Insurance Dos and Don'ts
Many of us have a love/hate relationship when it comes to insurance. We love feeling covered and protected in case of disaster, but really hate paying out so much money just to guard against chance. This can lead to us not spending enough time thinking about what works best for our particular situation. But when we know a little more about what to do (and what not to do) with our insurance, we can end up saving ourselves both cash and heartache in the long run.
Ask about discounts. Taking the extra time to research which premium discounts may be applicable to you and your situation can save significant sums. Different companies offer various discounts, with varying qualifying thresholds. You can’t rely on your insurance company to automatically apply any available discounts to your policy, because they may not be aware that you qualify.
Shop around. The company that offered the lowest rate when you were first looking is likely not the lowest a few years down the road. If your provider raises your premium or you’ve experienced a major life change, like marriage, moving, or a new teen driver, it is a good idea to shop around for a potentially better rate. Even if nothing has changed recently, you should check other companies’ rates every few years.
Select the lowest deductible. It may seem enticing to have the lowest amount of out-of-pocket costs, but choosing the lowest deductible options in auto and homeowners insurance may mean you’ll actually pay more in premiums than you could recover in claims. If you increase your homeowners deductible from $500 to $1,000, that could reduce your premium by up to 25%. Likewise, if you increase your auto deductible from $200 to $1,000, you could save up to 40% on your premium. Holding a policy with a low deductible may encourage you to make small claims you would otherwise take care of yourself and that could preclude you from any claims-free discounts for which you would have qualified. Instead of paying higher premiums for a lower deductible, funnel your savings on the premium into an emergency fund so you'll have cash on hand to take care of small claims and save money in the long run.
Assume that group life insurance is cheaper. If you have free group life insurance as a benefit from your employer, it can be tempting to purchase extra insurance from the same policy — but that is not always the best deal. If you are in good health, you may be able to get a better rate outside of group life insurers, who tend to raise their rates every five years or so.
Maintain insurance through COBRA. If you have lost your job or changed employers, you may be worried about continuous health insurance coverage. Federal law requires that employers let you maintain your former health insurance on their group policy for up to 18 months after you leave, which may alleviate that concern…but at great cost. Keeping health insurance through COBRA means you will pay about 102% of the cost, which is an especially heavy burden if your employer previously paid at least some of the premium. You can save yourself that financial stress by researching other health plans or negotiating with a new employer to qualify for their health plan sooner.
Insure your home based on market value. The market value of your home assumes that the home remains in one piece. But if a disaster causes it to be destroyed, the cost of rebuilding it may be more expensive than what it could sell for now — so the insurance value of your home must be enough to cover that extra cost. Fortunately, there are several online calculators that can help you determine a cost estimate for rebuilding your home.
Select a policy based on the premium alone. If you’re prone to sticker-shock and shy away from higher prices in general, you may default to choosing lower-cost plans automatically. However, this can ultimately result in you not having the coverage that you actually need. Carefully examine the percentage you will be responsible for when it comes to doctor’s visits, procedures, and prescriptions while comparing policies and use what actually works best for you instead of automatically choosing low premiums.
Representative is registered with and offers only securities and advisory services through PlanMember Securities Corporation, a registered broker/dealer, investment advisor and member FINRA/SIPC. 6187 Carpinteria Avenue, Carpinteria CA. 93013, (800) 874-6910. Randall Wealth Management Group and PlanMember Securities Corporation are independently owned and operated. PSEC is not responsible or liable for ancillary products or services offered by Randall Wealth Management Group or this representative. CA Insurance License: #0727953.
This newsletter was prepared by Integrated Concepts Group, Inc. The opinions expressed in this newsletter are for general information only and are not intended to provide specific investment advice or recommendations for any individual. It is suggested that you consult your financial professional, attorney, or tax advisor with regard to your individual situation. The views expressed are those of the author and may not necessarily reflect those held by PlanMember Securities Corporation. Material presented is believed to be from a reliable sources and PSEC makes no representation as to it accuracy or completeness.