12: 4 ways to save on insurance

Today on the show I am going to discuss insurance. I can feel your excitement!

Next week is going to be way more feel good, I promise. Last week and this week I have been trying to think about what to call these episodes because I was thinking no one wants to talk about estate planning and insurance and if I just write that. you’re all going to be like 'arr Meaghan no way, we are not going to listen to these episodes'  but you know what? It’s something we need to talk about, because having your estate planning affairs in order is a huge gift for your loved ones. It’s hard enough when you lose someone. Having your estate affairs clear and organised takes the burden off your family. Likewise having the right insurance in place can save a lot of headaches and financial stress.

Before we get into the thrilling content that is insurance I have been brainstorming ways to make your life easier and I wanted to let you know I have a resource section on the website, that I am continuing to add to, as I come across great resources.   In the menu above you will see there is a tab called resources. There are website resources and book resources. I have set up the book resources in a way that you can read a quick summary on what they are about and there is also a direct link to Amazon if you want to buy it.

Books have literally changed my life.   So much of what I write about in these posts is based on what I have learnt from books. These days because of the wonderful Internet, it really is possible to learn about almost anything. I love love love books and many of my favourite are in the resource list.

Now a quick tip for those of you who are clutter or budget conscious. I love to buy books that I think I will refer back to. Most of my money or mindset or personal development books are full of highlighted notes. I consider them texts books and worth buying because I do actually refer to them again and again. However, another amazing resource for books is the library. Yes the library. Do you know how amazing libraries are?!

You can search and reserve books online. Many libraries are also connected to some form of audio service like Borrow Box where you can borrow the book and then listen to it via an app on your phone. If your library doesn’t have the book you want you can request an inter library loan, usually for a small fee or you can request a purchase order. If they deem the book to be worth getting or it is a new book they will purchase it and you will be the first inline to borrow it! Amazing, I know. So check out your local library or if you know you just want to buy it, jump on to the resource section and there will be a link to take you directly where you can buy the great books I have referenced on the show. Too easy.

Ok lets talk insurance. Why do you need it?   And how can you save on insurance costs?

1: Insure for events that will have a significant effect on you or your family.

Cast your memory back to episode 1, I mentioned the book Your Money Milestones by Moshe Milevsky, well he makes a great point about insurance. What he says, first of all, is some events like a broken phone are more likely to happen but they are inexpensive to replace and therefore not worth getting insurance for. If you can afford the replacement value you don’t need insurance for it. This will straight away help you determine which insurances are a wastes of money.

If I have booked a flight for a couple of hundred bucks and I can’t fly for whatever reason I can afford to buy a replacement flight. I don’t need insurance for that. However, on the other hand, Milevsky says insure for events that are unlikely to happen but will have a significant effect on you or your family and your standard of living. Such as the death of the main income earner or a car crash that causes significant damage to many cars and property that will leave you with a very large bill to pay.   Incidentally this exact circumstance happened to us. It was an AAMI ad in real life; you know the one, when a small accident sets of a domino effect of trouble. A few years back Louis got home from a late night shift.   I heard him pull up in our driveway which, was on a hill and then I couldn’t figure out what was taking him so long to get inside. It sounded like he was dragging our bins down the driveway, making a total racket late at night.

Well, what was actually happening was that he had got out of the car and locked it and somehow the handbrake didn’t engage properly and the car just started to roll back out down our driveway! Well the car was locked and moving so what I thought, was him dragging the bins, was actually him being pushed back down the driveway while he was trying to stop the car rolling away. Well evidently he was unable to withstand the force of a rolling SUV so he jumped out of the way and watched our car roll down our drive, over the road, through our neighbour’s front fence, only to be stopped by, thank goodness a big tree in their front yard. Otherwise, I think it would have kept rolling straight into their house! Needless to say we were pretty relieved our insurance covered the cost of the extensive damage to our car, and our neighbour’s fence and front yard.

2: Set your excess as high as possible to reduce your premium.

The higher your excess is, the lower your premium will be. Full stop. The extra money you save on the lower premium could be saved in a buffer account to pay for the excess in an emergency. We have the excess on our car set at $1000. We know we always have $1000 on hand in our savings account so we can cover any minor car incidents.

3: negotiate the price.

