgage loans made with less than a 20 percent down payment, protects the lender if you default on your mortgage. While PMI may allow those without a hefty down payment to buy a home, it is not life insurance targeted to pay off your mortgage. It’s also worth mentioning that one of the advantages of a VA loan is that it allows you to avoid PMI, even without making a down payment.

Does my health insurance coverage protect me overseas?

You’ll want to know the answer to this question well before stepping on the plane or ship to your destination. Although we had to pay upfront, my work coverage through USAA reimbursed us when my wife spent the night in an emergency room in Germany a few years ago. Is that the case with your work coverage?

Medicare does not provide coverage while you’re outside the United States. However, certain Medigap plans (C, D, F, G, M and N) provide overseas emergency health care. TRICARE and TRICARE for Life provide overseas coverage. The key is to understand your coverage before you are confronted with a health crisis away from home. If your coverage is likely to fall short, look into a short-term travel policy before you leave. 

If I have Medicare or a Medicare Advantage plan, can I ignore the annual enrollment this year?

You can, at your own financial peril. Deciding between Medicare, a supplemental plan or Medicare Advantage used to be a one-and-done decision for many people. But in the rapidly changing medical environment, it’s worth evaluating each year, from both a cost and coverage perspective. Take a look at your coverage during open enrollment this year, from Oct. 15 to Dec. 7.

Do your research, ask the questions you need to ask, and turn the complex into commonplace.

J.J. Montanaro is a certified financial planner with USAA Financial Planning Services, one of the USAA family of companies. USAA is The American Legion’s preferred provider of financial services.