March 16th, 2013
When dealing with insurance, how should you approach it? High deductibles or low deductibles? Why?
When dealing with insurance, how should you approach it? High deductibles or low deductibles? Why?
A higher deductible lower your insurance cost substantially for the same level of coverage. This means you need to create an emergency fund that can be used to pay a large deductible. Many insurance sales people might try to create fear that you won’t have the deductible when you need it. If you have an emergency fund this isn’t an issue. Also many contractors will ask you what your deductible is so they can give you a quote that minimized your out of pocket expense.
Well put, Aaron. The key point is to see insurance as a way of mitigating risk. You simply want to protect yourself from some major life catastrophe, not small incidences that pop up now and again. This means ratcheting up those deductibles which will lower the premiums dramatically. This can save you thousands of dollars over time.
Just as Aaron stated, the emergency savings account should be used to deal with the small things in life and that includes the deductibles when the big things do come around. Be smart and efficient when it comes to insurance. Buy only what you need. Select a high deductible, and self-insure the rest. You can do it.
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