Insurance and protecting what you have
Pay a little to avoid a loss you could not survive.
Seeing trouble ahead and preparing for it is not fear. It is wisdom applied to the future.
Proverbs 27:12
Everyone pays a little so one person is not wiped out
Insurance pools risk across many people. You pay a premium, usually monthly, and in exchange the insurer covers large losses. The goal is not to get your money back; it is to avoid the one event that would ruin you. Insure the catastrophes, budget for the small stuff yourself.
Premium versus deductible
The premium is what you pay to have the policy. The deductible is what you pay out of pocket before coverage starts. A higher deductible usually means a lower premium, which works if you have the deductible in savings. The worst combination is a high premium and no savings for the deductible.
Key terms
Premium: The regular amount you pay to keep an insurance policy active.
Deductible: The amount you pay yourself before insurance covers the rest.
This week's money move
Find out what you are already covered by
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Week 9 check
3 questions · no grade, just a gut check
1. A deductible is…
2. You can generally stay on a parent's health plan until age…
3. Which policy is usually the cheapest high-value protection for a renter?