Two for Tuesdays #4
Last week we discovered ways to save money on gasoline and appliances. This week, we’re going to explore ways to save with insurance.
Odds are, you will never use your auto insurance, or, if you do, you’ll use it only once. In any event, most people carry a really low deductible. Doing so causes your auto insurance rates to be higher than they need to be. You can save up to 40 percent on your collision and comprehensive coverage by raising your deductible to $1000.
This is a surefire way to save a ton of money every year and this is a money hack you can put to work right away. Simply call your insurance company and ask them to run your policy at a higher deductible for both collision and comprehensive coverage. You’ll find that you’ll save thousands over your driving lifetime.
Your emergency fund (you have one, right?) will cover you in case you ever get in a crash and have to fulfill on your deductible.
Not everybody needs life insurance. For example, if you don’t have any dependents, you don’t need life insurance. This doesn’t mean that you don’t own some life insurance, though. Often times, your employer throws in some small amount as part of its group coverage. You can generally opt out of such an arrangement and take that small premium they pay on your behalf and choose to have it added to your paycheck.
Another way to save on life insurance, for those of us who actually need it, is to buy term life insurance, rather than whole life. Term insurance is simply life insurance that pays a beneficiary if you die. There is no other coverage. Whole life is term plus a savings plan. It sounds good on paper, but the savings plan is a whole lot worse than you could do on your own, even if you invested in a bond fund.
So do yourself a favor and get term life insurance and invest the difference in an IRA (either a Roth or traditional). Choose stock mutual funds and in a few years you’ll be way ahead of your whole life plan.
That’s it for this week. Stay tuned for two more money hacks next Tuesday!