Insurance

When was the last time you obtained quotes for your home and auto insurance?  It is very, very important to carry both home and auto insurance. However, that does not mean that you should pay the highest dollar amount possible!  Here are some tips to lower some of these costs and add some extra green to your budget.

Homeowners Insurance Tips:

• If you have auto insurance or some other insurance, ask for a “bundle” discount.
• Consider increasing the deductible to reduce your premium costs.  If you are managing your money well and have built your emergency fund to at least three months of expenses (Rung #5), you may consider increasing your deductible.  This can result in a substantially lower insurance premium.
  • Example: If you increase your deductible from $500 to $1000 and the premium drops to $400 a year, this is probably a no-brainer.  The premium is the only cost guaranteed to happen, and an event requiring the use of the insurance is not. If you are able to make it fourteen months without a claim, you will come out ahead financially.  Even if a claim happens two years down the road, you will pay the $500 more in deductible, but you will have saved $800 in premiums (two years at $400 per year in reduced premiums due to increasing the deductible by $500).  
• Shop around for the best rates every two years.
• Obtain a minimum of three quotes – one of them being from an independent insurance agency.

Auto Insurance Tips:

• Always have auto insurance.
• Bundle with other types of insurance to get discounts.
• Shop around for the best rates every two years.
• Obtain at least three quotes – one of them from an independent insurance agency.
• Obtain quotes with different deductibles.
• Obey the traffic laws.
• Be very cautious buying car insurance from family or friends without getting quotes from other places.  

Try out some (or all!) of these tips and save some money today!

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“I can promise that if you read and apply what has been written here then you will eliminate financial regret from your life.” – Joe Sangl

One of the most popular questions I get asked is, “What is the difference between whole life insurance and term insurance and which do you recommend?”.  Both types of insurance can and will protect your family in the event of your premature death but there are a couple of key differences.

Whole life insurance is permanent insurance.  As long as you are paying the premiums, the insurance will remain in force.  With this permanent policy comes a cash value aspect. A portion of your premium would go to pay for insurance and a portion would go to fund the cash value.  It is possible that at some point your cash value could grow to be big enough that you could stop paying premiums. In this case, the cash value would be used to fund premiums and your insurance would remain in force.  

Term life insurance is exactly what it sounds like.  It is insurance that will be in force for a specific term whether that be 10, 20 or even 30 years.  Once that time period is up, the insurance no longer exists. This insurance is cheap and easy to understand when you compare it to other insurance products on the market.  

I carry a term life insurance policy equal to ten times my annual income.  If you bring home $50,000 a year, this would mean you would require a $500,000 life insurance policy.  To get this type of policy in whole life coverage would be entirely too expensive to carry. Because whole life insurance policies guarantee to pay out until death, along with the accompanying cash value, they are much more expensive to maintain.  

I decided to buy term insurance and invest the difference.  Essentially, you would pay for term life insurance and invest the remainder of what that would cost you in whole life coverage.  For example, a 30 year term policy for a healthy, 30 year old is around $380 per year. The equivalent in whole life is $4,000 per year.  If you decided to buy term insurance and invest the difference of $3,620, it would equal $1,055,479 after 30 years! Under this approach, if you have made the commitment to become debt free, you could be self insured by the time your policy expires!  However, the key to this approach is that you actually have to invest the difference. Notice I did not say, get term life insurance and use the savings to go shopping or take a nice vacation.

Ultimately the choice between whole and term insurance is up to you.  But it is better to make an informed decision, instead of allowing insurance salesman to confuse you into buying a policy that you do not understand.  It is very possible to get the coverage you need without breaking the bank!

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Want more tips like this one?  Subscribe to the Monday Money Tip Podcast HERE.

SPECIAL OFFER: This month only, get your own copy of Joe’s book, I Was Broke. Now I’m Not. for 25% off plus free shipping!  Get your copy HERE before July 31st!

