Money Watch 8: Buying Insurance

INDIANAPOLIS (WISH) - Financial experts call it "risk management," but you know it better as "buying insurance." It's a necessity that can be costly if you're not careful.

In week 5 of the Money Watch 8 Challenge: 60 Days to Change our three families found out how they can save money on insurance with one simple move. This week also included the emotional impact of preparing for end of life issues.

Everyday we all face risks; from car wrecks, to a fire that can wreck your home, to natural disasters that can end your life.

"Insurance is about laying your risk off onto someone else," said Peter Dunn, the financial expert behind 60 Days to Change.

Dunn said buying insurance won't keep you from having an accident or facing a life-changing event, but it will cushion the blow when and if it happens.

"I might have to move in with my daughter. She would love it," said Merita.

Merita and Joe understand the need for insurance. But like many, they don't understand insurance policies.

"To me it's very hard. Just the way, you know explain things, especially when an insurance agent comes over. You have no idea what he's talking about. Of course, he knows what he's talking about," said Joe.

"There are a lot of misnomers out there," said Insurance Agent Roy Lederman.

Lederman realizes insurance can be confusing. But he said you can't let that keep you from getting the kind of coverage you need.

"Typically, they say anywhere from seven to ten times your family earnings are in the household. But that's for someone who has dependent children at home. For someone who is single, the numbers may be quite a bit different," said Lederman.

Working Dad Brent said, "I didn't want to buy her next husband a boat, but uh."

He found out he needs about twice the amount of life insurance he currently has.

"Amy would be in a position to have to go back to work almost immediately," said Dunn.

"I do think it makes more sense and I definitely want to make sure that our boys are covered," said Amy.

"Wow, there's really no reason not to I guess," said Brent.

Dunn said putting all of your insurance policies with the same company is a good way to save money.

"We had the homeowners and car insurance on one policy and then they cancelled our coverage. Due to a certain young driver that had too many tickets," said Merita.

Dunn said, "I think with the right phone call you could save $4 to $500 a year. And then you can put that money to some other financial priorities."

Dunn also recommends you have a will.

"I don't. I figured I was too young for a will," said Nadia, a single mother.

"Wills are important, but not in the way most people think. Wills become excruciatingly important when there can be a conflict with family over who gets what in the event of someone's demise," said Dunn.

For single parents like Nadia that includes who would take custody of her child.

"It really hasn't been talked about. But I would imagine he would be with his dad or his grandmother," said Nadia.

It's important to work that out ahead of time. Our families are learning that taking control of their financial future also means preparing for unexpected disasters. Dunn said your will should include provisions such as a power of attorney for finances and health.

Next week, is the halfway point in the 60 Days to Change program. Hear how the families describe the impact the program has had on their lives.

Click here to join the Money Watch 8 Challenge any time.