Insurance Planning for Debt Protection

Insurance products are something of paradox. They are very important to own but people are the happiest when there is no occasion to use them. Unfortunately, these occasions can and, all too often, do arise. Whether it is a car accident, a medical emergency, or a death in the family an insurance policy will work to protect your financial interests. A failure to have adequate coverage could result in catastrophic consequences. For example; what happens if you are required to stay in the local hospital for an extended period of time? Without proper coverage the end result could be a bill totaling thousands and thousands of dollars. This is just one example, but it effectively shows how a lack of insurance can result in large amounts of debt. At this point I think we would all agree upon the importance of insurance but there is one more issue that needs to be addressed: the cost. The cost of insurance is extremely expensive and this will continue to increase as time goes on. So what are some ways that we can make purchasing insurance a little more affordable?

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• Shop around. The importance of this advice can not be overestimated. The pricing from company to company can vary tremendously so a little extra research can result in big savings.
• Slow down. A clean driving record (void of points) will often warrant a safe driver's discount, which lowers your premium.
• Look for multiple policy discounts. Most companies will offer a discount when a person purchases both their auto and home owner's coverage through their firm. There are also multiple car discounts available.
• Quit smoking. Smokers pay a premium on health insurance policies.
• Buy term and invest the difference. Term life insurance is much cheaper than its whole life counterpart. The advantage of whole life is that that it offers an attached savings program. However, if you are looking for a long term savings plan you are much better off to take the money that you save from buying a term policy and invest the difference in the market.
• Increase your deductible. The higher your deductible the lower your monthly payments. Make sure the deductible can be covered through your emergency savings.

Make annual payments. You pay an extra premium for the privilege of making monthly payments.

Mark Carney is a professional consultant with First American Debt Consolidation and Loans, a debt consolidation service specializing in financial education, credit counseling, and debt management services nationwide.