What are some examples of when insurance bundling is a bad idea?

Some insurance companies offer only one type of insurance, while others offer many different types. Insurance buyers often receive a discount if they buy all or many of their insurance policies from the same company. Bundling often presents value to policyholders, but there are times when it does not.

Life insurance policyholders, for example, tend to stay with one company for their entire lives. Switching life insurance companies can be difficult or impossible. Those with term life insurance have the option to switch at the end of each term. Life insurance holders should shop rates every time they renew term life insurance to ensure they are getting the best deal. Whole life insurance is generally held for life.

Bundling may not always be available. For example, a person who owns an exotic car requiring special insurance may have difficulty bundling his or her auto, home and life insurance. A company that offers the best home insurance rate may not offer any other types of insurance, and the cost savings could make not bundling worthwhile. Researching competitive quotes and examining the total cost with each combination of insurance provides the answer as to what the cheapest route is.

For many reasons, rates offered by insurance companies can change. A customer who bought a bundled package of home, auto and life insurance may get the best deal at one point in time. However, what was the best deal before may not always be the best deal now. It is wise to compare quotes for each insurance policy each time they are due to be renewed.

Different companies offer different types of coverage, and exactly what is covered by each company can vary dramatically. Some medical procedures and diseases are covered by some insurers, and some are not. Different home insurance policies offer varied levels of coverage as well. When comparing quotes, be sure to compare comparable policies. Sometimes it is not possible to get competing quotes on exactly the same coverage, and it is necessary to compromise either in price or in the level of coverage received.

Some people like to spread different insurance payments over the course of a month. For those who get paid on a weekly basis, it might be difficult to pay a large insurance bill that covers medical, home, auto and life insurance all at once. Another drawback is that a missed payment has much larger consequences. Should a missed insurance payment occur, it may be better to miss a life insurance payment than an auto insurance payment. By having insurance spread over several policies, those who are on tight budgets may maintain more control of how many policies they miss payment on in a worst-case scenario.

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