When you buy insurance, you’re paying for something you hope you never need to use. It’s a lot of money going out each month, and you ponder cutting back.
Your auto and home lender require you to carry insurance. But what about other, non-mandatory coverage? Think about what could happen if calamity struck and you didn’t have insurance to help you cover your bills.
Learn: How To Get the Most Savings Out of Your Health Insurance
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Eliminating insurance could prove impossible or unwise. Still, you might not need to pay quite so much for your premiums. You do have options, and now is the ideal time to review your coverage and ask the right questions.
The Big Four
Car, homeowners, health and life insurance are the most common types of insurance. Fortunately, you can employ some smart tactics to save on the monthly premiums.
If you’re buying a new car and weighing different models, ask your agent how much each will cost to insure before signing the contract. If you drive an older car that has little monetary value and you own it outright, paying for collision and/or comprehensive insurance might not bring value in case of an accident.
The Insurance Information Institute says that could be a strategy if the value of your car is less than 10 times the insurance premium. Search Kelley Blue Book to learn what your vehicle is worth.
Other tips from the III:
- Compare rates among companies
- Increase your deductible
- Ask about low-mileage discounts
- Bundle your home and auto insurance
- Take a defensive driving course
You also will save on your homeowners insurance by comparing rates, raising your deductible or bundling it with your auto policy. And you might have made improvements that qualify for a discount.
Do an annual checkup and let your insurance agent know if you added a security or sprinkler system, upgraded to storm shutters, bolstered your roof or made other safety or disaster-resistant changes. If you were insuring an expensive item, such as a piece of jewelry, and no longer have it, let your agent know to remove it from your policy.
Also, discuss any life changes. Now retired and over 55? You could qualify for a discount, according to the III.
Injuries sustained in a car accident or a fall from a bike, for example, could leave you with thousands of dollars in medical expenses and put your financial future in jeopardy if you don’t have health insurance.
If you’re not eligible for an employer-sponsored health insurance plan, turn to the federal or state marketplace to find coverage. Subsidies available through the American Rescue Plan signed into law in 2021 reduced the cost of insurance premiums, and enrollment in marketplace health plans increased by 21% over 2020. An insurance broker, at no cost to you, can guide you through your options to help you select the plan that best fits your needs and budget.
See: Here’s How Much More Expensive Healthcare Is in the US Than 5 Other Countries
If you’re under an employer-sponsored plan that comes with a high deductible, enrolling in a health savings account will save you money. With an HSA, you don’t pay taxes on the money you put in, and you can deduct from that account to pay a variety of medical expenses.
If you want insurance to protect your young family, term life insurance is less expensive than whole life and generally runs for lengths of 10 to 30 years. The best time to buy life insurance is when you’re young, locking in your rate before older age and medical issues can drive up the rates.
According to insurer Progressive, a 10-year, $250,000 term policy costs a 40-year-old man $16.31 a month; it’s about a dollar less for a woman of the same age. The price doubles if you take out the same policy at age 50.
Another way to save money on life insurance? Stop smoking. Fidelity Life says it takes one year of being a nonsmoker for lower rates to kick in. Once you’ve kicked the habit, your insurance company can reclassify you, making you eligible for lower rates.
The option to buy insurance comes along often in other areas, but is the investment worth it?
Credit Card Insurance
This guarantees your credit card payments will be made if you lose your job or become disabled or critically ill — and the insurance will pay your balance in case of death. It costs about $1 per month for every $100 you owe. If your balance is $2,500 at the end of the month, your credit card issuer will charge you $25 — added to your balance.
That $25 instead could be put in an emergency fund or pay for a term life policy that would pay off your credit card — and much more.
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Rental Car Insurance
The full package of insurance offered when you rent a car could cost almost $40 a day, covering the car and medical expenses. Chances are you can skip the insurance. Check with your insurance company, but you’re probably fully covered if you’re driving a rental and it’s damaged. Your credit card issuer probably offers benefits that cover an accident, too. And your health insurance should take care of any medical expenses incurred in an accident.
Mortgage Protection Insurance
In the case of your death, mortgage protection insurance will send a check to your mortgage holder to pay off the balance, ensuring that your family can remain in your home. It’s great peace of mind, but chances are you’re paying too much for it.
While the price depends on the amount of the loan, your age and other personal information, Rocket Mortgage estimates the insurance costs at least $50 per month for “bare minimum” coverage. A term life policy would be less expensive and probably provide benefits that exceed the cost of your remaining mortgage balance.
If you plan to purchase a pricey cellphone, put it off until you’ve had a chance to do some research. If you’re spending $1,000 on an item that you can easily drop and damage, you’ll probably consider cellphone insurance. But, if your credit card issuer offers cellphone protection, you can do away with the insurance.
Some card companies will protect the phone if you buy it with their card and make your monthly payment that way, too. It probably won’t cover theft, and you’ll still have to pay a deductible to repair the damage, but it’s free.
By contrast, the AppleCare+ plan costs between $79 and $199 for two years of coverage, depending on the phone, before the deductible.
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