Everybody needs insurance at some point in their lives but you've got to
understand that the entire industry is a total money-making machine and it is way
easy to get ripped off if you don't follow a few simple rules so in this
video I'm covering the three things that you need to know about insurance so that
you don't get ripped off and you can be a little bit smarter about it so that
you can actually save some money and all of these strategies apply to all the
different types of insurance like life health and auto insurance so definitely
pay attention and hopefully you'll learn something new now I'll warn you right
now that I'm not a professional when it comes to insurance so definitely seek
one out if you're looking for that type of information but I do know that basic
math can usually cure a lot of these problems and that's what I'm into so
this is the information that I'm going to share with you guys and if you just
found this channel I'm Jason with honest finance and I make a lot of videos on
different topics that will give your life and your finances more value so
definitely subscribe if you guys are into that type of content but now let's
talk about the things that you absolutely need to know about your
insurance the first thing that you need to know about insurance is that you
should always shop around with a whole bunch of different companies before you
go with any type of insurance and then also don't stay with the same company
forever because a lot of the time you're gonna find better deals elsewhere I say
this because statistically you will stay with the same company for years because
once you get your automatic payments set up you're probably not gonna switch
companies because that's just how it is insurance companies make everything
super complicated to understand so naturally we don't even want to switch
companies just because it's a lot easier in that sense but I would recommend that
every couple years you look into a bunch of different insurance companies and
check their premiums and their coverage just to see if maybe you can get some
better value out of another company plus a lot of the time you'll find that when
you threaten to cancel your policy they'll actually come back with a better
rate because they're trying to negotiate you to stay onboard with them and this
all happened just because you're looking at different companies so if you really
do love your insurance company and you never want to leave them then I would at
least do this tactic just to make sure that your rates don't inflate over time
the goal here is to get the most coverage that you possibly can from your
insurance while at the same time paying the lowest premium possible and that's
pretty much all that I would ever worry and then keep in mind that a lot of the
insurance companies that you see on TV are actually some of the most expensive
ones out there because they have to pay for all that marketing and they have a
bunch of gimmicky features that you also have to pay for as well you just need to
do a little bit of research and I guarantee you you can find a lot of
insurance companies out there that actually have good prices and good
coverage now the second thing you need to know about your insurance is how your
deductibles can actually affect your monthly premiums and I really want you
to pay attention here because I think I can save you some money
so basically the way your deductible works is that whenever you have to make
a claim with your insurance you're gonna have to pay your deductible first before
they actually end up paying out any money and this is all pretty simple but
the problem is is when you have a low deductible you're gonna have higher
monthly premiums and this is a problem because you usually don't need to use
your insurance because the way it works is that if you have a $500 deductible on
your car and then you make a claim you're just gonna have to pay at least
$500 before they're gonna pay anything out and then your monthly premium I
would bet is probably around 75 bucks a month but if you change your deductible
to $1,000 and you are gonna have to pay $1,000 if you need to make a claim but
the thing is is that your monthly premium is going to go down to probably
55 bucks a month and statistically that's gonna save you a lot more money
over time so with this math you can tell that in two years you're gonna make up
four hundred and eighty dollars which is almost the difference in that deductible
so as long as you're not getting in a wreck in two years or so then it's
actually a better value for you but if for some reason you're the type of
person that gets in a wreck every six months or so then I would definitely go
with the lowest deductible possible because you're probably going to end up
needing it and that's gonna save you more money but overall if you look at
the stats you're gonna find that statistically you're probably not gonna
get in a car wreck and that's why I'm always gonna recommend going with the
higher deductible and keeping the lower premiums because it's always gonna save
you more money in the long run and another thing here is that if you
actually have an emergency fund saved up then this is what you should be using
for your deductible and you should always keep your premiums low just
because you actually have an emergency fund to cover the problem if something
happens and then also keep in mind that no matter what your deductible is you're
probably not going to make a claim with your insurance unless you absolutely
have to because the problem here is that when you make a
generally your premiums are gonna go up a little bit and that's something that
we all try to avoid so a lot of the times unless you're getting into a big
accident this isn't something that you need to worry about now if you do end up
calling your insurance provider and raising your deductible but your
premiums only go down about a dollar a month then I would definitely say that
this probably isn't a good thing to do because it's gonna take way too long for
that money to actually make sense as far as value goes so if that does end up
happening then I would just stick with the same deductible that you already
have or I would just look into going with a different insurance company to
find something better and then the third thing you need to know is that a lot of
different types of insurance out there are a total ripoff so what I want you to
do in most cases is just some basic research and some basic math and you can
easily find out if it's going to be a good value for you or not it's kind of
like when you go to Best Buy and you get a new laptop for only 300 bucks but then
they offer you an extended warranty for $100 as insurance but that's really just
a total ripoff because that's a third of the cost of the laptop just for
something that's probably not gonna happen so that right there is a prime
example of insurance that I think is a total ripoff because it's just not worth
spending that much money to cover something that you can actually replace
yourself because at the end of the day I feel like you should only be getting
insurance if you can't replace the item or repair it on your own now take for
example whole life insurance which is basically a life long life insurance
policy with the built-in savings account as well in my opinion I don't think it's
worth it and I'm gonna give you two examples right here that I think you
will agree with the first reason is just the fact that when you're older you
probably don't need life insurance anymore because at that point you're
gonna have your assets all paid off and if something did happen your family
should be safe at that point in your life and that's actually one of the big
problems I have with whole life insurance because you're actually paying
more in your premiums just to have a giant life insurance policy when in
reality you don't need it for your entire life you only need it for 10 or
20 years when you're young when you're actually having to pay off those assets
and if something happened to your family you couldn't pay them off but when
you're older you're not going to have that problem and honestly in some
situations it does make sense to have a life insurance policy when you're older
but I feel like for the most part you should actually have your debts paid off
by that time in your life and like I said earlier the only reason that you
need insurance is to cover something financially that you can't actually
cover on your own if something were to happen to it
now the other stupid thing about whole life insurance in my opinion is that a
lot of your premiums are actually going into an investment account which is
something that I don't think that you should be paying for on top of the
premiums on your life insurance I mean it might sound like a good idea on the
outside to have an investment account inside your life insurance policy but
the problem with it is that it's a total ripoff because there's a ton of hidden
fees in there that you have to pay and you're actually going to end up with an
investment that's paying out less than the S&P 500 index which you can just get
on the stock market I mean the average return from the S&P 500 index all the
way back to 1923 has averaged 10% if you're not including inflation so the
thing is is that that's actually a far better return than you could ever get
from your whole life insurance policy and that's why I don't agree that it's a
good idea to be spending your extra money on a stupid policy when you could
just invest it on your own so if it were me I just take the extra money that you
would be spending on your premiums but instead I would invest that in the stock
market on my own terms so that I could get a better return because just
remember that any extra money that you're paying on your monthly premiums
is money that you could be using as an investment or just something else in
your life rather than insurance just do some basic math and some basic research
whenever you're looking for any type of insurance because a lot of the time
you're gonna find out if it's worth it or not just by doing those two things
there are a ton of big commissions in the insurance industry and that's why
they always want you to buy all the stupid fancy policies and the add-ons
but in reality you just need to do your homework and your research so that you
can get the best value for the insurance policies that are best for you now once
again I'm Jason with honest finance and I make a lot of videos on different
topics that will give your life and your finances more value so definitely
subscribe if you guys are into that type of content but for now just remember
that insurance is a big deal but I don't want you spending money on something
that you don't actually need