Lower Premium to be Safer
While conventional insurance advice will tell most people to raise their deductible and lower their premium you may be surprised that this is not always the best cost-cutting move you can take. While raising your deductible will lower your premiums and save you money right away you may find that under certain circumstances it is best to keep a lower deductible despite having a higher premium. Sometimes raising your deductible (despite having lower premiums) can cost you big along the way. Here are a few of those circumstances:
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- Medical insurance-Sometimes when people feel overwhelmed by the premiums they are paying for their medical insurance the first move they take is to raise their deductible to lower their premium. But there are certain things you should consider before doing so. Do you have young children? Parents with young children will tell you that not only do they need regular checkups but grade school age children especially are often sick. The exposure they have at school will often have parents taking sick kids to the doctor on a regular basis. In addition if you are a parent of a teenager statistics show that they are 90% more likely between the ages of 14-18 (especially boys) in being involved in an accident that requires medical care. This is not just driving accidents, but skateboards, skiing, snowboarding and sports related accidents as well. With doctor's visits averaging nationally between $60-250 dollars you can find yourself shelling out big bucks if you still have a high deductible. In addition you must consider large dollar amount expenses like a pregnancy (average cost nationwide between $6000-10,000 dollars for a no-complications pregnancy) or a chronic condition that can arise suddenly. If you see yourself as a heavy user of medical care you may be better off keeping your deductible low, paying a little higher premium and letting your insurance pick up the big tab.
- Car insurance-You can save substantially if you raise your deductible on your car insurance. Insurance records show that you can save between 25-40% on your car insurance premium depending on how much you are willing to raise your deductible. But before you rush out and do this there are some things you should consider. Do you drive a significant amount of miles per year? Insurance companies consider heavy driving to be over 15,000 miles per year. If you drive a lot you may want to keep your deductible low despite having higher premiums since just by being on the road you are more at risk of an accident. Do you have a history of accidents? If you have had more than one accident in your recent driving you may not want to be raising your deductible. Insurance surveys show that most non-injury accidents result in about $5000 dollars worth of damage. If you are getting in frequent accidents you may want to keep your deductible lower as well.
- Homeowners insurance-While every homeowner is looking for ways to save money in certain circumstances it may just not pay to raise your deductible on your homeowners. Some considerations to take into account are: Where do you live? If you live in a storm path, flood area, or close to wilderness (where fire is a possibility) you should perhaps keep your deductibles lower and just pay your premiums. While having a disaster at your house can be catastrophic not having the funds to pay your deductible and get your house back would be worse. Insurance agents advise that homeowners with homes that are older than 20 years old keep their deductibles lower since many older homes need frequent and sometimes costly repairs.
