Self Insurance and Cutting Costs

2007-03-08 10:33:40

( Insurance )



Insurance Can Be Expensive

For the most part, buying insurance is a good idea. We all need protection from the dangers that exist while we live on Earth. Having adequate insurance coverage can give you a sense or peace and security, knowing that your needs will be met if and when an emergency situation presents itself.

The one drawback to buying insurance is that it can get quite expensive. Many people simply cannot buy all the insurance that they want because of the cost. You may want to insure yourself, your family, your car, your home, your valuables – but that means you will have to be paying premiums for all these items, which will drag your finances down in the long run. However, there is a way to purchase more insurance, as well as cut your current insurance costs. It is called self insurance.

What is Self Insurance?

Self insurance is a risk management method in which a predetermined amount of money is set aside to offset a potential loss in the future. Self insurance can be used to provide medical insurance self employed. It can also be utilized to provide for home insurance, car insurance, etc.

In self insurance, you create and maintain a fund for your insurance needs. In essence, you will be assuming some of your insurable risk. When you do this, you will immediately reduce your current insurance costs and keep premiums down. Most people find that combinations of self insurance and company-issued insurance policies work best for them.

Perhaps the most difficult part in self insurance is determining just how much cash you should set aside for your insurance needs. There is no easy way to calculate how much you need; the figure will vary depending on what you want to insure and the events against which you seek protection. If you have the time and the inclination, analyze your actuarial information and the law of large numbers to help you come up with a suitable amount.


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