Smart or Big Mistake?

    Recently, a North Carolina man figured he would save $100 a month when he cut back on his disability insurance.  After all, he was healthy and felt fine.

    He just felt the disability policy was too expensive in today's hard economic environment.

    What happened was this: In January, he was diagnosed with a serious, debilitating illness.  Now, at 61, has had to leave his job as a sales manager for a girl's accessories company and is out $3,000 a month in disability income payments.

    This summer, as consumers become more frugal, they are searching for new and creative ways to save money.  Some are clipping coupons and looking for freebies, while others are making far tougher choices.  These tough choices threaten to cost them far more than they save.

    Reducing insurance coverage, whether it's a consumer or a small business making the cuts, does mean instant cost savings.  But it is proving dangerous for some people, leaving their homes and businesses underinsured and their owners facing huge monetary losses.

    It's also making families vulnerable to financial hardship because they are giving up their life insurance to save money.

    Many consumers are beginning to shop for better insurance deals in home, auto, business and even life insurance.  This creates something of a buyers' market.

    According to an Insurance Resource Council survey that questioned 1,000 adult consumers by phone in December, 28 percent with at least one vehicle shopped for lower auto insurance rates, while 9 percent said they had canceled or decided not to renew their auto coverage.

    Companies like Allstate and Travelers are introducing new discounts and lower priced products.  But consumers need to be cautious about reducing their coverage just to save a few dollars.  A short-term savings may have a disastrous long-term result in the event of a loss.

    The bottom line is this:  Before deciding to reduce or eliminate any insurance coverage, whether it is home, auto, business or life, please discuss it with your insurance professional.  They may be able to suggest alternatives to save you money without giving up important protection.  There is an old, but true, saying.  "The long-term good is often sacrificed on the altar of the immediate."

(Portions of this article were obtained from the Associated Press.)