Frequently Asked Questions
A deductible is the amount you pay out of pocket before your insurance company pays for a covered claim. Being “covered” doesn’t mean the insurer pays everything. You pay your share first.
Example: With a $500 auto deductible and $1,500 in covered damage, you pay $500 and your insurer pays $1,000.
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Higher deductible = lower premium (your monthly or yearly cost)
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Lower deductible = higher premium
How to choose: If you have solid emergency savings, a higher deductible can save you money. If a surprise bill would strain your budget, a lower deductible may be the better fit.
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The three numbers are your liability limits, in thousands of dollars. They show the most your policy pays if you cause an accident. These are also called “split limits.”
For 100/300/100:
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$100,000: injuries to one person
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$300,000: injuries to everyone hurt in one accident
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$100,000: damage to other people’s property, like cars or fences
If costs go above these limits, you may have to pay the rest yourself.
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You need enough coverage to protect what you own now and the income you’ll earn in the future.
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Property coverage should match the cost to repair or replace what you’re insuring.
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Liability coverage (which pays when you’re at fault) should be as high as your budget allows. Medical bills, repairs, and lawsuits can be very expensive. If they go over your limit, you may pay the difference.
When in doubt, higher liability limits are usually the safer choice. David Peters Insurance can review your situation and suggest the right limits.
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You need enough renters insurance to replace everything you own, plus liability protection. Your landlord’s policy covers the building, not your belongings.
Count the value of your furniture, electronics, clothing, household goods, and any appliances you own. A home inventory (a list or video of your things) makes this easier.
Most renters policies also include:
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Personal liability: if you’re responsible for someone’s injury or damage
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Medical payments: for guests hurt in your home
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Additional living expenses: hotel and meal costs if a covered loss makes your home unlivable
Review your coverage every year as you buy more things.
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You need enough homeowners insurance to fully rebuild your home after a covered loss. This is called “replacement cost,” and it is often different from:
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What you paid for the home
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Its market value
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What you still owe on your mortgage
Most policies also cover your belongings, liability, and living expenses if you have to move out during repairs.
High-value items like jewelry, fine art, collectibles, firearms, musical instruments, and high-end electronics often have low limits. You may need extra coverage (a “rider” or “scheduled personal property” add-on) to fully protect them.
Building costs and home values change, so review your coverage every year.
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Often, not fully. Most homeowners policies offer only small amounts of coverage for business equipment and little or no business liability protection.
You may need extra coverage if you:
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Meet clients at home
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Store inventory
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Own specialized equipment
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Earn significant business income from home
A home-business endorsement (an add-on to your policy) or a separate business policy can fill the gap. David Peters Insurance can help you figure out which fits.
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Health insurance pays for medical care. Disability insurance replaces your income if illness or injury keeps you from working.
Health insurance helps pay for doctor visits, hospital stays, prescriptions, preventive care, and mental health treatment.
Disability insurance sends you a paycheck replacement to cover everyday bills, like rent or mortgage, utilities, food, and transportation.
Simply put: health insurance protects your ability to pay for care. Disability insurance protects your ability to earn a living.
Pick the plan that covers the doctors, prescriptions, and care you use most, at a total cost you can afford. Ask these questions:
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Is my main doctor covered? Check that your primary care doctor is in network, including for your yearly physical.
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Are my prescriptions covered? Look up each regular medication.
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Are my other providers covered? Think about therapists, chiropractors, and specialists.
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What’s the deductible? Regular costs like medications can add up fast with a high deductible.
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How much comes out of my paycheck? Check how much of the premium your employer pays.
If a provider isn’t covered, decide whether you’ll pay out of pocket and plan for it in your budget. Review all of this before your first paycheck so there are no surprises.
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A health savings account (HSA) is a savings account with tax benefits that you use to pay for qualified medical expenses. To open or add money to one, you generally must have a qualified high-deductible health plan (HDHP).
HSAs offer three tax benefits:
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Money you put in is tax-deductible
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Growth is not taxed while it stays in the account
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Withdrawals for qualified medical expenses are tax-free
The money stays yours even if you change jobs or retire. Because HDHPs mean higher costs before coverage starts, keep emergency savings too. For healthy people with few medical bills, an HSA can be a strong long-term savings tool.
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You likely need life insurance if anyone depends on your income. This includes if you:
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Are married
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Have children
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Support aging parents
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Own a business
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Share major debts with someone
Life insurance can help your loved ones replace your income, pay off debts, cover education costs, and keep their standard of living. People without dependents also use it for estate planning, charitable giving, or business succession.
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A common rule of thumb is 10 to 15 times your yearly income, but the right amount depends on your goals and obligations.
Think about:
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Income your family would need to replace
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Mortgage and other debts
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College or education goals
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Childcare costs
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Final expenses (like funeral costs)
The goal is enough coverage so your loved ones can keep paying their bills if you’re gone.
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Term life insurance covers you for a set number of years. Permanent life insurance covers you for your whole life, as long as you pay premiums and meet policy terms.
Term life insurance
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Lasts a set period, like 10, 20, or 30 years
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Pays your beneficiaries if you die during that time
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Usually the lowest-cost way to buy a large amount of coverage
Permanent life insurance
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Lasts your lifetime
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Builds cash value (a savings part you can borrow against)
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Can help with estate planning
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Costs more than term because of these added features
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The main types are whole life, universal life, variable life, and variable universal life. All of them build cash value.
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Whole life: fixed premiums and steady, guaranteed cash value growth.
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Universal life: flexible premiums. Pay at least the minimum to keep the policy active, or pay more to grow cash value faster.
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Variable life: cash value is invested, so it (and sometimes the death benefit) can rise or fall with the market.
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Variable universal life: combines flexible premiums with investment options.
Can I borrow from a life insurance policy?
Yes, but only from permanent policies. Term policies have no cash value and no loan option.A policy loan isn’t free money. Any unpaid loan plus interest is taken out of the death benefit before your beneficiaries are paid. Example: If you borrow $20,000 and don’t repay it, your beneficiaries get $20,000 less, plus any unpaid interest. You may also owe interest each year on top of your regular premium.
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Start with the coverage that protects you from the biggest financial risks. A common order is:
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Health insurance: Medical bills can cause serious money trouble.
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Auto insurance: Required in most states, and accidents can be costly.
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Homeowners or renters insurance: Protects your home and belongings. Lenders and landlords often require it.
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Disability insurance: Your income is one of your biggest assets.
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Life insurance: Very important, especially with dependents, but may come after the basics if money is tight.
As your budget grows, fill in the gaps. Review your coverage regularly, since your needs change over time.
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