"The person who makes a success of living is the one who see his goal steadily and aims for it unswervingly. That is dedication." - Cecil B. DeMille

SavingAdvice.com Blog

Bridging the gap between saving money and investing

Insurance

Time To Refinance – But Not Your Home

By 5 Comments

If you were smart, you have already refinanced your home loan to a lower rate (and if you haven’t, then it’s time to get on the ball and do so), but with interest rates now rising, it’s not likely that refinancing is going to bring the savings that it has in the past. That is, unless you begin to refinancing other aspects of your personal finances.

Rates on a number of different types of insurance policies have been falling with stiffer competition and more people willing to shop around. For example, experts say that term life insurance rates have been falling and are expected to continue to do so through 2006. A similar trend has been seen with car insurance in certain parts of the country.

Most people don’t think about it, but you can refinance your insurance just like you refinance your house mortgage. Depending what your goals are, you can either pay less for the same coverage or pay the same amount of money for better coverage.

How do you go about refinancing your insurance? The same fashion as you would go about refinancing your house, but it usually takes a lot less time and paperwork. Keep an eye on advertisements in your paper. Take an hour to search comparison sites on the Internet and see what prices are being offered that mirror your current policy. If you find a policy that is charging less, you can choose to refinance at a better price or if you like your current insurance company, you can probably negotiate with them to match the competing offer (or at least reduce your current payments). This is because competition is tough and keeping good customers is far more economical than trying to find new ones. Your current agent will do his or her best to provide low rates to keep you if you look like you may be ready to move to another competitor.

You should look into refinancing on a yearly basis on all your different insurance policies (life, car, home, etc). It only takes a few hours of work and can pay off handsomely. Even better, refinancing your insurance is a painless savings in that you don’t have to give anything up to put more money in your pocket.

Insurance You Don’t Need

By 5 Comments

I had a friend come to me and ask what was the best type of life insurance to get for her child? She explained because she saw an ad on TV and it seemed like the proper thing to do. That got me thinking about the different types of insurance that most of us don’t need.

While everyone’s circumstances are a bit different, there are a number of areas where the risk for the situation the insurance policy is covering is quite small and suffering the consequences of the loss is a better risk than purchasing the insurance policy. That doesn’t mean that the unfortunate situation won’t happen. While the risk that something will happen will always exist, the risk is so small that you’re much more likely to come out ahead if you put aside the money you would be paying for the insurance into a savings account.

Here are 5 types of insurance that most people don’t need and shouldn’t pay for:

1. Life Insurance For A Child: These policies are sold purely on emotion and not on true need. The advertisements will appeal that “if you love your child…” you will have a life insurance policy on them. While the commercials may appeal to your emotions, the financial facts are that a loss of a child will actually relieve you of a financial commitment. It cost less not having a child than having one. Life insurance is meant to replace an income that is lost when one dies, and a child rarely has an income. Unless your child is the main source of income for your family, there is no need to have life insurance for him or her.

2. Life Insurance For Singles With NO dependents: for the same reason above, life insurance is to replace an income that is lost with death. If you are single and have nobody counting on the money that you earn, then there is no reason to have life insurance.

3. Comprehensive & Collision Auto Insurance For Older Cars: As your car gets older and is worth less according to Blue Book value, it no longer makes sense to keep the Comprehensive & Collision portion of your insurance. Why? Because when your car is damaged in an accident, the insurance company will only pay what it’s worth. If the Blue Book has it at $2000 and you have a $1000 deductible, the amount you’re paying for the comprehensive & collision is probably not worth the price. It certainly isn’t if your car is only worth a Blue Book value of $1000 since you’d be paying money for nothing.

4. Rental Car Insurance: You want to take a few minutes and call your current auto insurance policy and see what they cover if you rent a car. Then take a few more minutes and call your credit card company and see what insurance they provide if you rent a car using their card. Once you know both of these, you’ll know exactly what you need and don’t need when renting a car and chances are that means you can skip the high price rental car insurance the rental car company will be trying to sell you.

5. Extended Warranties On Appliances: You are almost always better off taking the money you’d pay for an extended warranty and placing it aside in a bank account. They are usually expensive and only are worthwhile for a short window (of maybe a year or two) between when the manufacturer’s warranty ends and the extended policy becomes more expensive than replacing the item yourself.