Buy down insurance cover

In my prior life, I practiced insurance and trial law, taught insurance and civil trial law, and consulted for a major publisher on the development of insurance books and online products. A brain tumor required me to stop practicing, but I have a store of knowledge that I wish to share.

For automobiles, $500 is often the deductible for collision coverage, and $100 and $250 are usual deductibles for comprehensive coverage. Generally, collision coverage is more … expensive than comprehensive, and a lower deductible for comprehensive does not add that much to the cost of the premium. These amounts typically increase when the covered vehicle is a high-end automobile. People who can afford such automobiles can usually afford to pay a higher deductible. For homes (homeowners coverage), the amount can vary depending on where you live and the type of coverage(s) you have. In most areas, for fire and theft, a frequent deductible is $500 - $1000. Wind damage policies can be very expensive if you live in high-risk areas for hurricanes. Therefore, in order to make a policy affordable, deductibles of $1000 or more are common. In fact, some insurers require deductibles to be some percentage of the damage, sort of like a co-payment in health insurance. Deductibles are similar for flood insurance. If you live in a high-risk flood plain, deductibles in the $1000 or more range may be required to keep a policy affordable. Flood insurance is a little out of the norm, however, because it is not universally available in the private market, so sometimes a government program is the only option. In that event, the available deductible(s) are limited to what the government program provides. For health insurance, deductibles can range quite a bit depending on the type of plan. Deductibles ranging from $250 - $500 per individual, $500 - $1000 are common. Some catastrophic plans offer very affordable plans (in terms of monthly premiums), but have deductibles in the range of $1000 or more per individual and $2000 or more per family. When evaluating insurance plans of any sort, and the deductibles that attend them, it is important to make sure that you understand whether the deductible is calculated on a per year or per occurrence basis. (MORE)

Your deductible only gets paid in the event of a claim. For example, you tap a light pole in the mall parking lot. The pole is ok but your car is damaged. If you have comprehe … nsive coverage on your car, your insurance company will pay a claim to have it repaired. So, you get a body shop who says it will cost $1,400 to fit it. If your deductible is, say, $500.00, your insurance company cuts a check to the body shop for $900.00 which is the difference between the damage repair bill and the deductible. Thus, you must come up with the $500.00 amount. (MORE)

I've been a licensed insurance agent in Georgia since 1985 and have owned my own Independent Insurance Agency since 1989.

No. Also, it is probably not a good idea to try and deduct the premiums for diability or life insurance because if you deduct the premiums or if the employer pays the premiums … then any benefits are then taxable. You certainly would not want to have to pay income tax on a large life insurance benefit just because you wanted to deduct a few hundred dollars of insurance premiums. (MORE)

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