How to Take Out Insurance

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    • 1). Identify what type of insurance you need. Life insurance provides a relatively large cash settlement in the event of your death; homeowners insurance pays for major repairs to your property caused by external factors. Other options include auto, renter's, flood and fire insurance. You can add additional coverages to primary policies through riders as well, such as earthquake and acts of terrorism.

    • 2). Shop around with the various sources of insurance coverage that are available. You can talk to local insurance agents, as well get quotes from online insurance companies. When you shop around, only compare similar policies. For example, comparing a liability-only auto insurance policy against a full coverage policy from another carrier will not give you an accurate point of comparison.

    • 3). Review the coverage limits of the policy. Generally, a life insurance policy should provide enough money for your family to pay for any funeral costs, lost income or associated medical bills. Alternately, an auto policy should provide at least enough coverage to pay for damage inflicted if you're at fault for an accident. Depending on the state in which you live, you must meet legislative standard limits for auto insurance.

    • 4). Choose your deductible, if applicable. A deductible is the amount you must pay before the insurance company pays out any claims. The higher your deductible the lower your premium and vice verse. The deductible renews every year with your policy.

    • 5). Fill out the application provided by the selected insurance company. You must include personal information like your name, address and Social Security number. If you are buying life insurance, you usually have to answer health-related questions, submit medical records or take an examine. Common questions include whether you smoke, if you recently suffered a heart attack or if you have any chronic diseases like asthma.

    • 6). Submit the necessary documentation and finish the application process. Depending on what type of insurance you are buying, you need to provide the mandatory documentation, such as a property appraisal, a property deed or car title. In some cases, the insurance will want to inspect your car.

    • 7). Sign the policy and remit your premium payment to put your insurance into effect. Generally, you can choose monthly premium payments or pay your policy in full -- insurance policies usually last between six months and one year, although some short-term policies may last only a few weeks.

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