“I can promise that if you read and apply what has been written here then you will eliminate financial regret from your life.” – Joe Sangl

I do not like talking about death.  I do not know many people that I do.  But, I am not deaf to the fact that we are all going to die.  Every single one of us. At this point, we all know that life insurance is important and hopefully you have taken the appropriate steps to protect your family.  But, is it enough? Is your policy enough to cover your debts and provide a comfortable life for those you leave behind?

I carry an insurance policy equal to ten times my annual income.  With an income of $50,000 per year, this would mean a person should obtain a $500,000 policy.  If I pass away while my children are still in the household, I want my wife to be able to focus on raising them without having to worry about replacing my income.  

With that being said, I also carry no debts.  My home, vehicles, and school loans are paid off.  I do not need life insurance in order to repay these debts.  If you do have debts, you should consider these when deciding how much insurance you need.  

The total amount of insurance that you require to secure your family should not break the bank.  For a healthy 30 year old male who does not use tobacco products, a $500,000 policy would cost about $25 a month in term life insurance.  For a healthy 30 year old female, the same coverage would cost about $20 a month. That is really cheap for such great coverage.

My personal goal is to become self-insured.  If you are able to become debt-free and invest wisely, you will eventually have enough money that your need for life insurance will diminish greatly.  Think about it. Suppose you die, leaving behind no debts and more than $1,000,000. You have probably become self-insured.

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Want more tips like this one?  Subscribe to the Monday Money Tip Podcast HERE.

SPECIAL OFFER: This month only, get your own copy of Joe’s book, I Was Broke. Now I’m Not. for 25% off plus free shipping!  Get your copy HERE before July 31st!

“I can promise that if you read and apply what has been written here then you will eliminate financial regret from your life.” – Joe Sangl

One of the most important types of insurance one can hold is health insurance.  While the cost of this insurance is outrageous, it does not change the fact that medical costs themselves are astronomical.  Without insurance, a medical emergency can not only be detrimental to your health, but also to your finances. This insurance must be a priority!  

Which would you rather have happen when you experience a major illness or surgery?  Pay medical insurance premiums and only owe the insurance deductible or have no insurance and end up owing $20,000, $50,000, or even $100,000 because you had no health insurance?

I think you know which route I have chosen for my family.  Everyone in my family is covered. Yes, I know it is expensive but I have experienced first hand the importance of insurance.  Jenn has had two major surgeries and I have had one. Each one cost more than $14,000. Two surgeries occurred within ten months of each other.  If we did not carry medical insurance, it could have destroyed the path we were on to win with our money.

Now, just because you have to have this insurance, it does not mean that you should simply pay whatever rate you are quoted.  Shop around for better deals. Make the decision to at least carry insurance that covers huge expenses, like a high deductible health insurance plan.  While this type of plan will require you to pay a significant amount of any medical expenses before insurance takes over, once you have reached the deductible, the plan will usually pay for the majority (if not all) of your additional health care costs for the remainder of the insurance year.  This is much cheaper than comprehensive care, but you should be okay financially if you have reached Rung #5 on the IWBNIN Ladder and have established a fully funded emergency fund of at least three months of expenses.  

Medical Insurance Tips:

• Get over being irate at the cost of medical insurance and get covered – even a high deductible plan can seriously limit the costs you would pay in the event of a major medical event
• Shop around – usually your employer health plan will be better than what you can get on the open market as an individual, but it is still worth shopping around
• Make sure you clearly understand what the insurance will and will not pay for
• Have health insurance at all times as you never know when you are going to need it

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Want more tips like this one?  Subscribe to the Monday Money Tip Podcast HERE.

SPECIAL OFFER: This month only, get your own copy of Joe’s book, I Was Broke. Now I’m Not. for 25% off plus free shipping!  Get your copy HERE before July 31st!

“I can promise that if you read and apply what has been written here then you will eliminate financial regret from your life.” – Joe Sangl