Investing (and self-insure) vs. Insurance

[SteveinMN]

I dropped umbrella as the chances of needing it are minuscule. Possible but not likely.

Yes, but when you need it... it's well worth years of paying the minuscule premium. However, one does have to factor in the higher coverages insurance companies often insist upon before they write an umbrella policy, so it's not really just $100-200. But we were insured beyond minimum anyway so it wasn't much of a risk to have it.

[iris lilies]

Why do you think term life insurance is always a bad deal? I thought whole life insurance was really the bad one to avoid.

You guys are right! i will correct!

[iris lilies]

Yes, my thought is that to forego health insurance, you'd really need to be pretty rich (>$2 million net worth at least). Scary to do otherwise.

Oh Honey, that’s when you need health insurance, to protect the sizeable stash. $2.5 million is chump change in a health event of major proportions.

[iris lilies]

We have always self-insured for dental treatment and optometry. It’s just not a big deal. And yeah we both wear glasses. Before DH had his eyes fixed, his eyeglasses were $1000. But that’s what people do, save money and pay the bill. this idea that everything have to be paid for by someone else it’s just very strange to me

I do know one demographic that could possibly benefit from whole life insurance and I am talking about whole life as you guys point out. Some people who are poor and who cannot who cannot save money, use it as something to leave their children. That is a very bad economic equation when you run the numbers, but it has something to do with not being able to open a savings account account in someone else’s name and contribute regularly to it. But the main thing about these whole life insurance policies is that they’re not part of the person’s estate and Nanny Government will not come after that sum of money for Medicaid/nursing home costs.

This latter situation is not something my family or DH’s family would run into, but one of my friends ponted out it worked for his mother and she left him a bit of money this way.

[bae]

I self-insure for vision and dental.

I purchase health insurance on the state exchange, to protect my assets from an unexpected large healthcare expense. It's pretty miserable coverage, but I self-insure for the small stuff.

I maintain a large umbrella policy, again to protect my assets from Something Unpleasant.

I do not bother with life insurance on my own. If I die, there's plenty left to take care of my daughter in the style in which she would like to be accustomed. My employer, the fire department, does provide some life insurance for on-the-job oopsies.

The fire department also has a medical expense reimbursement program, that covers my first $2500 of receipts or so, which generally covers my vision/dental, and some of my insurance payments. Alan apparently pays for the rest, thanks ACA!

I don't buy extended warranties on most consumer products. I did purchase an extended warranty on one of my fancier cars, because it is super complicated, perhaps not-reliable, and the first "minor" repair would more-than-pay for the cost of the warranty.

[dado potato]

Yeah, whole life is the one to avoid. If you need life insurance -- big if -- term is much more efficient until you're too old or sick to purchase it at a reasonable cost.

)

I had term life insurance, as a breadwinner. I felt that coverage was worth the premium while I had dependents (including step-children) who would have been unable to fend for themselves in the event of my death... minor children with university expenses ahead of them. I would consider my spouse's employment prospects, and I always figured she would get along fine, if I bit the dust. During those years I paid an insurance company to carry a defined financial risk of my death.

[jp1]

I currently have dental but it only really makes sense because my employer pays about 70% of the premium. Vision doesn’t make sense. I just pay out of pocket because I know that it will be about $320/year. I make sure to put enough money in my FSA to cover that every year.

I just upped my employer term life from 1x my salary (entirely paid for by employer) to 3x my salary (the past 2x paid by me but reasonably priced) so that SO will not be unduly burdened by the house if I kick the bucket.

[jp1]

If I were looking to save money on insurance premiums in an effort to invest more (assuming that I had a decent amount of assets, which I am fortunate in fact to have) I would focus my insurance purchases on buying insurance to avoid catastrophic losses. And I would self insure for smaller losses. For instance with home and auto insurance I would opt for the absolute highest deductibles available, but would keep full property coverage on my home in case it burned down, and for liability maintain a sizable umbrella to avoid suffering from a catastrophic liability claim against me. I would drop low risk stuff like dental and eye care where I"m likely to have a steady stream of stable bills year after year. I would maintain health insurance but with a high maximum out of pocket and high copay. I would drop all life insurance if there is no one dependent on my income to maintain their lifestyle. If someone is dependent on me then I'd keep enough term life in place to support that.

Doing stuff like that would reduce my premiums but still give me the peace of mind that a catastrophic event would only cost me an out of pocket expense that I could afford.

As it is the insurance I have doesn't necessarily match my recommendations but that's because some of it is partially paid for by my employer. Taking that into account I've made some different decisions. I also maintain full collision and comprehensive on my 19 year old car because the whole policy for both liability/first party is only $500/year. As old as the car is dropping first party coverage would save me less than $100/year.

[roxybeme1997]

If I were looking to save money on insurance premiums in an effort to invest more (assuming that I had a decent amount of assets, which I am fortunate in fact to have) I would focus my insurance purchases on buying insurance to avoid catastrophic losses. And I would self insure for smaller losses.

I'm beginning to think this is really the winning idea. Mostly the same thing advocated in the article in my original post.

Appreciate all the input...this forum is really active!

[herbgeek]

Many many years ago, someone told me - look at the biggest buildings in any city, they are insurance companies. Meaning of course insurance companies make a lot of profit. I carry health insurance and house/umbrella/car insurance to protect my assets, but no life insurance (no dependents). I only had life insurance when it was provided for free by an employer.