DIY Bailout: Are You Over-Insured?

Wednesday, May 05, 2010

It's week eight of The Takeaway's Do It Yourself Bailout with our friend Beth Kobliner, author of "Get a Financial Life", and we're taking a good long look in the mirror at our spending habits: where we're saving, if we're saving enough and whether we can do more to bail ourselves out of the financial mess that many of us are in.  This week's question to ask yourself: are you spending too much on insurance? Or not enough?

Kobliner says in the world of insurance there are two types of people: overloaders (people who want to insure themselves for everything) and underloaders (those who insure very little, effectively betting they'll never need the coverage). She says the trick is to know for sure that you're in the middle.

Guests:

Beth Kobliner

Produced by:

Jen Poyant

Comments [4]

Katia

From someone whose significant other works in the rental car business: there are times to buy the rental insurance. Are you unfamiliar with the car? Buy the insurance for the first day or two (you can always cancel it later when you feel comfortable with the vehicle). Most rental-car accidents happen because someone is driving a car they're not used to. If you're only renting for a couple days, you might want the insurance--for a few bucks a day you can avoid a deductible and higher rates from your own insurance company should you get in an accident and your insurance cover the costs. For longer periods, you may not find it to be worth it.

May. 07 2010 12:58 PM
Mark Schwartz from New York, NY

You stated in the report that rental car insurance is generally unnecessary because credit cards provide insurance. You had that only half right. Credit cards do provide collision and damage insurance on rental cars, but they generally do not provide liability insurance. In most states liability insurance is required, so the auto rental agencies automatically supply a minimal level. For those with substantial assets, this may be inadequate, and the add-on liability insurance is necessary.

May. 05 2010 06:22 PM
Katia

Donna--we ARE paying for it. Medical insurance through an employer is part of the compensation package people receive for doing a job. Consider it as getting a lower salary in exchange for your employer paying part of your insurance costs. Don't forget the old adage, "there is no such thing as a free lunch." Employers aren't paying part of our medical insurance costs out of the goodness of their hearts, trust me.

As far as a discount card--indeed. Just a yearly physical exam can cost $300. That's not counting various tests your doctor may wish to do. Why do you think many people without health insurance forego these things? It's not because health care is dirt-cheap and they just don't feel like paying. With the cost of medical procedures these days, MANY things can be catastrophic for a family.

THANK HEAVEN that when I got into a car accident and had to be toted to the emergency room, my health insurance paid the $12,000+ it cost just to use the trauma room and make sure I was okay (CAT scans, x-rays, etc.; it turned out I was fine, so that bill didn't even include any sort of treatment except a nurse cleaning the blood off my face). But thank heaven my medical, dental, and vision insurance also covers the $300-$400+ for my glasses (which in this case were destroyed in the auto accident, but which do in fact need to be replaced every few years as my vision worsens), the $700 for fillings and tooth extractions, several hundreds of dollars in preventative care and treatments for illnesses, etc., or I'd be in big financial trouble pretty quickly (or, more likely, going without treatment for this stuff).

You can stay on your high horse and pay all your stuff out of pocket and save your health insurance for the off-chance you get cancer or get hit by a truck. I'll hang onto mine that keeps me out of the poorhouse for routine stuff, thanks.

May. 05 2010 11:26 AM
Donna from Colorado

Medical "insurance" has morphed from a plan to pay for unexpected catastrophic events to a 99% Discount Card. Everyone expects to get everything dirt cheap. No one has any clue how much this costs. I loved your comment "COBRA is so expensive!" Wooo, guess what - that's what your policy costs. Didn't you care to know? All that money your employer was flushing on your behalf each and every month, to subsidize your 99% discount card. And when it's your turn to pay for that, it's suddenly too expensive? Medical insurance needs to be turned back into actual insurance - something that covers unexpected events, not something that buys a nice lifestyle.

May. 05 2010 09:45 AM

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