Insurance, especially health insurance, has been a buzzword for some time.
You know you need it, especially when it comes to home and auto, because you know, fires and car crashes, and stuff.
These disasters can destroy your property, so you need to be insured to protect your belongings!
But, there is a thing as too much insurance. While it’s better to be safe than sorry, it’s also a good idea to have money to pay your bills, instead of paying for insurance you don’t need.
Here are some places where you might already be paying for insurance that you don’t need.
I want to start saying that life insurance is good to have. It can help your family in case something would happen to you. That being said, you don’t want to buy so much life insurance that your loved ones would rather have the money from the policy than keep you around. I kid, but the point is, you don’t want to be over-insured.
You really only need to cover funeral expenses and any debt that you may have. If you have adult kids who no longer live with you, or if you are young and single, you probably don’t need much life insurance.
Instead of paying for insurance that you don’t need, put that money in your retirement plan. You’ll see a better return on your money.
Extra Auto Policies
For most people, a car is a necessary tool to help them get to where they need to be in life. For example, your car might be your primary way to get to work so you can make money and pay your bills. But, paying for extra insurance you don’t need, plus all of the other costs of owning a car, can really add up over the vehicle’s lifetime.
For example, do you really need towing insurance? Or, what about the collision insurance? Sometimes the premium is almost as much as it would cost to repair your car.
Instead of buying this extra coverage, maybe you could build some extra money into your emergency fund, or set up a separate fund specifically for car repairs. Essentially you’d be self-insuring and you could always use the money for something else since it’s your money in your savings account instead of being paid out to an insurance company.
It’s great to have a warranty on your appliances. Most have at least a short warranty when you buy them. But, do you really need to extend the warranty? Some of these extended warranties don’t cover the issues you thought they would. Instead of buying an extended warranty that you probably won’t use anyway, save your money.
High Premium/Low Deductible Plans
Is a low deductible really the way to go when you buy insurance? This is what I was always taught growing up, but now I’m not so sure.
If you look at how much you pay in premiums, it really adds up! If you hardly ever use your insurance anyway, you still may not ever hit that deductible. For instance, health insurance. If you’re relatively healthy, it’s probably a better use of your money to pay lower premiums and have a higher deductible. The money saved from not paying high premiums, can help pay for your medical bills if you ever do end up with a large bill.
When it comes to insurance, you are looking at the forest and not the trees. You want to be covered so you can rebuild your home should it go up in flames, not nickel and dime every little thing that breaks.
If you haven’t been thinking this way, you can probably save a lot of money by reviewing your plans with this new frame of mind.
Are you paying for insurance you don’t need? What kind?
Photo courtesy of: Hans