Many people spend more than they should to secure adequate insurance coverage. Here are some of the many simple ways to reduce insurance costs and avoid costly mistakes.
Raise deductibles. You can save as much as hundreds of dollars each year by raising the deductibles on your automobile and homeowner's or renter's insurance policies.
Don't underinsure. While you should certainly be encouraged to pare down unnecessary insurance costs, don't go without necessary coverage merely to save premium dollars. Eliminating needed coverage can be a costly mistake.
Earn discounts by purchasing all insurance coverage from one company. Many carriers offer discounts to customers who purchase all their policies, such as automobile, homeowner's, and umbrella liability insurance, from them.
Don't buy insurance through the mail without comparison shopping. You may periodically receive direct-mail offers for life insurance from a credit card company, association, or famous TV personality. While most of these offers should be rejected, some, particularly those offered by professional associations, may be worth considering. Do some comparison shopping to determine if the mail order deal is a good one.
Reduce life insurance coverage when children leave home. Life insurance needs often decrease when children are no longer financially dependent, if the parents manage to live that long. In addition, as you age, the role of life insurance changes. While those with dependents have considerable life insurance needs, once you retire, your insurance needs may decline if you need any at all.
Avoid credit life insurance. Credit life insurance (and credit accident and disability insurance) is almost always grossly overpriced and entirely unnecessary. If you need a policy to ensure that your loans can be paid off in the event of death or disability, you should buy death or disability insurance - not this overpriced waste.
Inquire about discounts. Many insurers offer discounts for homeowners who take protective measures against fire and burglary. The cost of installing these systems may be recouped fairly quickly through insurance premium savings. You may also qualify for special discounts on your automobile insurance policies without even realizing it. Check with your insurance agent or the company itself to find out about various discounts that may be available to you - such as those for driver training courses, theft deterrent systems, and automobile safety features.
Self-insure. You may have sufficient capital to assume certain risks, either by raising deductibles or by canceling coverage altogether. The decision to self-insure is a serious one, however, and should only be made after careful analysis.
Avoid "dread disease" or other narrowly defined insurance coverage. Stay away from cancer insurance, air travel insurance, and other types of insurance that protect against very specific risks. Your parents are particularly susceptible to buying narrowly defined insurance policies in that these policies exploit fear and protect against risks that regular insurance already covers. A good medical policy, for instance, renders any disease-specific insurance unnecessary.
Pay insurance premiums annually rather than monthly or quarterly. If it doesn't decimate the family budget, paying insurance premiums annually is usually cheaper than paying monthly or quarterly.
Don't over insure your car. If you have an old car worth less than $4,000, eliminate collision and comprehensive coverage and increase deductibles. liminate nonessential coverage for your newer cars like towing and substitute transportation.
Your aging life insurance policies. Life insurance needs often decline as you age. Replae term insurance policy if cheaper coverage can be obtained.
Duplicate health coverage. If both spouses are covered by health insurance, you probably need only one policy.
Private mortgage insurance. Cancel PMI if you have at least 20% equity in your home.