How to Navigate the Money-Saving Challenges With Today’s High Insurance Premiums

You have to have it. There’s little getting around it. The “it” here is insurance. But how does one navigate the money-saving challenges presented by today’s high insurance premiums?

The Basics

Put simply, insurance is a way to manage risk. The idea is to trade paying a relatively small sum of money (the premium) which is fixed for a given time period in exchange for a benefit should there be a catastrophic loss in one’s health, life, or big-ticket property item such as a car or home.

Who Needs It?

It’s easy to think of those insurance premiums as money thrown into a lake that is never to be seen again. Indeed, imagine all of the things we could buy and/or experiences we could have if we could use the money for premiums for more pleasurable purposes. But the essential question, or challenge, to always ask is this: could I cover a huge loss with my own savings if any of these occurred: my appendix burst, my car was stolen, my house burned down, or my spouse/partner died? If the answer is “no” then it’s a good time to consider the severity of the money-saving challenges you face and look to areas in your life where you can cut back.

Should I or Shouldn’t I?

Most people would not be able to just write a check for a major surgical operation or to replace their car or home. If you can, you’re most likely not reading this article. If you can’t, you are probably facing money-saving challenges like the rest of the world. Thus there is a need for insurance. Health insurance is typically provided by employers or Medicare for those over 65. Some younger folks gamble that they won’t need it given their generally better overall health. Others such as part-timers and freelancers in the ‘gig’ economy struggle to find affordable coverage. But life can change in an instant, so it’s rarely wise to eschew health insurance. One insurance that might be skipped, according to many experts, is life insurance, but only if no one else is dependent on your income for survival.

Safety & Peace of Mind

It’s a known fact that most people won’t “win” at the insurance game. That is, if you added all the premiums you paid after several decades and any benefits you claimed, the vast majority of us would “lose.” But that’s not the way to view insurance. Peace of mind does not have a price. Even when we are facing money-saving challenges. We can’t know if our home will have a break-in or if we will have a car accident on any given day. We pay the premiums so as not to worry about financial catastrophe should one of life’s unfortunate events occur to us.

Shop, Shop, Shop Around

What we can control to at least some degree is the amount we pay. Yet studies routinely show Americans do not shop around much for insurance. There’s a real inertia when it comes to paying for coverage. It’s easier to stick with what we have, essentially leaving our policies on “autopilot.” Many experts recommend getting quotes from multiple companies at least annually at renewal time. Another piece of advice is to choose the highest deductible you can handle to get the premium lower. 

So, while insurance is definitely a money-saving challenge, more of us should embrace the challenge to get more dollars into our own pockets.

Jeff Szymanski works in political communications for AMAC Action and previously taught high school economics, history, psychology, and sociology.  He writes frequently on the issue of Social Security’s challenges.

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