Obvious Money Saving Tips Do not Always Apply to Insurance

There are so many ways for people to save money that it’s hard to know where to begin.  In today’s economy, saving money is on the top of everyone’s priority list.  Every product and service purchased, or eliminated, is an opportunity to spend less.  Spending less does not always render a better value.  “Cutting corners” on certain items can ultimately cost you more than you save.  Evaluate everything received in exchange for your hard earned dollars. Tip:  Begin with your next purchase and continue with every one thereafter.

Always be mindful when spending money.  Items routinely purchased everyday by millions of people such as coffee at Starbucks, lunch at McDonalds, and a pack of cigarettes, account for thousands of dollars a year.  Brewing coffee at home, “brown bagging” your lunch and buying cigarettes by the carton are alternatives that will save a substantial amount of money.   Make the local grocery store your new “best friend” and have restaurants, convenience stores, and coffee shops as “mere acquaintances.”  Tip:  Frequent trips with fewer items to the grocery store will keep you focused on what you need, what’s on sale, and assist in monitoring scanned items at the register.    

The method of distribution extensively affects the ultimate retail cost of the product or service delivered.    Coffee, lunch, and cigarettes are obvious examples.  Less apparent is the method of distribution for insurance. There are three main ways insurance is available for purchase to the consumer. Captive agents, independent agents, and direct writers are the industry jargon for the delivery method of insurance to the consumer.  Tip:  A complete evaluation of money paid toward insurance requires a comparison of all three distribution channels.

An insurance agent who exclusively represents one company is a captive agent.  Allstate utilize captive agents.  Independent agents represent a variety of insurance companies.  These types of insurance agents are not directly employed by insurance companies and receive a commission, from the company not the consumer, when a policy is sold.  Direct writers, such as Geico, employ personnel and pay them a salary.  Progressive is an example of a company which uses independent agents and employees of the company to sell their policies.  Tip:  The price for a Progressive policy varies depending on how it’s purchased; through an independent agent or directly from the company.

“Cutting corners” is another way to spend less.  Smoking fewer cigarettes, or quitting, will save money and improve your health.  Once again, for insurance it’s not so obvious.  It’s reasonable to assume that reducing the amount of coverage on your automobile insurance policy will lower your premium.  However, insurance companies often place you in a lower tier, or category, with higher prices when you have reduced coverage.  So, “cutting the corner” on your car insurance policy may ultimately cost you more money.  Tip:  Captive and independent agents have a vested interest in providing the best value for your insurance dollar and a salaried employee does not.