International Insurance

Posts Tagged ‘money’

My question is this: – “Are we all invincible?” I was always under the impression I would never have needed insurance as I’m not ill or dying so why commit to yet another monthly direct debit, especially in times of hardship like now!

That is until now, what with all the money worries and the stresses of everyday life, the depression and divorce, the financial issues and lack of jobs. All this puts stress on our lives and must lower our life expectancy!

I’ve looked at the different insurances on offer, and there really is something out there for everyone. Whether it’s to cover the life of someone who brings in all the money, to give us financial security if they ever die, or cover for ourselves if we have debt or if we get a critical illness that changes the way we need to live.

I’ve also realised the benefits of choosing a cover to suit me to make sure that from now on whatever happens keeps me in the lifestyle I’m used to.

A member of my family actually became ill but didn’t have critical illness cover. Not being able to work for a while has resulted to them never clearing the mortgage. So even though they are now retired they are still tied to a high mortgage payment each month.

This makes me think “For goodness sake, why didn’t you get yourself covered to prevent being retired and having a mortgage?”

If one of their friends had asked them ‘Do you have life or critical illness cover?’ the response they would have given probably would have been ‘Well not at the moment, it’s something I’ll always get round to later’. However this was before they had Cancer and were left with a mountain of debt! Sometimes I wish there was a time machine for all those people who have contracted a major illness to go back and buy sufficient critical illness insurance. You will find that once you have contracted a serious illness you will not be allowed to buy any cover from most insurance companies. There are a few specialist critical illness companies but you will be paying astronomical premiums.

The question to ask yourself is ‘Do you need insurance?’ unfortunately, yes. We do all need insurance. You might not need life insurance today (Critical Illness insurance is always a must) and fingers crossed not for a very long time when our life needs insurance. But inevitably we need to protect those around us we love and our lifestyles. I could not imagine having a serious illness and not being able to work but still have all the same outgoings each month, cos let’s face it, how many employers in today’s market will actually keep our jobs open or help us out until we are through all the surgery, treatment, and remission – not many, and that information is for free.

Think of any event that could happen unexpectedly that would cost you money. Your house could burn down, you could get sued, you could be involved in car crash, you could get sick and need medical care. You can buy insurance to protect yourself from these and many more eventualities. We usually think of insurance as something to cover us in case something huge happens. But there are also insurance policies to cover your loss related to more minor incidents. For example, when you buy that new stereo system for your car, and the sales clerk asks if you’d like to purchase the extended warranty, that’s an insurance policy.

It’s a very good idea to have a contingency plan in case something goes wrong. There is a way to do it that can potentially save you a lot of money. Self insurance is just what it sounds like: you are insuring yourself. This means that if something goes wrong and you suffer a financial loss, you pay for it yourself. Isn’t that just like being uninsured? Yes, except that it implies that you have a plan to pay for these types of expenses. Here’s how you do it.

First, make a list of everything that you could buy insurance for. There are three categories to look at. First, write down everything you have that you could lose: a car, a house, a vacation in the Bahamas, future income, an iPod, etc. Second, write down things that you could suddenly need that would cost you money: medical care, legal services, etc. Lastly, look at potential liabilities. What financial loss could you possibly be deemed responsible for? You could cause damage to someone’s property or be responsible for an injury or even death. This could happen because you made a mistake while driving, or because you were negligent, or simply because you own the property someone was injured on.

Next, take a look at your list and put a dollar amount for the worst case scenario next to each thing. Some will be so high that you can’t estimate accurately. For those, just write $$$.

For any insurance you could name, it’s safe to assume that the premium cost, over time, is a little more than the average claims over that time. For example, pet insurance costs a certain amount each month over the life of your pet. The insurance company is collecting premiums from each pet owner. Out of those funds, they will pay any claims the customers have and they’ll have some left over for their overhead. It would make sense to skip the policy and pay for any claims yourself, except for two things. You might be a person who has a greater than average claim, and you might have a claim before you saved up the money to cover the expense.

