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If you’ve implemented your monthly budget, you’re probably looking for ways to cut costs in various budget categories. This may seem overwhelming at first because you’re just not sure where you can actually cut costs in all of your budget categories. Especially in your “Necessities” categories, like “Insurance.”
But you CAN save money in your “Insurance” budget category.
Note: This is part of my “Saving on Necessities” series of posts. If you’re unfamiliar with the 50/20/30 budgeting rule and what “necessity” categories are, read my post on that here.
How do you save money on insurance?
In this post, I will share some things that you can do to save money on your insurance. I will touch on ways to save on auto, home, life, and health insurance, but the main focus of this post will be on health insurance.
Important note: Insurance is definitely a necessity. Please please please never go without insurance to save money. It’s not worth the risk. Instead, compare coverage options and get the coverage that makes the most sense for you. Do not cancel your current coverage before your new coverage goes into effect. Also, when you’re sick, please get the medicine that your doctor prescribes regardless of cost. I am disturbed by the stories of people who die because they didn’t get a prescription filled to save money. That is not the right way to save on your medical needs. Your health is your wealth so get healthy first. There are ways to get help with the bills later.
Ways to Save on Auto and Home Insurance
- Make sure you have the right amount of auto coverage. Are you paying too much for your auto insurance? What does your current insurance policy cover? Do you need collision insurance? What size deductible can you afford? Dave Ramsey, financial peace expert, gives the low-down here: https://www.daveramsey.com/blog/how-much-car-insurance
- Buy a used car. Not only can it save you thousands of dollars in cost, but it often costs less to insure than a brand new vehicle.
- Compare insurance quotes. Use a site like LendingTree to get lots of quotes in one place- and let the insurance companies fight over you to earn your business.
For auto insurance: https://www.lendingtree.com/insurance/auto/
For home insurance: https://www.lendingtree.com/insurance/home/
- Buy a smaller home. Similarly to the used car, smaller homes cost less to ensure than large homes. Bonus: you’ll get savings from less maintenance costs as well.
- Get a “Multiple Policy Holder” Discount. If you get both auto and home from the same insurance company, you will often be rewarded with a discount. If you’re not sure if your insurer is giving you a discount for this, call and ask.
- Call to ask if there are any other/new discounts available. Are you a good driver? Are you a student? How far are you driving to work? Does your home have an anti-theft alarm? Did you make any upgrades? Answers to these questions and more can net you some discounts on your auto/home insurance. Many insurance companies will try to find additional discounts for you right over the phone. You just have to call and ask.
Ways to Save on Life Insurance
- Switch out your Whole Life Insurance for Term insurance. This is the cheapest and most affordable form of life insurance. The money you save each month (most likely hundreds of dollars) by making this switch can be put towards your retirement fund. Here’s Dave Ramsey’s detailed explanation on this: https://www.daveramsey.com/blog/term-life-vs-whole-life-insurance
- Compare prices. Our financial advisor was able to help us find the cheapest term life insurance policy. We now have a 30-year policy that will insure both my husband and me until our mid-60’s for less than $45/month. If everything continues to go as planned, we will have a nice retirement savings, enough to become self-insured and no longer need life insurance.
- Check employer benefits. Sometimes employer benefits offer additional life insurance for a few cents each month. This can be a cheap way to supplement your coverage.
- Get it when you’re younger. The sooner you get life insurance, the cheaper it will be. As you age, policies will cost more, but when you buy your plan, you lock in the price so it pays to lock it in when it’s lower.
- Take care of yourself. When you get life insurance, the company will perform a few health tests so it is beneficial to you if you’re in good shape. For example, a non-smoker with low blood pressure and an active lifestyle is going to qualify for a cheaper policy.
Ways to Save on Health Insurance
- Get your health insurance through your employer. When you’re employed, if your employer provides health insurance options, this is the most cost-efficient coverage that you can get. However, if you have to pick between multiple plans, do your due diligence to determine which is the best option. I’ll go into more details on perks to look for to help you decide on a plan in the next few list items.
- Seriously consider a High Deductible Health Plan (HDHP). If your employer offers this kind of plan and you’re healthy, this is going to be a great option for you. I cannot say enough good things about HDHPs! It’s been a good experience for my family to go with the HDHP option vs. the old co-pay plans because of all the perks that employers offer with them. Not only are the monthly premiums usually much cheaper than co-pay health plans so you keep more of your hard earned money each month, but employers will often put money into your very own Health Savings Account (HSA) every month. This is basically free money and can be used for your other medical costs for you and your entire immediate family! Even with a couple of unexpected office visits, you’ll usually come out hundreds of dollars ahead with an HDHP vs. co-pay plans.
- Take advantage of a Health Savings Account (HSA). HDHPs come with an HSA, which is almost reason in itself to switch to an HDHP in my opinion. You can contribute money to it and your employer may contribute to it as well. Not only can the money be used on medical expenses Tax-free, but it also rolls over. If you don’t use it this year, you keep it forever!
- Take advantage of a flexible spending account (FSA). If you can’t bear to switch to an HDHP, FSAs are often available on the old co-pay plans. An FSA this will help you pay for some of your medical costs tax-free like an HSA. However, there’s a catch to this particular account. Any money that you contribute to your FSA does not roll over from year to year. If you don’t use it this year, you lose it. So you must have a good estimate of what your expenses will be that year. For example, if you know you’re going to need a couple of fillings or are going to get lasik, you can factor in those costs to save on taxes.
