Thursday, March 21, 2013

The Question of Insurance

No one likes insurance. Well, at least we don't like to pay for it. So many things in life require it though and to be honest, the one we will most likely use in the next 10 years (car) is also the one I hate paying for the most. I HATE paying for car insurance. It drives me crazy.

But why? Why do we hate paying for that piece of mind? I think it's just because we don't use it so it doesn't feel like we're getting our monies worth. But isn't that ridiculous? Shouldn't we be thankful we have it and don't have to use it?

In FPU there is an entire class devoted to insurance. Dave recommends ALWAYS having the following:

  1. Homeowner's or Renter's
  2. Auto
  3. Health
  4. Disability
  5. Long-Term Care (60+ y/o)
  6. Identity Theft
  7. Life

We were actually ahead of the game here and had all but the Identity Theft and Long-Term Care Insurance.  The FPU workbook is really good at crunching numbers to explain WHY you need these things. It also goes into depth on what types you need. 

For instance, Dave tells you to stay away from Whole/Cash Value Life policies. His reasoning makes sense if you have the dicipline to ferret away your yearly premium instead of paying on your Whole Life policy you'll have 2 million or so by the time you reach retirement age. Not too shabby. 

I find though that working on FPU is a little bit of a balancing act. I want us to stay true to the Baby Steps and follow Dave's advice, but I don't see that dropping our Whole life plan would be ideal at the moment. I know us, and right now, we just aren't in a place where we would continue to ferret away our premium rather than just apply it to other things. When you don't have a lot, an extra 180 every couple months is a big deal. If I have a bill to pay, I'll pay it. If not, well I'm still working on the whole "Pay Yourself First" motto Dave preaches. 

So what's your take on this whole insurance thing? Do you have all of these? If not, is there something stopping you?

Interested in teaching your kids how to handle money? Check out Dave's series for the little ones: