Insurance cost can be cut with some shopping

Revisit your coverage plans and seek discounts when buying more than one policy from a firm.

By Mindy Fetterman / USA TODAY

It’s not coffee or ATM fees that bust your budget. It’s the cost of health, home, life and auto insurance, your mortgage and your car loan.

In their book “All Your Worth: The Ultimate Lifetime Money Plan,” Elizabeth Warren and Amelia Warren Tyagi argue that Americans should “forget about the pennies and worry about the dollars.”

“I’m a bigger fan of cutting insurance costs over cutting cable TV,” Warren says. “I’d miss it too much.”

Tyagi says: “People get their home insurance from their mortgage broker or Realtor when they bought the house, or they shopped for it once 10 or 20 years ago and haven’t looked at it since. With a little bit of shopping, you can cut a lot of money.”

Their tips for what you do need:

Re-shop home and auto insurance: If you haven’t shopped around for a while, get on the phone. Try to “bundle” both policies with one company; they’ll likely give you a discount.

Ask about other discounts. Some insurance firms offer group discounts. “My husband has a degree in engineering, and by golly, our company has a discount for people with engineering degrees,” Warren says. Some homeowner policies offer discounts for nonsmokers.

As with health insurance, get a high-deductible policy.

You can change your insurer every year if you want. “It’s not like a cell phone plan where you sign up for two years,” Warren says. “Shop for a discount one year, then shop for a discount another year.”

Term life insurance: “This is one of those places where renting is better than buying,” Tyagi says. Don’t get whole life insurance, which combines savings with insurance, she says.

Disability insurance: “Everybody needs disability, and getting it through your company is best,” Warren says.

Here’s what you do not need:

Specialty disease insurance: Policies that claim to cover cancer or emphysema, for instance, are “almost always a bad idea,” Tyagi says. Plus, “if you’re already known to be at high risk for the disease (like being a smoker), they cut you out.”

Credit card insurance: “Ack! Ack! Ack! These schemes are scams, pure and simple,” Warren says. People think that if they get sick or laid off, their credit cards will be paid off. No. The minimum payments will just be suspended for a time, and “you won’t get any new credit when you’re ill and you need it,” Warren says.

Mortgage insurance: Just as bad. “On average, mortgage insurance costs three times more than ordinary term life with the same amount of benefits,” Tyagi says. Just get life insurance, and if you die, it’ll pay for your mortgage.

Health insurance: You must have this, even if you think you can’t afford it.

Get a plan that doesn’t cover routine costs, such as doctor’s visits or immunizations, but covers catastrophic illness and at least some hospitalization costs. A high-deductible policy will cost you less.

Be suspicious of plans that cover smaller costs, because when you really get sick, they might not cover hospitalization or major diseases. Read the fine print. Try to buy plans as part of a group, either at work or through professional organizations. Some colleges offer group plans for catastrophic illness.

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