I’ve Paid For This Twice Already…

Frugal living and debt reduction tips for a better financial future. This is one family’s story.

Archive for the ‘insurance’ Category

3 Tips for Reducing Your Home’s Insurance Premium

Thursday, June 14th, 2012

Are you looking for ways to save money? Have you considered evaluating your homeowner’s insurance policy as a possible way to reduce your household expenses? The first thing that people think when trying to lower their home’s insurance premium is they must shop around for another insurance carrier. While this may produce savings, there are other ways to save on your premium and possibly stay with your current insurance carrier. Below are three things you can do to reduce your home’s insurance premium:

Bundle Insurance 

Bundling your homeowner’s insurance policy with other policies, such as life and auto, helps to lower your premium. This is referred to as a multi-line discount. According to the Insurance Information Institute, bundling policies can lower your insurance 5 to 15 percent. If you currently have multiple policies spread across different insurers, you may want to ask your current insurance carriers to provide a quote with all your policies combined. You can then decide who has the most competitive rate and move any other policies over to that one insurance provider.

Increase your deductible 

Inquire with your insurance provider how much you can save if you increase the deductible on your insurance policy. The more risk that you are willing to take; the less the immediate cost will be to you. This is an ideal way to save on your premium for those who can afford the higher deductible.

Make your home disaster-ready 

The more secure your home is, the more savings you will receive on your home’s insurance premium. Smoke detectors and deadbolt locks may qualify you for some savings. However, making a bigger investment to ensure the safety of your home may earn you an even bigger discount. Home alarm and fire sprinkler systems put your home at less of a risk for break-ins and extensive fire damage.

The first thing you should do is review your policy to see if you are currently receiving the appropriate discounts for any security features you currently have. If not, request that your policy be reevaluated. If you are interested in having a security system installed in your home, ask your insurer for more info on what systems will qualify you for a discount.

If you haven’t explored these options to lower your home’s insurance premium, do so today. The only thing you have to lose is a fraction of your premium.

Reviewing Insurance Policies Can Save Money

Tuesday, January 6th, 2009

Last week we went into our insurance agent’s office and had a face to face meeting to review our homeowners and auto insurance policies.  This can also be done over the phone, but I like to sit down and look at all the numbers on the computer with my agent and make him make 15 different changes one at a time to see what effect each has, separately and combined.  I knew that I wanted to make one big change on both our policies (raise the deductible) but I ended up making a few other ones as well, some of which lowered our premium and some which raised it.  But the overall result was lower premiums for the coming year.  Most of the changes we made were to our auto insurance, and we looked at these factors:

Collision coverage:  We had collision coverage on both our vehicles.  I am very attached to collision coverage.  our agent showed us how they valuate cars, and basically, the 1996 Corolla would end up valued at about $900 (give or take).  Removing collision coverage on that car was basically like giving it a $900 deductible, since that was the most they would pay out in damages no matter what happened to the car.  So we removed collision on the Corolla.

Deductibles:  We had $250 deductibles on both cars.  Removing collision on the Corolla eliminated the deductible question altogether, and we raised the deductible on the Saturn to $500.  I wanted to go to $1000, but my spouse is more cautious and considering our current financial state, $500 made more sense.

Liability:  We actually raised our coverage here – we had a maximum payout of $25000 per person injured if we caused an accident (not us, the other people), and we raised that to $100000.  Medical costs keep going up and we don’t want to be liable as much as possible if something were to happen.

Plan options:  We actually upped our plan to one that has multiple accident forgiveness (meaning, no rate change if we have an accident) and a deductible reduction.  We upped it for the deductible reduction, basically.  Every year without an accident, our deductible on the Saturn goes down $100.  This plan also has 5% cash back of our premium paid every 6 months.  We weren’t planning on doing that at all.  The rest was basically preplanned in my head before the meeting, but when we looked at that plan, the difference in premium was about 5% from what we would be paying on our current plan (with the other changes already incorporated) and if we didn’t have accidents, we’d get 5% back each 6 months.  Why we decided to go with it was because it reduces our deductible and just in case we have an accident, it protects our premium.  One accident would shoot our premium up higher than the overall savings of the other plan.

Overall, we ended up with a $20 per 6 months savings for our auto policies, with a potential of $45 per 6 months savings if we remain accident free.

Then we looked at our homeowners insurance, and simply raised the deductible from $250 to $1000.  This saves us about $40 per year.  We actually could make our deductible as high as $7500 and plan to someday, but not yet.  That is several years of saving away.

Overall, yearly our savings is about $80 between the two policies, with an additional $25 cash back every 6 months if we have no at-fault accidents.  So a guaranteed $80 savings with potential of $140 saved per year.  Not bad for a fifteen minute meeting.

Long Term Disability Insurance Comes To My Spouse’s Work

Thursday, October 16th, 2008

Now that we’ve finally got Long Term Disability Insurance sorted out for my spouse and the policy has gone into effect, his work has started offering LTD insurance as well starting November 1st.

Of course.

When my spouse brought the paperwork home Monday, my reaction was just basically “Of course they would now after we spent so much time figuring it out for ourselves.”  And then we got down to business comparing the policy we have in effect now through private insurance vs the policy that his work now offers.

