Insurance

[tsptalk]

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A recent poll asked you what you thought you spent the most on each year. It looks like housing costs came up number one with taxes number two.

I wanted to talk about insurance. It makes me ill thinking about how much I spend on insurance each month/year. There's auto insurance, homeowners insurance , life insurance, health insurance, I have anumbrella policy (good value), I have earthquake insurance ( I live near a fault line). How about those kids? Who pays for their car insurance when they hit 16? There's also PMI and mortgage insurance. You can buy disability insurance, insurance to pay for your credit card in case you can't work.

Holy cow! This adds up to a lot of money that gets you nothing but a little peace of mind. You'd rather never have to get your money back from it because it means something bad has happened.

I think I'd be rich and self insured by now if I were putting that money into my TSP all these years.

 

[azanon]

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Insurance is definitely a topic worth exploring very closely since it is probably in folks overal top 3 expenses (next to mortgage and taxes).

That book i mentioned in another thread "More wealth without risk" by charles givens, gave quite a bit of money saving tips for insurance, in particular auto andhomeowners insurance. Let me try to remember a few tips from it.

1. Go for 24-hr insurance. Example: An independant disability plan you get yourself will likely cover you 24hrs a day. The disability insurance you find in your auto policy (PIP) only covers you if you are disabled in your car. Go with the former and eliminate the duplicate coverage.

2. Eliminate all overlapping insurance.Ex: PIP and uninsured motorist on your auto policy are overlapping insurances IF you already have good, comprehensivelife, medical, and disability insurances.

3. Dont buy extended warranties, warranties for anything you purchase that doesnt come free with the item. Get real, you'll never use them. You'd have a fortune if you just self-insure yourself for what you buy. Also, its easier to break a steel ball, than it is to get someone to do warranty work you already paid them for in the past. Money is an excellent motivator, but you eliminate that motivation if you paid them first!

4. On life, if it isnt term, its a ripoff. Mixing investments with life insurance is a bad idea (ie: whole life, variable life).

5. If you're young and healthy, get the cheaper health policy at your work. If you're sickly, for god's sake start to eat right and exercise. Its so much cheaper, and you feel better to boot.

6. Set deductibles on just about every kind of insurance you have high (1K), and insure yourself with respect to the deductible. Remember, actually using your insurance is a self-defeating process anyway since it will almost always raise your premium. Thus, only use insurnace for major life disruptions (loss of thousands of dollars), not for petty, a few hundred dollar claims.

7. Try to eliminate insurances you dont need. Did you know I found out my homeowners insurance actually covers me if someone identify thefts me via my credit cards? WTF? I found out they tacked on so much add-on junk, my homeowners was bloated with all kinds of coverage i really dont need.

 

[tsptalk]

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Great advice. Thanks. I was beginning to think I was the only one who was tired of paying for all of these insurances.

 

[Rolo]

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Hey! I read Givens' Financial Self-Defense about twelve years ago. I still have it; I may peruse it again and buy his book you mentioned.

I scrutinised my insurances pretty well, but those tips were things I had not known. I will be revisiting my policies too. Good post!

#3. hehe, an episode of The Simpsons: Homer wanted to be dumb again by having Moe hammer the crayon back into his brain. Partly wedged, Homer yells "DE-FENSE! DE-FENSE! HUAH HUAH!", Moe thinks aloud, "Not quite there"; fully wedged, Homer says thoughtfully, "Extended warranty! I can't go wrong!"

#6. Bingo! There was a good story in Money/Forbes/Smart Money a few months ago on insurance. I raised my deductibles to the state maximum, $2K for car and $5K for house. Insurance is for complete disasters, not to be used as a coupon. Having a claim-free history saves a lot of money. Many homeowner's insurers will not renew you if you have three claims or more.

 

[crispjw]

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What do you guys think about the Federal Long Term Care Insurance offered through OPM? Anyone use it? Think it is a good idea? A good deal? Is this basically the disability insurance 'azanon' mentioned in his post or is disability insurance something else.

I've been considering getting this insurance, and dropping my 'Uninsured motorist' protection since I think they overlap. Let me know what you think...

Thanks,

-Will

p.s. I'm enjoying learning about the TSP from all of you, and watching my TSP grow more quickly thanks to your advice. Thanks!

 

[Guest]

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This web page should give you more info. It will be great if you need it, but many feel it is too pricey.

http://www.opm.gov/insure/ltc/

This Program offers a choice of benefits that can provide a variety of services, including but not limited to:

• nursing home care
• assisted living facility care
• home care (both formal and informal)
• adult day care
• hospice care
• respite services
• bed reservations
• caregiver training

 

[tsptalk]

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crispjw wrote:

I'm enjoying learning about the TSP from all of you, and watching my TSP grow more quickly thanks to your advice. Thanks!

Welcome crispjw! Thanks for joining us.

I don't know too much about that long term care insurance.I hate the idea of paying for more insurance but I'd like to hear what others have to say.

 

[Guest]

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Tom,

You are starting to sound like me....if you look your insurance has probably increased double digits this year. I got my car insurance and fell over. Then went down to register the car and it went from $310 to $450 from last year to register a car that was one year older. My car insurance went up 14%.

Now watch your property taxes. That took my breath away also. With the housing bubble getting larger that means larger assements values which means larger property taxes.

My house went from $585K to $1.3M in assessed value in five years :shock:.

Bill

 

[Brewnet]

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If you ever need someone to house-sit, let me know........