Where should you start with your insurance?

It wasn’t too long ago that most people simply bought whatever insurance was mandated by the government and lenders, or recommended by insurance agents and friends. Sure, diligent Fools have always purchased books and magazines on the topic, but given the pace of ever-present change, it used to be tough to get up-to-date information from all perspectives without actually spending more time and money than was saved by the effort.

Nowadays, the Internet has it all, and most of it is free. By far and away, this type of comparison shopping is the activity in which the Internet has had the most dramatic impact: websites that are great for getting familiar with the market landscape at your own pace, without the sales pressure. They typically provide calculators for figuring your insurance needs and then provide free quotes on matching policies.

As you click around, note differences between quotes and see what patterns you can find. What are the variables that have a high influence on price? Do rates vary widely across insurance companies? When you get some specific quotes, look for links to detailed policy information. Also, by changing the input, you can see how different carriers rate health issues of concern to you. The more variables on the quote form, the more you can learn. As long as you don’t identify yourself, you should be safe. One word of warning, though, never give out personal information like name, address, telephone, and especially, Social Security number on one of these quote sites, unless you are ready to purchase from a trusted source. There are plenty of sites that will provide information-only quotes based on age, sex, health, and medical information, or car and home details, without asking you to identify yourself. Give out your name or phone number and you can expect agent calls before you’re ready. Give out your Social Security number and you can expect a check of your credit file.

Multiple inquiries on your credit history can hurt your credit rating, and anytime you give out your Social Security number, you risk identity theft. So please be careful! With this caution in mind, though, do look for quote sites that ask for detailed information on policy variables. For example, if you get a life insurance quote based only on age and sex and smoking status, you may not get an accurate quote, unless your health status is absolutely average. The more information you give, the more accurate the quote will be.

For every financial rule, there are exceptions, so don’t take these examples as gospel. Instead, think about it this way: Before buying anything, be sure you know exactly what you’re doing, and go well beyond an insurance agent or salesman for advice. Generally, these kinds of policies prey on fear and are not competitively priced. In most cases, the same coverage is built into your basic life and disability policies. If you’ve set these up to cover what you can’t afford to lose, there’s no need to do it again