The main difference in policies is that his work policy is 60% replacement of income vs the 70% replacement that we have with our private MetLife policy.  ANother difference is that the work one does not, if he signs up right now, require a medical exam, which would end up giving us coverage for a slightly braoder range of things.  My spouse has a diagnosed (through MRI) problem with one of the discs in his lumbar spine that he does exercises for.  MetLife was not impressed with that and wrote an exclusion for lumbar spine problems into his policy.  The coverage through work has no such exclusion.  So on the off chance that becomes a problem, the work one would cover it.  Otherwise the coverage exclusions and inclusions are exactly the same.

The big kicker is his work one will cost him about $12 per month, vs the private one that costs almost $70 per month.  The premiums are paid with already-taxed money in both cases, so the benefits would not be taxed if we ever had to use them.

So, we decided to go with the work policy and see how much it would cost for MetLife to become a supplemental policy to that (to cover up to the 70% of income).  Depending on how much the premium would be for that (my spouse called them today and they will get back to him by Friday) we’ll make a decision on if we are going to keep the MetLife policy or not.  We’d like to keep it, because of course his work one is tied to work and if he leaves his current employer, he can only keep it for an additional 12 months.

And there you have it.  I’m happy his work is now offering coverage, I just find it ironic that they started doing so just as we finally got a private policy completely sorted out.  We literally just paid our first premium last week.

Long Term Disability Insurance: Purchased

Friday, August 15th, 2008

After much research, discussion, and weighing a myriad of options, yesterday my spouse signed the contract for long term disability insurance for himself.  We chose a 180 wait period policy that in guaranteed renewable until age 65 through MetLife.  There were a number of factors that contributed to our decision and how we chose that policy through that company.

Originally, we contacted several companies, and then chose to have quotes done through three – Guardian, Principal, and Met Life.  The Guardian policy ended up the most expensive, and the MetLife one the least expensive.  That isn’t the only reason we chose the MetLife policy, but after careful review of each policy (including getting sample policies from each company) it was the final deciding factor, because the policies were in effect, identical.

Why was Met Life’s the least expensive?  My spouse is a computer programmer, and falls generally into the “4″ risk class (the higher the number, the lower the risk).     MetLife however breaks the 4 risk class into subclasses 4, 5, and 6 – and my spouse’s occupation is a 6.  Which lowers his premium even more.   So per month, we save $15 over the Principal policy and $25 over the Guardian one.  Which over the next 30 years… adds up.

In total, we are paying $68.87 a month to cover 70% of my spouse’s salary.  We have the option of paying monthly (which we chose) or annually, and annually would save us $26 a year.  We want to pay annually, but right this second can’t work that into our budget (we’re still working in the extra monthly premium in fact) but our goal is in the next two years, get to a point where we can make this an annual expense.

I previously discussed the optional “return of premium” rider and we in fact did not choose to have that added to our policy.  As many of you pointed out, insurance is insurance and not an investment vehicle, and in my heart I thought it was a bad idea but I couldn’t articulate why when on paper it seemed like it would work out.  But we had been leaning against it anyway because of the steep raise in premium so talking about it and getting feedback just cemented what I had been feeling all along.
So now my spouse has disability insurance, pending his successful physical.  The coverage is effective today and we paid our first month’s payment, but if for some reason he is disqualified, we would get a refund of the premium we paid.  Check one item off the ever growing list of “things we need to do to cover our financial bases”.  On to actually dealing with the wills… we did write them, but have we gotten them notarized?  Um, no.  I think we might just throw in the towel and go to a lawyer…

Long Term Disability Insurance – Refund of Premium Rider

Thursday, July 17th, 2008

My spouse and I have been researching long term disability insurance for him, and we’re coming close to a decision.  We ended up doing one online quote through Guardian, and then meeting with agents from MetLife and Principal (our Allstate agent writes long term disability policies through Principal).  In the end, we’ve decided to go with MetLife, basically because their premiums are about 15% lower than the other two companies for practically identical policies.  This seems to be because of how my spouse’s occupation is classified in terms of risk by the three companies.   While Principal and Guardian classify my spouse’s disability occupational class (basically, how much risk they’re taken on based on his occupation) as 4A, MetLife has broken down 4A into even lower risk classes, 5A and 6A, and my spouse is in 6A.  The higher the number, the lower the risk, so the better the premium.

Now that we’ve decided on that, MetLife also offers a rather interesting optional coverage that at first I was totally against, but now have started to ponder a little bit.  It is called a Refund of Premium Rider, and basically for every five years that you do not have any disability claims, MetLife will refund to you 50% of the premiums that you paid in that five years.  it sounds good on the surface, but of course there’s a catch.  The rider costs a significant amount.  The insurance itself and all the riders we chose to add besides this one brings the total cost to $797.98 per year.  Adding the Refund of Premium Rider brings the total cost per year to $1300.71, which is a $502.73 increase per year for that rider.  However, if we didn’t have a claim for five years, we would get a refund of $3251.78 based on this year’s pricing, which is $738.13 more than we pay for the rider itself for five years.

When I first looked at it, it seemed like you paid half your premium just for the rider, but really the rider is about 40% of the total premium (if you choose to add it).  Obviously if you have a claim, then you ended up paying a lot more for your coverage than you needed to, but it resets every five years, so it is a short term type of risk.

Honestly, we haven’t decided.  We’re both leaning towards no, and just getting the standard disability insurance we were looking at in the first place, but this has me thinking.   I don’t need a forced savings plan, but I would like a 20% return on my money every 5 years (investing $500 a year in this rider and then getting $650 back per year every five years).  But maybe I’m looking at it too simplistically.  Of course there is risk involved, but there is always risk in everything.

What do you think?  What would you do?  Which sounds like the better option to you?

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