How do you deal with those challenges? Start small. Find the lowest item on your list and start with that. What about that car stereo? If you could afford to replace it in the event that it breaks, skip the warranty and set the money aside instead. Get a separate bank account for all of your insurance funds and put the money there. One of two things is going to happen. The most likely scenario is that your stereo will not break and it will last a reasonable time. Hurray! Now you have some money in your insurance account. This will serve as seed money for the next time. The other possibility is that your stereo will break and you will replace it using the money you set aside plus some out of your own pocket. Then you’ll have to start over.

When you can, move to the next item. Maybe you can afford to drop the collision and comprehensive insurance on your older car. Take the money you save and put it into that insurance account.

Every time you deposit more money in your insurance account than you need for claims, your account grows. This helps with the problem of having an unexpected expense that you haven’t saved up for yet.

There are some types of insurance that you’ll never replace with self insurance unless you’re super wealthy. These are the risks that you can’t afford if the worst case scenario should occur. Medical insurance is a good example. If you got cancer and needed a great deal of expensive medical care, you’d be in trouble. There is a way to be self insured for a portion of these risks, though. Get a policy with a large deductible and be self insured for that amount. Let’s say that you can save $200 a month by increasing the deductible on your PPO to $5000. Put the $200 a month into your insurance account. Just make sure that you could afford the $5000 if it came to that. The same thing works with any type of insurance that has a deductible.

Benefits of Self Insurance

You can pool the money to cover all your risks in one place. It’s unlikely that you’ll suffer any one loss, but it’s even more unlikely that you’ll suffer several losses at the same time. Your emergency fund could serve as your insurance for multiple types of losses.

You get to keep any unspent funds. If you don’t experience any unexpected financial losses, they money is yours to keep. Use it to insure yourself against the next more expensive risk. Each time you do this, you’ll save yourself money on insurance.

You decide what to cover. You won’t have to argue with the insurance company about whether an expense is covered. You’ll decide.

You can pick and choose which risks to self insure and which to buy insurance for. If you’re a risky driver, maybe a good insurance policy is the way to go. You could self-insure against a loss that you think you’re less likely to experience.

Drawbacks of Self Insurance

If you’re not careful, you could end up uninsured. You must put the money aside in case the worst happens. This takes a lot of self discipline. You also have to be careful about how much risk you can really handle. Don’t consider the average claim in making this decision. You must be ready for the worst case scenario, because it might happen.

There are so many things to pay every single month that you cringe when you have to give money for your insurance bill. This is completely normal because insurance seems like a waste of money. That is, until you need it!

In fact, that is what this type of coverage is all about. You pay for the policy hoping you will never need it but knowing that if you do it will be there to help you out.

Of course, the monthly premiums are not that cheap and that is because the companies must take into account how much money they would have to pay out should you need a special operation, or your house burned down, or something like that occurred.

Nobody likes to pay every month for insurance but it sure is worth it when a disastrous situation occurs and you have the policy you need to protect your interests.

Finding Coverage

Most Americans are under insured. This is a shame, but it is the truth. And, the number one reason people are underinsured is because the policy costs so much money. However, you can find good ones at lower prices if you are willing to shop around.

The easiest way to do this is to apply for an online quote with a website that submits your information to multiple carriers and gives you five or six quotes at once. Then, you can compare the prices as well as the policies to determine which one is the best deal for you.

This is a great way to do business because in no time you can find what you are looking for at the right price for you with just the right amount of policy.

Paying

The easiest way to pay for insurance for most people is monthly. That is because paying quarterly premiums can really hurt a budget and most people simply can’t afford it. So, the easiest way to go about paying for insurance is on a monthly basis.

Sometimes a small finance charge will apply, but that is usually minimal when compared to the ease of monthly payments. If you set up a monthly draft that is automatic from your bank you may also find that paying your premiums is easier than you imagined and you can budget better.

Discounts

If you buy multiple types of coverage from the same provider then you are likely to receive discounted rates. So, if at all possible buy your health, property, life, disability, auto, and more from the same company.

You need to save money wherever you can and if using one company will do that then you should definitely go for it. Also, you will only have one bill each month and that will make managing your finances and payments much easier as well.