Insurance. The one thing you pay a bunch of money toward in hopes that you’ll never need to use it.
If you look at the total amount you send to insurance companies, it looks like a big pile of wasted money. But since most of us are one freak accident away from having our lives destroyed, it’s worth the cost.
That doesn’t mean you should pay a penny more than you have to for good coverage. It’s worth some careful shopping to make sure you’re getting the most bang for your buck. If you haven’t shopped in a while, the good news is that you could save a ton of money quickly by making a few phone calls.
Here’s how to find affordable insurance.
Know Your Coverage
Before you can compare rates, you need to know how much coverage you want (or can afford).
Find your state minimum amount of coverage by Googling “[your state] minimum car insurance requirements”. The minimum is usually only enough to cover the other driver’s vehicle and any injuries the other driver sustains.
In truth, you want better coverage than that (assuming you can afford it). Aside from the fact that we live in a world of lawsuits, you need coverage for yourself should you be injured.
This guide explains what each type and level of coverage means. It’s good to understand this before you begin shopping so you aren’t at the whim of the insurance dealer.
Home or Renter’s Insurance
Many times you can bundle this with your car insurance for a better deal. Try for insurance that covers replacing your items. If you lose your home, you want the insurance to build a new one at today’s prices. (Not give you the value of your depreciated items.)
To be a bit crass about your demise (sorry), you need to think about whether people depend on your salary. Or maybe they depend on you for care (such as children, the disabled, or an elderly relative). If something happens to you, what will happen to them?
You might not be able to afford an insurance policy that will help these people for the rest of their lives. That’s ok. Find enough coverage to cover funeral costs and help loved ones get back on their feet after a devastating loss.
A simple term life policy is usually cheap and easy. Don’t fuss with policies that claim to give you money back later. You’re usually better off investing your own money. And with term life, you can get a policy that will cover you for a set number of years (until the kids are in college, for instance).
Finally, let’s talk about disability insurance. Do you really need this coverage? There are a lot of scary statistics out there, but if you dig around a bit you’ll discover that many of them are based on sketchy facts. What is a disability? Can you go to work if you twist your ankle? (That answer makes a difference here.)
Check at work to see what sort of disability coverage they already provide. Often times, that’s enough. If you have a big bank of sick days, you should be even less concerned about this.
If you do have legitimate concerns about disability insurance, be sure to shop around for your best price based on realistic facts about how much you need and how long you think you’d be too injured to work. Don’t let companies scare you into buying more than you need.
While this step is obvious, I have to mention it. You need to collect a list of agents from the top national insurance companies. Then include any local insurance agents you know of. Ask friends and family for suggestions. Do an internet search.
Then start calling. Since you know what coverage you’re looking for, it will be easy to compare rates.
If you don’t like the thought of making all those calls, you can try a comparison website. NerdWallet offers to shop 50 companies for the best rates.
I’ve saved hundreds of dollars just by calling a couple of companies to check prices every so often. This step alone is enough to fund a good chunk of your sinking fund.
Another “let someone else do it” option is an insurance broker. Give them your info and let them do the work. They’ll let you know your best options and you can choose from them. Brokers earn commission from insurance companies, so you won’t pay them for their services.
Look for Duplicates
Do you have insurance coverage on your phone? Or your mortgage? Cancel any extra policies you have on monthly bills. That savings might help you afford a term life policy instead. Now your family can use that money where they need it the most.
Find out whether you have life insurance at work. Some businesses offer life insurance that offers a one year salary to your family. If you want more coverage than that, remember this insurance exists when you calculate how much coverage you need.
Take These Steps:
- Determine what insurance you need and how much.
- Shop around for your best deal.
- Save money by cancelling duplicate coverage.
- Bank your savings.
This was day 20 in the Secure Your Savings and Find Peace in the New Year series. Go to the bottom of this post to find all the money saving and money making posts in this series!
These tips will help you find affordable insurance.
Though I hope you don’t need to use it!
Have you ever found big savings when shopping for insurance?