Showing posts with label Insurance. Show all posts
Showing posts with label Insurance. Show all posts
Is your insurance coverage right for your car's age?
Many people were raised to
be full coverage or liability only folks. When should you have which? You don't
WANT to have to pay to replace your car but if the value to total the vehicle
is less than the amount to repair it, that's what the insurance company will do
with full coverage. Older cars should always be considered for liability
only. Newer cars generally are required to have full coverage while being paid
for because the loan holder does not want to risk having the car wrecked
without replacement costs. The gray area between a new car under loan
requirements and an old car that obviously needs only liability leaves the
dirty details for you to decide. Find
the Kelley Blue Book http://www.kbb.com/ value
of your vehicle. Get the annual cost of collision (full coverage) and the
annual cost of liability only coverage.
value of car /
(collision-liability premiums) = years until you've paid to replace your car.
Example:
Your car is worth $3,000 on KBB. Collision is $600. Liability
is $100.
3000/(600-100)
3000/500
6
In six years you will have paid the insurance company the
money they would give you today if you
totaled your car.
Your car will have also depreciated in six years to $2,000
(give or take). If you wrecked it in six years, they would only give you $2,000
and you will have paid them $3,000 (more paid above the liability premium).
Insurance is about risk. You don't know if you'll wreck your
car tomorrow, ten years from now, or if you'll sell it as an antique when you're
a dinosaur. The decisions are all yours to make.
Are you still paying a gap insurance with your car payment?
Gap insurance
is designed to pay the difference in the insured value and the loan value early
in a car loan in case of the event of totaling. This is a nice coverage to have
if this is a concern, but you would be better to not buy a higher value car.
Better yet, walk in and pay cash for your vehicle.
Stack term policies.
Once your considered your life, you can reasonably plan
the timeline of what you will need for insurance throughout. By stacking
policies, you can lock in at the best rates and only add on additional amounts
as needed. These additional amounts can then be removed as you move out of
those phases of life.
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Child Support
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Mortgage & College Funds
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Income Replacement
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Adjustment Period to Return to Work
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Burial Costs
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Single Person
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Young Married Spouse
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Young Married with Kids
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Married with Older Kids
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Married with Grown Kids
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Buy term and invest the rest.
There are a lot of life insurance packages out
there. This one will accumulate cash value for you and this one will send you
to Disneyland and this one... I'm somewhat kidding. These package policies that
do more than insure cost more. That money is never really returned to you. Term
insurance is a basic insurance that does all it is supposed to do, pay on your
death a specific amount. Because of its simplicity, it costs a lot less too.
Purchase term insurance if you have calculated that you need life insurance.
The money you save by not paying the price of whole life or Disney life you can
invest and earn compounding interest on without paying someone else most of
those profits.
Consider if you need life insurance and get it if you do.
Life insurance for
some is an absolute in their minds. Life insurance is for two things: to
replace a lost income and for the burial costs. Does an 80-year-old need to
replace an income? No. Hopefully they have enough in their estate that they
don't need that money for burial costs either. A 35-year-old husband with two
young kids definitely should have the insurance to replace an income that could
be lost. With no kids in the house, a spouse could move on to support
themselves and would not need an income replaced when there was no longer a
family to support. These are not rules, simply thoughts to help make good
decisions.
Comparison shop for your regular subscriptions and contracts occasionally
Consider
everything on your spending log and highlight anything you pay for monthly to
annually. Whether it's cable, cell, internet, car insurance, life insurance,
health insurance, banking, or electricity, take a few minutes each day to evaluate
your subscriptions to see if there is a better deal to be made. This could mean
signing up for the package that's available right now that suits your needs
better or switching to another company for a lower rate.
Shop around for insurance
If you know the level of insurance you need, now
is the time to shop around to get a true and complete comparison between
insurance companies. Make sure you understand the features you must have, the
levels of coverage, and be sure that each company is presenting you with an
exact quote of what you want. Liability vs. Comprehensive. Medical limits.
Towing. Be sure to mention the same features of your vehicles. Be sure to
mention all affiliations to get the same rewards as available to have a true
comparison across companies.
Is your insurance right for your home's value?
Budget a freedom fund for regular non-monthly expenses.
I love the name
"Freedom Fund" by author Mary Hunt (http://www.debtproofliving.com/). What is it you ask, well it's
setting up a special account to make monthly payments into your savings for
things you don't pay for monthly. If you pay $600 every six months for car
insurance, then make a $100 deposit into savings every month. Then when the
bill comes you have the money there waiting for you. It's the freedom to not
have to worry about those big bills that come. You can preplan for purchases
like replacing tires. This Freedom Fund is your chance to make a readily
available pot for those stressful payments and purchases. You may be thinking -
hey but that's an emergency fund. Is your car insurance an emergency? Did you
know your insurance would be coming due? Then THAT is NOT an emergency. Your
emergency fund should be a separate amount, maybe in a different account and it
should be protected as much as possible from inappropriate expenses that you
should have known were coming.
16 things every family should know and do!
Scrutinize Your Bills
On our Internet bill we were paying $5 a month for a loaned modem. After how many months would that basic/cheap modem have been paid for? Do you need cable and internet with so much TV online? Can you cancel your landline or get a different plan for your cell phone with better features for less?
Get to know your mortgage statement - how much extra in a month would it be to pay a whole extra month every single month? If your payment is $600, that total is going to escrow, principal and interest. An extra monthly payment may only be $200!
What about your water bill, are you getting a service fee because of that flower bed blocking the access panel? Is your lawn watering costing you overage charges because of a conservation policy?
Are your insurance coverages right for your car's age and your home's value?
Are you still paying a gap insurance on your car payment?
Is your BANK costing you FEES? Are you paying a load fee for your investments? Find another bank!!!
Take a detailed look at where your money is going - even with the non-negotiable items like bills. Find the unnecessary and feed your pig. Review every bill. Slash every feature you can live without. If you want to live a better life, make the hard choices and don't let the money sit there - feed your pig!
nuttakit / FreeDigitalPhotos.net
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