This isn’t a secret trick or any great miracle. Do you want to save up to 10% on all your insurances? Take any insurance that you are paying monthly and pay them annually. Then take the monthly payments and make the to yourself. Insurance companies have what they call modal premiums in which they add on as much as 10% when you pay your premiums monthly.
So what insurances does this affect? For most people it would be your auto, homeowners and liability insurance. As a side not, save up to 25% by having all of these with the same company. You might have group health and disability insurance through your employer so this might not apply. However, if you are self-employed or have individual policies, you might just be able to take advantage of this strategy there as well. It works best with disability and life insurance.
This does take some discipline. Ideally, you add up the monthly charges for your auto, homeowners, liability, disablity and life insurance. Then pay the annually premium for all of them. Finally, you pay yourself the monthly total you just got and save it up for next years annual premium.
Do you want to take this one step further? Don’t use your savings. Go to the bank and get approved for an equity line of credit. You should get the approval anyways in case of an emergency. Then pay your annual premium with the line of credit and pay it back monthly. This definitely takes some discipline. You need to make sure you pay it back so that you are not building debt. This way you are leveraging your other assets. Putting idle money to work.
Using the equity line of credit, you will instantly free up the spread between the modal of your premiums and the interest on the line of credit. Then you just might be able to deduct the interest you paid on top of that (consult a tax adviser). Then what you do you do with this new found money? Put it back into your financial model. That’s one way I help people find money.
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