Retirement can be an exciting time of exploring the world and doing all the things you put off when you had to work. However, most retirees are on a fixed income and rely on Social Security, 401(k) plans and other retirement savings. Budgeting is more important than ever without a steady paycheck, and cutting excess spending is the best way to stretch your retirement income. Here are some tips on how to save money on insurance so you have more money to spend on enjoying your free time.
Slim Down Your Homeowners Insurance Bill With Discounts
For many people, retirement comes just as they are finishing paying off a mortgage. When that mortgage is paid off, it can be tempting to forgo home insurance altogether, but that’s a huge risk to take.
Imagine if you have a house fire or are robbed. What if a storm blows your roof away? Having an active homeowners insurance policy will prevent you from having to spend a large portion of your savings to repair your home or replace all your valuables.
Instead of canceling your home insurance policy, ask your insurer for a retirement discount. Most insurance companies offer discounts to retirees for both home insurance and renters insurance. If your insurer does not offer one, it may be time to switch. Here’s why you should pay less than a working person:
- You’re home more, so the chances of a robbery or vandalism are less.
- Because you’re home more often, you will notice small issues, like a drip leak from the ceiling, before it turns into an expensive disaster.
- If you haven’t filed an excessive number of claims or none at all while you’ve been insured, you pose less of a risk to insurers.
Even if your insurer offers a discount, you may still be paying more than you need to pay each month. It’s a good idea to compare rates for home insurance every six months to nab the cheapest rate you can find. With a discount on top of it, you will definitely cut costs and have more left for your exciting retirement plans.
Other Homeowners Insurance Discounts
Don’t let discounts be an afterthought. You can save up to 20% on your home insurance if you apply as many discounts as possible. Here are some common ones:
- Claims free
- Loyalty discount
- New roof
- Impact resistant roof materials
- Fire resistant building materials
- Storm shutters
- Upgraded HVAC
- Updated plumbing
- Indoor sprinkler system (fire)
- Monitored burglar and fire alarms
- Smart home devices
- Military affiliation
- Auto and Home bundle
- Affiliations with certain organizations (ask each insurer for their specific list)
Seniors With Pricey Medical Equipment
If you have health-related equipment in your home, like a stairlift, wheelchair ramp or durable medical equipment (DME) like an oxygen concentrator machine, you may need to increase your coverage in case a disaster causes you to have to replace or fix the equipment.
Speak with your insurance agent to find out if they consider a stairlift as a modification to the dwelling or a possession so that you set high enough coverage limits. Your contents coverage should be enough to cover your possessions and your dwelling coverage should be enough to take care of the home’s structure itself. You may or may not need to increase your limit to cover all your equipment. You may also have the option of adding an endorsement instead of increasing limits. See which is more cost effective.
Create an Inventory and Switch to a Cheaper ACV Policy
If you have not done so in a while, it’s a good idea to create an inventory of all your possessions to make sure you still have the right amount of coverage in case you have to replace everything. It’s a good idea to take photos or a video of every item along with a price list.
One way to cut costs significantly is to change a replacement cost homeowners insurance policy to an actual cash value (ACV) policy after you review your inventory. An ACV policy is much cheaper than a replacement policy because it factors in depreciation while a replacement cost policy will pay you enough to replace your stolen or destroyed belongings with brand new replacements.
Switching insurance types is not hard to do and usually only requires a call to your agent.
Increase Your Home Insurance Deductible
If you file a claim for damages or stolen property, your insurer will deduct the deductible amount you choose when you buy a policy. The higher your deductible, the cheaper your monthly premiums. Just make sure to have enough in your savings account to cover the deductible amount if the worst happens, and you should be set!
Consider Moving
With home insurance doubling in Florida and overall rates increasing by 12% or more across the country, it may make sense to move if you’re paying thousands of dollars in home insurance.
The risk factors of a home’s location play the largest role in how insurers set rates. If you live by the ocean, it comes with risks. If you live in the mountains that are prone to wildfires, that will mean higher insurance costs too. Also, you don’t want to live in a sketchy neighborhood where crime is high. Insurers raise rates in high-crime areas as well.
It may seem like a drastic measure to take, to uproot just when you’re ready to relax. However, it is better than living in a high-risk neighborhood and not being able to afford sufficient home insurance. Going without insurance, only to lose everything to severe weather or crime, would be tragic.
Look at Your Household Members
Are your kids moving in with you or are you moving in with them? This is a great opportunity to divide up the cost of insurance. You’ll want to make sure you have sufficient limits on your homeowners insurance to cover everyone’s possessions, however. You’ll also want to shop for a better rate rather than just raising limits on an existing policy.
If you’re renting a home, however, it’s a general rule of thumb to have separate policies for each household member (unless it’s a couple) to ensure that you’ll all be covered adequately.
Homeowners Insurance for Retirees FAQs
Is it true that seniors pay more for home insurance?
Usually, seniors pay less for home insurance unless they’ve filed many claims. Otherwise, the only other time you’d pay more for insurance as a retiree is if you buy a vacant home endorsement on your home insurance policy. You’d need this if you leave your home vacation for long-periods of time, like winters in Florida, for example. This is not an area to cut corners either. You may not be fully covered with your homeowners insurance without this endorsement if a catastrophe or burglary happens while you’re on the beach!
What if I own artwork, high-end jewelry and antiques?
After reviewing your inventory, if you decide you need higher limits to include your more expensive possessions, you can simply increase your limits or add an endorsement for your pricier belongings. See which option is more cost effective.
Are new homes more expensive to insure?
On the contrary, newer homes are less expensive to insure because they are built to newer building codes and can withstand harsh weather conditions, fires and more.
Bonus Insurance Tip: Save Even More on Auto Insurance
Don’t neglect whittling down your car insurance bill every month either. Here are the easiest ways to save money on insurance:
- Chances are you’re driving less now that you don’t have a daily commute. If you drive around 5,000 or 6,000 miles a year, you may qualify for a low-mileage car insurance policy. It’ll cut your costs tremendously.
- Compare auto insurance rates. You can save up to 40% each year with the right insurer.
- If you have a point or two on your license or if you simply want a discount, look into taking a safe driver course. Ask your agent if you’re eligible for a car insurance discount if you complete the class.
- Enroll in a telematics program and allow an app or device to track your driving behavior. If you’re a safe and cautious driver who follows the speed limit, you’re sure to get a discount.
- Increase your deductible, which is what you’re responsible to pay if you have an accident. Deductibles only apply to collision and comprehensive coverages, never liability coverage, which only covers the other driver, not you. When you increase your deductible, you pay less each month, but more if you have an accident.
Bonus Tip 2: Your Life Insurance Policy
A life insurance policy is important to have if you still have a mortgage on your home. This way, your beneficiaries will be able to pay off the mortgage with the death benefit if you pass away before the home is fully paid off.
Also, if you’re having a hard time making ends meet, now may be a great time to cash out your life insurance policy. However, if you cash it out, make sure you’re still keeping it active with premium payments so you don’t lose the death benefit that goes to your beneficiaries.