Eight Rules for Saving Money When You Buy Insurance

Are you feeling a bit overwhelmed by the cost of premiums? It's not just you; even with an average annual family income of $75,000, people in America are still spending over 4% of their net worth on the cost of insurance. The first step to make your premiums more affordable is to assess your needs: do you have significant assets or debts and how will this affect what kind of policy would best suit your lifestyle.

Learn how to save money with these eight rules for saving money when buying insurance! They're so simple they'll barely take any time at all.

This is a sponsored post written by me on behalf of the National Association of Insurance Commissioners. All opinions, text and images are my own.

1- Insist on deductibles for health insurance plans. For example, if you buy an $8,000 policy for family members, make sure to have a deductible of $2,000 or more that can be used to pay for your family members' healthcare needs. You'll also want to shop around and find insurance plans with low deductibles so that you don't have to spend too much out-of-pocket in the first few years of coverage – especially if you have other high-deductible debt like car loans or student loans.

2- Increase your medical deductible. The higher your deductible, the lower your premium. It's that simple! However, if you're in a position where you have to choose between fewer bills and higher premiums, always go for the lowest premiums possible – but do expect to pay out-of-pocket first. You'll also save money with this tactic by cutting back on unnecessary doctor's visits and preventative care that can lead to expensive complications down the road!

3- Look into a HSA (Health Savings Account) Option. A tax-sheltered HSA account is an excellent option for people who can afford to pay for the services themselves out of pocket without worrying about huge bills. You won't technically be paying an insurance premium; rather, you'll simply contribute pre-tax dollars each month that are used to help pay medical bills. All you have to do is use your tax refund money to pay your deductible and then use the remaining money from your HSA account each year for your deductible and co-pays. Make sure that you choose a low-cost plan if it has high deductibles or it may be better to stick with a high-deductible plan (if you don't have much in retirement savings due to investing mishaps).

4- Dodge medical bills through the healthcare system. One of the most common ways for people to spend too much on healthcare is by buying insurance for services they can't use because they are self-pay patients without health insurance. In fact, more than 33 million Americans are uninsured and can't pay their medical bills. If you're one of them, there are ways you can avoid high medical costs. For example, if your doctor doesn't accept your health insurance plan's network provider network, ask to be placed on a list so that you will be called when suitable providers become available near your home. Keep in mind that you can only be placed on a 'list' for up to five years.

5- Look into a health savings account (HSA). HSAs are tax-sheltered accounts that allow people to contribute pre-tax money each month to pay for their medical bills. When they use it, they only pay taxes on the money contributed – and then they can deduct those contributions from their income tax return. It's a great way for people who can pay out-of-pocket to avoid spending too much on healthcare services.

6- Look into Health Reimbursement Arrangements (HRAs). HRAs are an employer-sponsored group insurance program that pays for medical expenses. If your company offers this benefit, you'll receive a set amount or reimbursement each year. It's not taxable and it helps to lower your overall healthcare costs.

7- Look into Healthcare Savings Accounts (HSAs). HSAs allow people who are enrolled in a health insurance plan to put pre-tax money aside every year to pay for their medical bills for the rest of their lives. Since they are tax-sheltered, it's a great way for people to save money on medical bills.

8- Eliminate high-deductible plans from your consideration. If you already have other high out-of-pocket expenses – like car loans or student loans – it may be best to stay with an affordable plan that has higher deductibles than you'd prefer. However, these types of plans are often the most affordable! They're also the cheapest option if you have a family history of medical issues, like diabetes or cancer. In general, look for policies with low premiums but moderate deductibles or lower deductibles and co-pays if possible.

If you're still having trouble making your premiums affordable, consider your income, and if you have high-interest rate debts, cut some of them out. You'll be surprised at how much extra cash you can put toward your premium payments!

Share any tips on how you save money on insurance in the comments below!

by Dan Crosby | MoneySmartGuides.com | Image: Flickr: Micky111 [ARTICLE END] 

As always, I value your feedback and questions. Please leave comments below or email me directly at dan@moneysmartguides.com .

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Tags: How To Save Money On Health Insurance, How To Save Money On Insurance, Saving For Retirement, Saver Life, Saver Life Finance Blog

This entry was posted on Monday, November 12th, 2011 at 8:17 am and is filed under Personal Finance . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response , or trackback from your own site.