Should You Self Insure?

With insurance rates rising, I know more and more people who are choosing to insure themselves. Rather than paying premiums to an insurance company, they choose to instead save those premiums and other funds in order to cover any damage to their cars or property or, in some cases, to pay for health care. I saw an interview with a man who lived in a flood prone area of the Mississippi River. His riverfront house had just washed away for the third time and the reporter asked him if he had insurance to cover the loss.

“Heck no,” he said. “After the first flood they refused to cover us.”

“But isn’t that expensive?” the reporter asked.

“Sure. But we

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10 Responses to Should You Self Insure?

  1. Leslie says:

    I am not sure that I could do that with health insurance. Especially given that I have two young children. However, I am considering doing a very high deductible policy to have in case of a major illness or accident but then covering the regular stuff (checkups, minor illnesses, shots etc.) on my own.

    I can see doing this easily on a car and POSSIBLY even on a house once it is paid off.

  2. Julie says:

    Well, I personally do not have health insurance. I had it for many years, paid out over $90,000 and never collected a penny. I decided it is not worth while for me, so I have not had health insurance for years. I have only been to the doctor’s about 3 times in my life. I will be eligible for medicare in 6 months.

  3. Scanner says:

    Good essay.

    The insurance industry is the biggest lobbying force in Washington and they go to great means to continue to capture your part of your household income.

    Add into that attorneys depend on them to sue them (without insurance companies, most attorneys would be out of business, both plantiff and defense), you have a system that definitely conspires against the people.

  4. Joan says:

    Your “self-insured” 70 y/o will have Medicare with a snap of the fingers when he wants it, so I don’t think there is much risk that he would have to pay 100% out of pocket for major medical expenses.

  5. Monkey Mama says:

    My attitude is that we insure for catastrophe.

    Health Insurance is a given. If nothing else, we drive on California freeways every single day. It doesn’t matter how healthy we are. All it takes is one accident and we could all end up in the hospital (plus I insure 4 people; not just one). I had a young client a couple of years ago who had a brain tumor (very random). He is now on disability. He had full insurance but at some point they recieved a million dollar+ medical bill by mistake. Literally. I would prefer not to take the chance of financial ruin even if the odds are slim. Because in cases like these, financial ruin is the outcome if you do not have insurance. & it can happen to anyone. We’ve been able to switch to a high deductible plan recently though and I much prefer it. We don’t insure for a few thousand of medical bills – we insure for six-seven figure medical bills. I am happy to pay a “high” deductible.

    The house we will probably always insure – we live in a high flood risk area and the house is worth a lot. We have the highest deductible possible.

    On our disability we have longest waiting period possible (self insure first year of disability – much cheaper that way).

    Life insurance – we have now but I expect eventually we won’t need it. With age we can self insure here.

    Cars – Highest deductibles and don’t insure for collission once value gets below about $5k. We never have. We insure for comprehensive because we live in a very high auto theft area (& it cost just pennies).

    We definitely consider the risk in weighing the cost/benefit with each of our insurances.

  6. Princessperky says:

    I think the main trouble is the assumption that insurance will cover Everything. Insurance should be as MM said for the catastrophe. Not for routine care (Dr checkups, minor cold)

    Folks should pay attention to simple wear and tear on a car, and house, before they go thinking they can afford a latte a day.

  7. Tynesha says:

    What’s interesting is that not many Americans have accumulated the net worth to self-insure, yet still refuse to pay for insurance. The point of insurance is to “buy money” until you have your own – like Monkey Mama said – with age, you should reach a point where you can self-insure. The problem is too many people grow older, with too little savings — they underestimate how much they will need, or they simply fail to plan.

    THE MOST COMMON AREA IS LIFE INSURANCE! One out of three people is uninsured, and their families have “benefit” concerts, etc. to put them in the ground. The two-thirds that do have insurance have not looked at their contract since they bought it, and really don’t know what they have or how much.

  8. You should never self insure when it comes to health. One major claim can drive a family into bankruptcy.

  9. Jayme Archer says:

    I’m from Canada, and even here, not everything is covered by government health care. I think that something like your health isn’t something to gamble on as there are many things that could happen to you in which treatments are incredibly costly, and I’m sure when it comes to your family, the value of these treatments is priceless.

    However, increasing your deductible does usually lower your insurance rates, most of the time, so I agree that that is a good idea.

  10. saver says:

    Keep medical insurance, third party liability and disability. Only insure for the things that are going to be really really expensive. Avoid insurance where you are lumped with the fat and stupid people of this world ie. 90percent or America.

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