Most people buy Insurance the wrong way. First they buy it like a commodity—on price alone. Then they let whoever answered the phone and gave them the quote be their Agent, without any knowledge of that person's skill level. What they end up with, usually, is a cheap price... for the wrong coverage. Not to mention a less-skilled Agent than they could have had for the same price.

Understanding the danger of price-only shopping.

Why is the practice of calling around for the lowest price dangerous? Because Insurance is not a commodity. It's a 20-page contract full of exclusions and limitations. To put it another way, people buy Insurance like it's cheddar cheese when it's really more like Swiss cheese—nutritious but full of holes!

Good coverage can't happen when Insurance is bought on price alone. If you want to plug the holes in your Insurance coverage, you must be willing to buy Insurance carefully, and not just buy the cheapest available product.

Bargain basement brain surgery.

Suppose you've been told you need brain surgery. If you shopped for it like many shop for Insurance, here's what you'd do:

You'd start by calling around town, getting quotes over the phone. You're not sure exactly what kind of brain surgery you need, so you decide to get a price for the type you think you probably need. You get quotes from all over—from surgeons, clinics, hospitals, and even medical school interns. You're not concerned about skill—just price. After all, it's only brain surgery.

You find a clinic that will do the surgery you think you need for the lowest price. You sign up for the brain surgery. The intern who answered the phone when you called does the surgery, even though one of the top brain surgeons in the area works for the clinic and would do the surgery for the same price as the intern.

Insurance isn't brain surgery. But it isn't a commodity either. The moral of the story is that if you shop for Insurance like this, you'll probably end up with the wrong diagnosis, with possible serious side effects, and with a less skilled advisor than you need and could have had for the same price.

> Visit the Insurance for Dummies website.

From Insurance for Dummies © 2001 by Wiley Publishing, Inc. © 2000 Text and Author Created Materials Copyright Jack Hungelmann. Used by arrangement with John Wiley & Sons, Inc.

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