Home insurance, life insurance, auto insurance, health insurance and the list goes on & on! When do I trust in God for His provision & protection and when to I buy insurance? Or is it really that I need to do both?
You have heard me say that everyone should have enough money saved to handle emergencies. At a minimum you should at least $1000 saved and the more the better. Yet, there will be a time when your savings are not enough to cover the emergency and that’s why there are insurance policies.
The problem though is that insurance it typically left out your budget. And in many ways this is not a wise way to prepare for major emergencies.
Home owners insurance is required if you have a mortgage on your home. The premium is collected as part of your monthly payment to be deposited into an escrow account and protects the bank against catastrophic loss to the property.
If your mortgage loan to home value is greater than 80%, that is you put down less than 20% to purchase your home, you are also paying private mortgage insurance too.
Health insurance is what we come to expect of your employer. The policy handles many of the unexpected costs associated with health issues.
Auto insurance is required by law as a matter of driving your car. Most auto policies have elements to protect the asset (collision) and the victims of their injuries or loss (liability).
And each of these insurance policies is to protect you and your assets while you are in this world. Life insurance is to take care of those you leave behind. In essence, insurance helps us hide from trouble (Prov 27:12).
So, when does having no insurance become unwise and when does having too much insurance become ungodly?
Not having insurance is often unwise and sometimes illegal. God has setup the governments and therefore you can also conclude it is being disobedient to God’s word when we drop your auto insurance. It is also unwise, as in the case of life insurance, since you will be leaving a large debt burden behind if you have a mortgage or your spouse doesn’t work or at the very least your funeral arrangements (these can cost upwards near $20,000 dollars!).
Therefore, not carrying insurance is not an option. You should have some level of home owners insurance (even if we don’t have a mortgage), auto insurance (because it’s the law) and life insurance (if only to cover your funeral expenses). All others have to be evaluated carefully in light of the question; can you have too much insurance?
Okay, if you should be carrying insurance, is it possible to have too much insurance coverage? Maybe – If you are buying insurance because of a fear of the future, you may want to evaluate your trust in God’s provision. If God promises to not forsake us (Ps 37:25), then are you placing too much trust in the world to provide for your needs? Definitely a hard question to answer, and so you may want to use the Five-Why’s technique to dig deeper.
Now, if you feel that you do indeed trust God implicitly for His provision of the future, you should evaluate if you are paying for more insurance than is necessary.
Are the ways to save on insurance costs? Yes! Here are some ideas for you to consider.
Auto Insurance: Consider dropping collision coverage for a low value car; provided that your car is not financed. Only Liability coverage is required by law. Consider raising your deductible. Be careful not to raise it too high as to not have enough in your savings to cover the deductible. And be sure to check out the kinds of discounts your insurer provides for things like anti-lock brakes; for your children, good-grade discounts and so on.
Life Insurance: Consider term life insurance. Also, evaluate the value of the policy. If you have paid off your mortgage, then you probably don’t need as much as you have. What isn’t intuitive to most is that the older you get, the less you need to have. Remember, life insurance is best for covering debts and death expenses. If all of your debts are paid, then really you only need to consider the life-style of your spouse and funeral expenses.
Private Mortgage Insurance: This policy can be eliminated when your loan to value is below 80%. So, paying down your mortgage includes this benefit too.
My recommendation is for you to review your insurance needs every time you renew the policy and after every major life event (new children, children who are no longer living with you (empty nest), moving to a new house, changing jobs, marriages, and deaths).
No comments:
Post a Comment