With many aspects of your financial life, there’s a certain amount of “set it and forget it.” In some cases it works out well, such as setting a contribution to a retirement account or establishing a savings plan that auto-transfers money from your checking account to a savings account. In other cases, it’s important to take a look at those plans every year to make sure they still make sense for your situation.

Insurance policies fit into that category and it’s important to take stock and review your insurance policies each year. A lot can change in a year and unless you take some time to review your policies, you may be surprised when it comes time to use them.

Here’s the rule of thumb I use on whether or not an insurance policy is worth getting – if they are willing to sell you insurance without knowing anything about you, don’t buy it.

Think about how much information you have to provide if you’re buying any kind of “traditional insurance.” With life insurance, you have to submit yourself to a physical. For auto insurance you have to offer up your car’s history, your credit history and your driving history, which is being tracked by a third party. For homeowners insurance, you have to provide a history of claims on your home (don’t worry, it’s tracked by a third party), your own credit history, and home details.

When you buy travel or trip cancellation insurance, they don’t need anything except your money. When you buy cell phone insurance, they don’t need anything except your money. Extended warranties? Just send in a check.

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Trying to find a way to save money every month is a lot like playing Whack a Mole. In April you might save some money by brown bagging your lunch to work. In May you might try some hypermiling driving tips, like easing up on the brakes or driving closer to the speed limit. By June, you’ll probably have stopped brown bagging lunch as often but you’ll try going out to bars less after work. It’s hard keeping everything straight, especially if you haven’t made it a habit.

That’s why the key to saving money every month is to reduce your overall “financial load.” That is, cut or reduce your fixed monthly expenses.
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Last week, as I was research the “catch” on a return of premium life insurance policy, I wondered if it was possible for you to self-insure your life. The idea behind self insuring is that you take a lower level of insurance protection and save the difference into an account. With auto insurance, you could take away comprehensive insurance coverage, rental car coverage, or raise your deductible and put the savings into a high interest savings account.

I do this today with my auto insurance. For my Acura Integra, I didn’t carry comprehensive insurance and was able to saving hundreds of dollars a year. When it was totaled, through no fault of my own, I rolled the savings over to do the same thing with my current car, a Toyota Celica. As I’ve gotten older and the premium on excluding comprehensive insurance decreases, I’m tempted to add comprehensive again and pay for it with the fund. I’m able to because of good driving and good fortune, but I think that self-insurance is something everyone should consider.

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My wife wrote an article last week about how you can save money going local for balloons and flowers, but here’s another reason you might want to go local – superior service.

In working for my how to buy term life insurance post yesterday, I emailed my insurance agent, Deborah from State Farm, to get some updated quotes on term life insurance. I’ve had the need to email her on several occasions and each time her responses were usually back in minutes. She knew me as Jim Wang, a recent new customer, and not as customer #XXXXXXX in a database somewhere.

It really underscored one thing I had missed when I was with Geico and Traveler’s, personalized service with a real person.

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I hate insurance.

Actually, I take that back, I don’t hate insurance. I hate paying for insurance.

Every time I get an email from GEICO or a mailing from Traveler’s, I think about how I pay them every six months and, in the nearly ten years of driving and four years of living in this house, I’ve never filed a claim. At least with medical and dental, I get some regular checkups and routine cleanings (I hate getting a teeth cleaning but I love getting stuff for “free”). Don’t get me wrong, I’d still get insurance even if I wasn’t required to by law, but that doesn’t mean I enjoy paying for it!

So, once a year or so, I have an insurance review day. I get a little antsy and start asking for quotes from other insurance companies to see if I’m getting the best price. (Well, I’ve been more in the “or so” category, I haven’t done this in two years)

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It’s seven o’clock and you’re just leaving work. You’re tired after a long day of work and all you want to do is turn into a vegetable in front of yet another episode of Law and Order. As you walk to your car, you notice someone clipped the bumper and managed to unhinge it from the chassis. It’s scraped, a little cracked, and almost most importantly, since it is the bumped, it looks like crap. The culprit left no note. You are probably out a few hundred dollars of your deductible to get it repaired… fortunately you have an emergency fund… unfortunately, you’ll have to tap into it for this.

That situation is one of any number of reasons why emergency funds are so important. In the situation above, you are likely required by law to fix an unhinged bumper and any visit to the shop will cost you a few hundred bucks. Without an emergency fund, you might resort to a credit card or a short term loan. If you can’t pay that back, it quickly becomes a downward spiral you can’t escape. A minor expense becomes a major expense. But how much should you have saved in an emergency fund? The answer depends on who you ask! Some experts say twelve months of expenses, other will say six months, and even others say “however much you feel comfortable with.” The answer, unfortunately, is that the amount “depends” on you and your situation.

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Everyone’s been focused on brokerage failures and bank failures lately, wondering what happens and who backs them in the event of a failure… that is until we learned that AIG (American International Group) was in serious trouble. This begs the question very few have asked before, what happens if my insurance company fails? The quick answer is that most states have a guaranty that will back the fund up to a certain dollar amount.

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