Increase your deductible to lower your monthly premium

When it comes to insurance, one of the key factors that affects your monthly premium is your deductible․ A deductible is the amount of money you agree to pay out of pocket before your insurance starts covering the rest of the expenses․ By increasing your deductible, you can potentially lower your monthly premium․ Here’s why and how you can do it⁚

Understanding deductibles

Before we dive into the benefits of increasing your deductible, let’s first understand how deductibles work․ When you purchase an insurance policy, whether it’s for your car, home, or health, you will have to choose a deductible amount․ This amount can vary depending on the type of insurance and the policy you choose․

Let’s say you have a car insurance policy with a $500 deductible․ If you get into an accident and the repair costs amount to $2٫000٫ you will have to pay the first $500 out of pocket٫ and then your insurance will cover the remaining $1٫500․ Essentially٫ the deductible is like a threshold that you have to meet before your insurance kicks in․

The benefits of increasing your deductible

Increasing your deductible can have several benefits, including⁚

1. Lower monthly premium⁚ The most obvious benefit of increasing your deductible is that it can lower your monthly premium․ Insurance companies often offer lower premiums to policyholders who agree to take on a higher deductible; This is because a higher deductible means the insurance company will have to pay less in the event of a claim․
2. Cost savings over time⁚ While increasing your deductible may mean paying more out of pocket in the event of a claim, it can also lead to long-term cost savings․ If you are a safe driver or have a low risk of making a claim, you may go years without having to pay your deductible․ Over time, the money you save on lower monthly premiums can outweigh the potential cost of a higher deductible․
3. Encourages responsible behavior⁚ By increasing your deductible, you may be more cautious and responsible when it comes to filing claims․ Knowing that you have a higher deductible can incentivize you to take better care of your belongings or drive more safely, reducing the likelihood of needing to make a claim․

How to increase your deductible

If you’re considering increasing your deductible to lower your monthly premium, here are a few steps you can take⁚

1. Review your current policy⁚ Start by reviewing your current insurance policy to understand what your deductible is and how it impacts your premium․ This will give you a baseline to work with․
2. Assess your financial situation⁚ Consider your financial situation and determine how much you can comfortably afford to pay out of pocket in the event of a claim․ It’s important to strike a balance between a higher deductible and your ability to cover the cost if needed․
3. Request quotes with different deductibles⁚ Reach out to your insurance provider or shop around for quotes from different companies․ Request quotes for policies with different deductible amounts to see how it affects your premium․ This will help you compare and choose the best option for your budget․
4. Weigh the pros and cons⁚ Consider the potential cost savings, your risk tolerance, and your ability to pay a higher deductible․ Assess whether the lower monthly premium justifies the higher out-of-pocket expense․
5. Make an informed decision⁚ Once you’ve evaluated all the factors, make an informed decision about increasing your deductible․ Contact your insurance provider to make the necessary changes to your policy․

Remember, increasing your deductible may not be the best option for everyone․ It’s important to evaluate your individual circumstances and financial situation before making any changes to your insurance policy․ Consulting with an insurance professional can also provide valuable insights and guidance․