Getting a new insurance plan can be a bit overwhelming, especially when it comes to finding the best thing to suit your needs. There are many factors that should be taken into consideration before making a decision.
With so many different types of insurance coverage options available, it’s hard to know which one is right for you. Here are 5 tips on saving money on different types of insurance.
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1) Essential vs Nonessential Insurance
Essential insurance means you have to buy it, it’s probably mandated by law. Think car insurance, health insurance, etc. Or even if it’s not mandated by law, it’s in your best interest to have essential insurance.
Nonessential insurance policies are things like bicycle theft insurance, terrorist attack insurance (yes, it exists), and the like. You won’t really ever be in danger if you don’t have these types of insurance. I mean you can insure your vintage baseball card collection, but it’s not a life-or-death situation. Terrorist attack insurance is a life-or-death situation, but… it’s still nonessential, for the most part.
What matters most is knowing the types of insurance that are important for you, and how to compare different coverage plans. A tool like PolicyScout.com can help you determine what you need, and will let you compare the costs of different carriers.
2) Get a Low-Cost Policy.
Some plans are more expensive than others. You may not even be aware of this, but many policies will have different monthly premium costs depending on your sex, age, and even your family size.
An example would be buying fire insurance for a single person versus buying a policy for a married couple. Some fire insurance companies will charge more for a family than a single person. Children are apparently a fire hazard, not because they’ll spontaneously combust, but because they do things like shove pencils in electric outlets.
Shopping around for low-cost policies can be an essential part of your insurance shopping, but it doesn’t have to be a complicated process.
3) Figure out what discounts the insurance provider offers.
Having lower monthly premiums will save you a lot of money in the long term, so it really helps to fulfill certain criteria that insurance providers use to calculate your policy.
For example, your car insurance can be lowered by proving that you’re a responsible driver. So you might fit your car with an electronic device that monitors your average travel speed, and you can show the insurance company that you aren’t a reckless driver putting lives at risk.
4) Improve your credit
Your credit score can have a huge impact on your rates. Your credit score is calculated by taking into account your history of paying bills on time and other factors.
You can improve your credit by taking on a loan or even paying a smaller amount on your credit card each month. If you have good credit, you can often get better rates than if you don’t have any credit.
5) Pay for Monthly Protection Plans
Some insurance policies have a lot of benefits, but they cost you a lot of money upfront. For example, you can buy insurance for your electronics, and the more you buy, the cheaper your premiums will be. But how do you know which policies are worth the monthly fees?
Start by reading the fine print. Check out your coverage for any exclusions, and think about your own personal needs. Are there any types of items that you can’t afford to replace?
Most importantly, you need to compare the cost of your plans with the price of your alternatives. Can you afford to put $30 extra into your insurance? Do you have some type of alternative plan in place?
6) Shop around.
There are lots of insurance providers out there. Compare their prices, and find out what the lowest rates they offer for the same policy.
Also, make sure to ask for comparison quotes. These are usually offered by discount brokers, and the more they price match the more likely it is that they’ll offer you the best deal.
7) Don’t miss small deductibles
When you buy your insurance, you usually make a down payment on the policy. In the case of car insurance, that usually means paying a lump sum of money right away.
While you’re still paying off that price of the policy, the insurance company might charge a small fee. For example, if your car is worth $2,500 and you’re paying $100 a month for your car insurance, then the insurance company might charge you $1,500 to insure your car.
If you have an accident, this smaller payment might be a lot easier to afford than a large amount of money upfront.
