5 Common Insurance Mistakes to Avoid (and How to Fix Them)

Insurance is one of life’s necessities that is easy to overlook or push to the back burner – until you need it. Unfortunately, many families find that they are underinsured, are overpaying, or simply don’t have the right kind of coverage. In honor of National Insurance Awareness Day on June 28, here are five common, costly insurance mistakes and how to avoid them.

1. Not Having Enough Life Insurance

Many families underestimate how much life insurance they need or put off getting coverage altogether. This can leave loved ones vulnerable if the worst were to happen, and make a difficult time that much worse.

How to Fix It

Start by adding up everything your current income covers – your mortgage or rent, daily living expenses, outstanding debts, and future costs like college tuition, weddings, and other expenses. A common guideline is to have life insurance coverage equal to 10–15 times your annual income, although your individual needs will vary based upon your lifestyle and goals. American Heritage’s Investment & Retirement Center (IRC)¹ can help you evaluate life insurance and investment options and find the right coverage so you can feel confident and have peace of mind about your future.

2. Choosing the Lowest Premium Without Understanding Coverage

It’s tempting to choose the least expensive policy, especially for auto or health insurance. But lower premiums often mean higher deductibles or coverage that may not fully protect your family or fit your needs.

How to Fix It

Start with a thorough review of deductibles, coverage limits, out-of-pocket maximums, and exclusions before selecting a policy. The right policy will include a premium you can manage combined with coverage that won’t leave you financially exposed when it matters most.

3. Overlooking Bundling Opportunities

Many families purchase home and auto insurance separately, overlooking the opportunity to save money and simplify coverage through bundling.

How to Fix It

Bundling home and auto policies under one provider can lower your premiums, streamline billing, and make it easier to manage your policies with one provider. American Heritage can help members explore insurance bundling options including Auto and Home Insurance that can make a meaningful impact on your coverage and monthly budget.

4. Skipping Renters Insurance

If you’re renting, imagine a pipe bursts and causes flooding, or a fire damages your building. Your landlord’s insurance will cover the building structure, but your furniture, electronics, clothing, and other belongings are all your responsibility to replace. However, many renters overlook this fact, leading to costly struggles when a crisis hits.

How to Fix It

Renters insurance protects your belongings, provides liability coverage, and can even cover temporary housing and living expenses while repairs are made. And it’s typically one of the most affordable policies you can carry.

5. Not Reviewing Policies Regularly

There’s one thing you can count on: Your life is going to change as the years go by. Your insurance policies need to keep up and be a good fit for where you are at each stage. However, many people set their policies once and forget about them, even after major milestones.

How to Fix It

Review your coverage yearly and after each major milestone like marriage, having children, and buying a home. Regular reviews help ensure your coverage reflects your current needs, and that your beneficiaries and coverage limits are still accurate and meet your needs.

Quick Insurance Checkup Checklist

• Review life insurance coverage and beneficiaries
• Compare home and auto policies for bundling opportunities
• Confirm or obtain renters insurance
• Evaluate health insurance deductibles and coverage limits

• Schedule an insurance review with our Investment & Retirement Center¹

6. Updating Your Estate Plan

While you’re reviewing your insurance coverages, it may be a perfect time to also review your assets and your estate. Just like life insurance, it can be all too easy to put off or forget about estate planning and items like your last will and testament, a trust, and more. However, these life planning documents are critical and help set yourself and your family up for success.

We’re proud to offer our members access to our Digital Estate Kits, which provides comprehensive estate planning at a discounted price. For this one fee, you can create documents like a living will, a trust, guardianship documents, and more. You then have the opportunity subscribe to the service to revisit the documents annually and update information or add beneficiaries. Click here to get started today.

¹Securities and advisory services are offered through LPL Financial (LPL), a registered investment advisor and broker-dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates. American Heritage Credit Union and The American Heritage Investment & Retirement Center are not registered as a broker-dealer or investment advisor. Registered representative of LPL offer products and services using American Heritage Investment & Retirement Center, and may also be employees of American Heritage Credit Union. These products and services are being offered through LPL or its affiliates, which are separate entities from, and not affiliates of, American Heritage Credit Union or American Heritage Investment & Retirement Center. Securities and insurance offered through LPL or its affiliates are:

The LPL Financial registered representative(s) associates with this website may discuss and/or transact business only with residents of the states in which they are properly registered or licensed. No offers may be made or accepted from any resident of any other state.