Quick Insurance Tips

Here is a simple strategy to help you through these hard times.

1. Review your spending
2. Reduce or eliminate unimportant items
3. Save or invest what is left over

Review your Spending

You’ve probably heard this before. The reason you have is because it works. Keep track of your spending for a month. Write down every time you spend a penny. Use that information along with information from your check book and credit card statements to determine what you spend on a regular basis. Put everything into logical categories. If you are using a credit card to pay for some of your expenses don’t put the amount of your credit card payment on your list. Put the cost of the individual items you used the credit card for. You should also create a category called “credit card interest” and put the amount of interest you pay for your credit cards.

Reduce or Eliminate Unimportant Items

When you’ve determined where your money goes, put the items in order. Put the most costly items on the top and the least costly on the bottom. Your mortgage may be the item that is on top. You probably can’t eliminate that cost. However, you may be able to reduce the figure by getting a better interest rate. If you do, make sure that you don’t wind up paying more in the long run because you have delayed the date when your mortgage will be paid off. Look at each item on your list and decide whether you can reduce or eliminate the costs. Look especially hard at reducing or eliminating things that cost more than just money such as cigarettes.

Eventually you will get to items that involve insurance. You may find that another company can give you a lower rate on quality auto insurance, home owners insurance or medical insurance. Shop around and look for the best deal. If you pay for your own medical insurance, ask your agent about high deductible health plans and health savings accounts. You may save a lot of money if you use those programs properly.

If you can, leave some fun stuff in your budget. But not everything that is a lot of fun costs a lot of money. If you reduced the number of nights out with your family, I hope you can replace them with walks on the beach or more fun times at home or something else that appeals to your family. Maybe you can invest in a popcorn machine and save money by having a stay-at-home family night watching DVDs. Maybe you can trade DVDs with co-workers or borrow them from the library and further reduce your costs.

Save or invest what is left over

If you are one of the fortunate ones and have some money left over to invest or save, congratulations! Before you get involved in a long-term plan first make sure that you have ready cash available to take care of the small stuff that pops up from time to time. Once you have taken care of that, look at the interest that you are paying on your credit cards and other debts. It makes no sense to me to pay 18% on a credit card and invest money at 2%. Pay off your high interest debt before you get involved in any significant investment program. Remember to pay of the credit cards in reverse order of their interest rates regardless of the amount of the balances.

If you are comfortable with where you are financially and more importantly, where you are headed, please help someone else who isn’t. This may mean that you give money to family members or a charitable organization like FoodforThePoor.org. Your electric or heating utility company may participate in Operation Fuel. You can add a small amount, like two or three dollars, to your monthly gas bill and make a difference to someone who really needs it.

There are a lot of things that you can do to get a better price for insurance coverage. One of the better ideas is to shop around. Using a good broker can often reduce the amount of time this takes. However, you should have a basic understanding of the policies. You should also know enough about the companies your broker recommends to make sure that you select one that is stable and has a good reputation.

Lower Your Price by Lowing Your Risk Factors

Prices are determined by factors that are both within your control and those that are not. Being aware of the factors that you have some influence on is the first step in reducing your costs.

Auto Insurance

The biggest issue here is your driving history. Those who drive more slowly and thoughtfully tend to have fewer tickets and accidents. They will often be rewarded with better auto insurance rates. The car you drive can have an impact on your rates. More expensive cars can cost more to insure. Buying a sports car can raise your rates as well. You may want to get an auto insurance quotation before committing to a new car. Your location also has an impact on your auto rates. If you are thinking about moving, see how it will affect your insurance rates.

House Insurance

Your history of claims is a big issue here. Making intelligent choices about combustible materials can reduce your chances of having a claim. Also being conscious of safety hazards can keep you from being sued and having a liability claim on your insurance. Owning certain breeds of dogs and other pets, certain types of pools and even trampolines can have impact on your insurability and rates. Have a discussion with your agent before you commit to something that might raise your rates.

Life and Health Insurance

How much your life or health insurance costs is largely determined by your health history and your height and weight. Doing what you can to be healthy will tend to keep your rates down. Sometimes a little thing can mean a lot; you can miss getting a preferred rate because you are one pound overweight. You can also be one pound too heavy to qualify for a policy at all. You may want to ask your agent for help here. If your weight close to a point that makes a difference in your rate, you should be aware of that and see if you can get your weight down before you apply.

Disability Insurance

Health history and body mass index (height and weight ratio) are big factors for disability insurance as well although your occupation plays a bigger role with disability insurance. If you are thinking about changing professions, you may want to see if you can get a better deal by buying disability insurance now or by buying it after you change jobs. As a general rule, the more physical a job is the more you will pay for disability insurance. If you are an office manager who wants to be a carpenter, you may want to lock your rate in before you change professions.

There are several types of life insurance that are available today. Term life insurance, whole life insurance, universal life, return-of-premium life and single premium life insurance are just a few of the many types.

If you want life insurance for just its insurance benefits, term life may be the best. In another words if you don’t care about the cash build up in your policy a term policy may be all you need.

Term life insurance is similar to car insurance and home insurance. You send the insurance company money and they offer you protection. If you don’t have a covered event occur during the course of the term, no money comes back from the insurance company.

The average price for term life insurance is usually much less than the average price for a cash value type of insurance such as whole life. Term life insurance is ideal if you will need a lot of coverage until your children are done with their education, but will need dramatically less afterwards. Purchasing a large amount of term insurance is usually not very costly.

Be aware however that term insurance rates will tend to increase with each renewal. This is because your chance of dying this year is a little bit greater than your chance of dying last year, simply because you are a little bit older. Be sure to have your agent quote the prices you are likely to pay when your term policy renews.

Ten, twenty and thirty year term policies may be available to you. These plans will give you a fixed cost for the term you sign up for, but a much higher rate when they renew.

If believe that you will still have a need for insurance after your term is up, you may want to consider purchasing whole life or another type of insurance for the amount you will need then. This way you can lock in a rate based on your current age for that amount of coverage.