Why Insurance Costs Are Excessive (& Ways to Reduce Expenses)

Most of us pay far too much for insurance.

I am not talking about how we shop for insurance, discounts we might be missing out on or the providers from whom we purchase it (though all these can have an effect on premiums), rather I am discussing how much coverage is purchased.

As individuals, we hand insurance companies too much of our hard-earned cash over our lifetimes – and over-insuring can only pad their profits to our detriment.

Insurance needs and associated costs often operate as a progressive tax on those most in need. Lower claim deductibles = higher premiums while higher claim deductibles = reduced premiums. Consider:

If you own a vehicle and lack savings to cover an accident, chances are high that you will need both lower deductible AND more costly collision insurance – both of which will drastically increase your premiums.
If you own a home but lack savings to cover an expensive deductible, in the event of total destruction of it it would likely require a lower deductible which will substantially raise premiums.
If you have a family and little savings to cushion the income loss caused by a deceased spouse, purchasing more life insurance coverage will increase premiums accordingly.
If your health is poor (which often correlates to having lower wealth), you are more likely to require a plan with a lower deductible and thus, higher premiums. Simply put: the less money there is in your account, the more coverage will cost.