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How to Win with Insurance

By David Luhman on Mon, 05/11/2009 - 23:30

How to Win with Insurance

Risk assessment

Buy broad coverage

Get big deductibles

Shop around

Health insurance - the one kind of insurance that everyone needs

Insurance products to avoid

Risk assessment

You don't need insurance for everything

Don't pay for risks that you don't take

There are other ways to manage your risk

  • Sell your expensive car
  • Move to a safer neighborhood
  • Build up an emergency fund and insure yourself

Buy broad coverage

Avoid short-term policies like travel insurance

Buy full-time life insurance if you need it

Don't buy special policies like cancer insurance

Buy a good, broad health insurance plan that will cover any health problem

Get big deductibles

Save time and headaches by not filing trivial claims

Large deductibles can save you hundreds of dollars each year in premiums

But build up an emergency fund before you increase your deductibles

Shop around

Over 30,000 insurance companies in the US

Insurance is a very inefficient business

Buying direct may save you lots of money

Companies that sell direct that you may want to check into

  • USAA

Health insurance - the one kind of insurance that everyone needs

Get as tax-free benefit through your employer if possible

Buy group policies if possible

Reduce costs with a large deductible and a copayment

Avoid paying for risks like pregnancy that you may not face

Consider joining a HMO

Look into new, tax-advantaged Medical Savings Accounts if you're self-employed or work in a small company

Make tax-deductible contributions to account

Money grows tax-free in account

15 percent tax penalty imposed if your withdraw money before age 65 for nonmedical uses

Insurance products to avoid

Credit insurance

  • Protects the lender -- not you!
  • Why pay to protect your credit card company?
  • Insure your family with broad life, health or disability insurance, if needed
  • Consider only if you can't get insurance elsewhere

Extended manufacturers warranties

These warranties are very profitable to retailer

That's why salesperson always pushes it onto you

Don't buy the retailer's extended warranty

Instead, double warranty by using a gold credit card

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