This year when we received our car insurance premium, I just thought the price was unreasonable. It seems to go up every year and yet the value of our car goes down. So I just rang them with nothing on it and said I thought the premium was too high and I wanted to get a better price. The operator came back with a discounted price that was only about $50 cheaper. I said I wasn’t happy with that and I wanted her to check if she could do better. Look I only ended up getting it about $97 cheaper but hey that is better than nothing. Incidentally, I have done this with my credit card as well. I pay $75 per year for my credit card because it is one that comes with a rewards program. One year I rang them because I wanted to close the card, as I just didn’t want to pay the fee anymore. I was happy with the card as we always paid it off but I just thought it wasn’t necessary to have a card that had an annual fee. Well because of that call and because credit card companies don’t want to lose you they just waived the fee.

I’m telling you, the first time I rang a company to do this I was nervous. But now I don’t think anything of it as I realised the person on the other end is just a regular person. Their job is customer service. Keeping the customer happy and keeping the customer. Business’s are in business to provide a service. They provide value for their customer and you pay for that value. If you don’t think something is worth it, say so. The worst that can happen is you feel a little uncomfortable because they say no. So what! Why don’t you try it? I’m not saying ring every service you have, well sure go ahead if you want to. Some of the insurances and services we have, I feel that they are reasonably priced. However, if I don’t think that is the case I will call and tell them so.

4: Check you are not paying for insurance that you don’t need in your super.

You will find most supers have insurances available. Some you might get automatically. This is something that is helpful to check and may save you money. Alternatively you may be able to get insurance that you want and pay for that within your super.

The 3 types of super I know about that are in super are:

Death cover

Total and permanent disability

Income protect

From memory when I first joined the super I am with now I got TPD and death cover. That came standard with the super. I later applied for and also got income protection.

Let me give you a quick overview of each one.

Death cover is a lump sum payout to the beneficiary on your death.

TPD cover is an amount you get over a period of time if you have a total and permanent disability.

Income protection is money that is paid to you up to 75% of your income if you are unable to work.

There is also trauma insurance to cover medical expenses if you have to have ongoing treatment for something like cancer. As far as I know my super doesn’t offer that but maybe others do. Something worth checking out.

It’s worth noting all these insurances are available outside of superannuation and that’s why I think you need to be aware what you are paying for in your super as if you have a policy outside your super you don’t want to waste your money paying for it again inside your super!

We have our insurance inside our super because at the time we organised it, we were on one income and it made sense at that time to do it that way. We wanted to make sure we were covered but didn’t want to have to come up with the money upfront to pay for it.

Here are some other points that you might want to consider.

You can change the amounts you are insured for. Obviously the premiums will be higher if you insure for a higher amount. You can reduce the premium for income protection by delaying the amount of time before you get paid. For example, because we have a buffer fund we choose to have our waiting period at 90 days to reduce the premium. If you don’t have any savings to cover you if you can’t work, then you might want to forego the waiting period, but the premium will be higher.   When considering how much cover you need for death cover think about how much you would need to pay all your debts like a mortgage and then have enough to live off for a few years. A few hundred thousand sounds like a lot but let’s say for example you were a young family on one income with a $400000 mortgage and the main breadwinner dies. The person left caring for the children needs money to pay off the mortgage and have enough to live off for a period of time before they return to work. The amount insured for might need to be more like $1000000. Look there is no right answer and this is where you need to work this out for your own personal financial situation and consult a professional if you need to.

I don’t want to sound all doom and gloom. No one wants to think about this stuff but accidents happen. I have the tendency to think 'that will never happen to me'. I think this is pretty common. However, these things have happened to me, fortunately it was before we had kids. Louis was hit by a car, broke his neck and back in a few places and if that had happen now with two young kids it would be really tough on us financially, as he is the main earner. So I can confidently say, we do have insurance in the event that something like that happened again because I want to know I will have enough money to provide for the family if one of us can’t work for whatever reason.

So on that happy note. The take aways from today are:

1: Insure for events that will have a significant effect on you or your family.

2: Set your excess as high as possible to reduce your premium.

3: Negotiate the price.

4: Check you are not paying for insurance that you don’t need in your super.

Next week will be the last episode for this season. I have a ripper planned for you. With a lovely surprise you can take away for the summer holidays. I have been working away on making some material for you that you can apply over the break. Stay tuned for that next week.

Did you know there is a Money Mindful Ladies’ club? To join the club and be part of a community of financial femmes who are working towards kicking ass with their money and life you can sign up by clicking below.

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