7♠ – Don’t Buy Too Much Insurance

Don't buy too much insurance - it's cheaper to do it yourself.

3 Responses

  1. Hi Mike,

    I would actually challenge on some of these. For me travel insurance, if you are planning to go overseas outside of the EU (until Brexit…!) then its a must. I always purchase it and have used it in the past. The costs of hospital treatment and extended hotels for an unknown period are most likely more than most people can afford from their emergency fund.
    If you arent travelling outside of the UK then I wouldn’t bother!

    I would also suggest on the Home Breakdown cover it depends on the circumstances. I dont have it now but I have in the past when I had an older boiler – it worked out at half the price to take the BG Home Care agreement than pay a boiler repair person to come out each time!

    I would always encourage people to think twice about insurance that is needed – I am currently insured in case of unemployment, illness and death simply because I don’t want to lose our home. As I progress closer to FI then I will look to drop that insurance as well and reinvest the premiums!

    Cheers,

    FiL

    • Mike Rawson Mike Rawson says:

      Thanks for the response.

      I think the problem is that you are thinking of a situation where you will actually call on the insurance. That’s a normal psychological protection mechanism to justify your “investment”.

      On average, you won’t call on it, and over your lifetime you will save money. It’s not about whether you can fund a particular incident from your emergency fund.

      You only need insurance for things that might wipe you out, or are legally compulsory.

      The US might well fall into that category, and everyone has to decide for themselves. Not sure I will ever visit there again, so I’ll cross that bridge when I come to it.

      • Hi Mike,

        This is true, but these would have wiped me out and so if I go skiing in the USA or travel around South America or where there is a high cost of repatriation (including dead bodies…!). You are right on average I haven’t called on it, but I also wouldnt travel with out it, potentially psychological but I wouldnt not get that for some of the more remote places.

        Europe I wouldn’t bother, but depends on how often and how far you go and for how long!
        Cheers
        FiL

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7♠ – Don’t Buy Too Much Insurance

by Mike Rawson time to read: 5 min
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