- When your employer doesn’t offer health benefits or you’re unemployed, apply for a Healthcare.gov/ACA plan. You’ll be amazed how much more affordable it is than COBRA or possibly your spouse’s family plan. In my case, the Healthcare.gov plans were nearly half the price and the coverage was comparable.
- Get help paying for premiums with ACA government subsidies. When you apply for an ACA insurance plan, you’ll have an opportunity to share your family’s yearly income and, depending on the amount, qualify for government assistance for your healthcare premiums. Our family income is currently low enough for us to receive enough assistance to cover the entire medical insurance premium and part of the dental premium for my child and myself. Without the ACA, we’d be paying over $900/month for our health insurance. That’s more than a quarter of my husband’s take home pay!
- Stay in-network. When you search for a doctor, make sure they’re in-network. Call or use your insurance’s website to find and confirm this information. Look up where the closest in-network hospitals are so you know where to go in an emergency.This will prevent you from getting unexpectedly high medical bills just because you went to an out-of-network provider.
- Get what is covered by your insurance. Your insurance may cover a generic medicine almost completely when the name-brand has no discount. Or your insurance might cover certain eyeglass frames at 100% and not others at all. We experienced this first hand when my daughter needed her first pair of glasses. I share how we handled the experience in this post: How I Saved over $300 on Glasses for My Kid
- Find out if your medical insurance covers vision. I did not need to buy separate vision insurance for my daughter because our medical insurance plan included it for my dependents. If this is also the case for you, you don’t have to pay for a separate vision plan.
- Check on Employer plans offered for other types of insurance. In some cases, employers may offer other insurance plans for a few dollars a month like long term disability insurance or cancer insurance. Consider adding these if you can get a good deal.
- Only get vision insurance if you need vision correction. Some of the cheapest vision insurance will cost you about $16/month ($192/year) and that’s a great deal if you need contacts or glasses. But if you don’t, you can schedule a yearly appointment for only $95 without having vision insurance. From my experience, if you have an eye injury, you are expected to see your medical doctor first rather than going straight to an optometrist, and a visit like that wouldn’t be covered by the vision insurance anyway. Also, the last time I went in for my yearly vision appointment, my optometrist told me that I didn’t need to have another appointment for 2 years, only sooner if I noticed any changes in my vision. So this is one type of insurance where I feel comfortable foregoing and saving the money.
- Save on dental costs by taking care of your teeth. Dental insurance usually covers the full price of 6-month checkups. It’s just when you start needing other work like fillings when things get more expensive. So avoid cavities by brushing at least twice a day, flossing, and drinking fewer sugary drinks.
- Go to health fairs. Many employers offer a free health fair every year. Take advantage of this time to get additional health checks and stay healthy.
- Get your flu shot. I’ve never heard of a medical insurance plan that doesn’t cover a flu shot at 100%. So get your free flu shot. It’s a lot cheaper than getting the flu. You may be sick for weeks, miss work, spread it to your family, and just feel overall miserable. Plus, tamiflu is expensive so just do yourself a favor and try to avoid the flu by getting your free flu shot.
- Get your yearly exam. Your body needs regular maintenance checkups. When you get a yearly exam, you can catch any health issues early and it will cost less to treat and possibly take less time to heal the sooner you catch it. These appointments cost a co-pay or are free with an HDHP so there’s no reason to skip it. This is how I found out that I had hyperthyroidism in 2017 and was able to get it taken care of quickly.
- Buy generic medicine. Regardless of your insurance plan type, generic brand medicine is going to save you money. If there is a generic option, go with it first(unless you have a known allergy). This rule goes for over-the-counter medications as well. Ask your doctor if there is a generic brand for what you need.
- Compare pharmacy pricing. Some pharmacies are cheaper than others. Just call and they’ll tell you what they charge for your medicine with your insurance. Some will also give you a discount for being a loyal customer and refilling prescriptions with them. If you need prescription refills, ask if they have a pharmacy perks program that you can join.
- Research your options. Health insurance really requires some research and leg work to ensure you’re getting the best for your personal situation- in both coverage and price. When it’s time to sign up for the upcoming year’s insurance plans, take some time to think about what you expect to have going on medically in the next year and research accordingly. For example, if you take certain medications regularly, check the cost under the medical plans that you’re considering before choosing. If you know you may have a baby in the next year, check on the costs for prenatal visits, etc.
- Take care of yourself. When you’re healthy, you’ll have fewer medical bills. So treat your body right. Take stock of what you’re currently doing and determine what you can change/start doing to be healthier. Don’t do drugs. Eat healthy. Exercise regularly. Lift with your legs. Get enough sleep. You’ve got one life and one body. Be good to it.
So there you have it. 30 ways to save money on your “Insurance” budget category.
Now it’s time to flex your frugal thumbs, do some research, and see what deals you can find. When you find places to save on insurance for many of the tips above, it can easily save you hundreds and even thousands per year. So do your research, get your price quotes, and get to saving!
Plus, you’ll feel secure in knowing you have insurance to fall back on when you need it.
And please share any other ideas that I may have missed in the comments below.
Happy frugal budgeting,