I shared a few weeks back that we are attending a class on Financial Peace. Last night, we had our class and it was all about insurance. What do you need? What is unnecessary? A lot of information to process.
I took the information that was shared and started looking into my own insurance policies. The recommendation is if you have an emergency fund in place, to increase your deductible and save money. We are fortunate to have enough in savings that we can take that risk. Just increasing our deductibles to a level or two up and eliminating the rental car option, we will save almost $1800/year. We can take that extra $150/month and put it towards the car or mortgage payment to get them paid off faster.
Homeowner’s insurance is one that I honestly just renew each year and don’t pay attention to at all. I know that is bad to admit, but I looked at it now and realized that our basement we finished in 2010 is still listed as unfinished on our policy. Time to update that policy and make sure we are truly covered.
Another area that we discussed was life insurance. The best being term and even better if you can get it through your company. It was recommended to have 10x your income. The other is cash value that is like a savings account and that was not recommended. The amount that you pay in a cash value program is higher than term and does not give a good rate of return as a savings. Essentially, you are better off with term and taking the additional money and investing it in something that pays you better.
I must admit that insurance is not an area I like to invest time in understanding or comparing, but I did get a lot out of the talk at the class last night in a way that was easy to process. Now that I know a little more about what I should have versus what I don’t, it makes it a little less overwhelming.
Any tips or tricks from anyone out there? Lessons learned over the years? I must admit I am looking forward to my upcoming classes on retirement investing.