Wednesday, July 13, 2011

Save money by self-insuring with savings

reaching for money istock e1310405409628 Save money by self insuring with savingsThe following is a post from guest of Sierra Negra, who writes at on financial matters and savings tips. Their views do not necessarily reflect the accelerate the loan or its writers.

To buy any product of high-end, a team of kitchen for a new car, you will be offered probably extended it warranty. Such guarantees can seem like an attractive insurance policy, but are generally a waste of money.

Think about it. Assurance companies could not remain in business if they paid more than claims that took in. Profits come from the sale of coverage to people who never use. It is betting that you will not use your warranty coverage, and that they are kept in the business because most of the time is right.

Even so, stuff breaks. Your vehicle needs an unexpected repair and face. The laptop blows his fan and warming up while. The washing machine new fantasy is have a defective engine. What should you do?

Self-insure savings

In most cases, the best course of action is self-insure with a savings account. Put the money you would have spent that extended warranty in a savings account of high interest and add a little each month. It will soon have an egg of little nice nest that can cover many repair issues that may arise. Think of it as an emergency fund for a very specific set of emergency situations.

How big is that its self-insurance is flexible. It can be used to pay for the repair of a car or a new computer or a part of the washing machine. If you buy a warranty, your coverage is limited to a topic that acquired the guarantee for the. Cash is fully transferable. You can cover any repair or accidents, provided that they have saved enough.

Self-insurance is a great approach for the management of minor problems with:

his car (set aside long enough to cover the high-deductible) electronic products such as computers, cameras and cell phonesfurnitureappliances

To save money, is giving you maximum flexibility in the event that something goes wrong.

Do remember above, when I said that the warranty companies are betting you do not use your warranty coverage, which are generally correct? If self-insure, is making that bet with yourself. The money is there in a savings account if you need, but probably not. If you don't use it, you can roll part of it in the purchase of your next vehicle or equipment. You may want to leave sufficient account of self-insure that the subject, of course.

When autoseguro is a bad idea

Self-insurance is a great alternative to extended warranties, but is not a replacement for the insurance on real topics included. While that probably you should never use his owners, insurance life and disability insurance, you must still have in place. The risk of loss of these essential elements is too large and the cost of replacement is that more than most of us never be able to save.

How could replace your home after a fire? Could what his family if he died of a sudden? Its life insurance and your stand's home between his loved ones and total disaster should the worst happen.

She also wished to maintain safe car and health insurance. These policies are different because they are used with some frequency. You should make claims of health insurance at least one couple of times a year, when go to annual visits from physical, dental and other health problems are.

While it could pay out-of-pocket for some doctor visits, probably not have savings to pay for a situation of great physicians such as prolonged illness or surgery.

The real life story

You can add medical bills quickly. He was hit by a car in my first 20 years and amassed more than $10,000 in medical bills only in the first hours after the accident. The total cost was more than $30,000. It is more than my annual salary at the time.

In the same way, the car insurance premiums protect liability in cases like this. It would happen to a pedestrian (and of course I hope not, but accidents happen) would be on the hook for the tens of thousands of medical bills. Certainly car driver who pays my medical expenses after the accident I mentioned earlier.

When the stakes are high, and the potential costs or liabilities are more than reasonably you can save, it makes sense to pay the insurance policies that will protect it in case of an emergency. Can never be needed, but if even once in their lives needs to have one of these policies, they will be worth more than all the premiums you paid. However, for everything else, self-insurance could be the best bet that has ever been made.

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