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Is it better to buy insurance or save money?

Many people, when looking for health insurance quotes or other types of insurance premium pricing information, begin to feel like they would be better off just saving their money rather than sending it to an insurance company to make a premium payment. They often feel this way because they think that the likelihood that they will actually use the insurance that they are paying for is low, so they will spend all this money on premiums and then have nothing to show for it, which leads many individuals to decide that it would be better save their money and put it into an interest-bearing account and forgo the insurance policy.

Savings vs. Insurance

An insurance policy pays for large expenses – things it would likely take you years to save enough money to pay for on your own. And these expenses aren’t just big in terms of cost, they are important. For instance, staying with the example of health insurance – let’s say you need knee surgery. If you haven’t saved enough money (tens of thousands of dollars) to pay for this and you don’t have insurance, then you need to wait until you have the money in your account before you can get it done. That means you will have impaired mobility for years until you have enough to pay for the surgery. If you have insurance, however, you can get the surgery post haste. You can also get treatment for emergency medical needs and not have to leave the hospital wondering how you are going to pay for it.

Making Insurance Affordable

The real issue here is making sure that you can afford the insurance premiums you are paying. Avoiding insurance and trying to save the premium dollars will probably leave you high and dry when you actually need the money. But creating an insurance premium that you can actually afford to pay – and don’t resent doing so – will be a better plan. Here are a few tips to help you do so:

  1. Look for discounts: Whether they come from bundling several insurance policies through one insurer, from taking the necessary steps to be a low-risk customer, or from paying your entire bill annually, take advantage of all the discounts you can. They add up!
  2. Get only the insurance coverage you NEED: No matter what type of insurance you’re looking at, get only the amount you actually need to cover that individual risk. Being over-insured doesn’t provide you with any extra protection. Insurance is meant to make you whole, so the insurance company isn’t going to give you an extra payment if the value of what you are insuring wasn’t worth that much (the exception here being life insurance, which pays out your death benefit in full).
  3. Continually review your policies: Your lifestyle and situation can change continuously and when it does, so too should your insurance. Every year before you renew, make sure there isn’t anything frivolous that you are paying for and no longer need and adjust anything else that could have a bearing on your premium.
  4. Get new quotes: Insurance rates vary from company to company, and the initial search that you do for insurance quotes is not always relevant a year or two later. Getting regular quotes from other insurance companies can help you to ensure that you really are getting the best deal out there.

If you plan it well and stay aware of discount opportunities, you will maximize your insurance premium dollars without sacrificing the coverage you need.

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