Insurance Basics

  • Insurance is all about mitigating risk. You buy it to deal with catastrophes. It protects your assets and your family from devastation. There are smart ways to deal with these matters and not so smart ways. Let’s take a look.


  • Only buy insurance that protects you from catastrophes. This means you avoid buying small insurance policies like pet insurance, extended warranty insurance on your consumer merchandise and vehicles, cell-phone insurance, credit card insurance, and alien abduction insurance (yes, it exists).


  • If you are concerned about death and protecting your family, buy term life insurance. Avoid high priced policies that feed off your fear of death. These would include cancer insurance, disease insurance, mortgage life insurance, flight protection insurance, accidental death insurance, and terrorism insurance (yes, that exists, too).


  • Ratchet up your deductibles on all of your insurance policies. Only file big claims as you handle the small one’s yourself (take money out of your emergency account to do this). The high deductibles will reduce your yearly premiums and that means more money in your pocket throughout the year.


  • Take emotion out of your decision-making. This is hard, but you must do your best. Salesmen use fear to sell you all kinds of products that you very well may not need. Stay rational and educate yourself on insurance matters from independent teachers, not salesmen. Don’t be sold!


  • Focus on teachers when learning more about insurance. Eric Tyson and Jane Bryant Quinn are teachers. They will provide you with sound advice on all of your insurance needs. I trust them and so can you.