Insurance

Lesson 4

You really must acquire adequate insurance or risk the most common financial crises turning into crushing debt. You should do this even before paying down all your consumer debt.

Types of insurance to consider:

Health
Car
Home or renters
Life insurance
Disability

The comparison between high and low deductible plans is really good. I tend to have high deductible plans and use my emergency fund to cover it in the case of emergency. That way I save on monthly payments (premiums).

Source

Health Insurance

You only have one body and mind and that affects everything else. So take care of your body.

I’m self-employed and my wife's plan is too expensive and prevents me from receiving subsidies on the Obamacare open market.

So I had to turn to Christian Healthcare Ministries.

Good and bad

For me, costs around $200/m
Bad for ongoing medication needs
Must pay for brothers keeper to have catastrophic coverage
No in or out of network or blocked off services or blocked off providers
Must pay out of pocket and then submit requests for reimbursements

Medical savings account option

I don’t know a lot about health insurances. But I have heard medical savings account plans are a good way to go if you want to have lower monthly costs. Regardless of what you get try and understand what it will cover.

I love this episode of Money For The Rest Of Us 213: Why Health Insurance Is A Mess.

Car Insurance

You can price shop this fairly easily. But be sure to look closely.

What to look for:

Make sure you plan covers uninsured or underinsured motorists
If you are still making payments on your car make sure you have full coverage
Understand how much in property and injury you are covered for
Understand your out of pocket deductible

Life Insurance

You do not love your wife and kids if you do not have a life insurance policy. Because if you die and don’t have at least 10-20x your annual income chances are they will struggle financially.

The best thing you can do is get this insurance while you are young and healthy.

I choose to get a 30 year term insurance so I have 30 years to become self insured.

Home or Renters Insurance

You need homeowners insurance if you own a home or renters insurance if you rent.

Depending on your region you may need different coverage.

Fire
Storm
Flood
Earthquake

Without this coverage you will be paying to replace your things and paying to pay back that home without being able to live there. Be sure to ask questions because you may be forced to prove what you owned or risk not being compensated for it.

Disability Insurance

If you can’t work, what will you have to give up? Coverage is always a percentage of your current income like 60%. But your income is your primary tool in wealth building. There are ways to save and get insurance that kicks in after 5 years of disability that covers you as long as you are disabled. I hear those are cheaper and probably the best most of us can afford.

Final Thoughts

For each of these there are independent insurance agents and websites that can give you a quote. Also being under insured can leave you lacking in an emergency.

Other insurances to think about as well:

Vision
Dental
Identity theft (this is a growing problem)
Long term care for 60+ year olds
Supplemental insurance for not covered by major medical (Example hospital stays when having a baby) - Aflac for example