Should Christians Buy Insurance?

Is purchasing insurance an indication of the lack of faith? Some may think so but I don’t. In this world we all live and then die and we should prepare for both.

Spiritually we must prepare for death, as well as make preparations for this life. The same is true in the finances of our lives. We need to secure our family’s future in the absence of the breadwinner. This leads to the necessity of the proper kind of insurance. Buying insurance is both a right and wise thing to do.

☛Auto Insurance. In North Carolina, state laws require liability insurance. Liability insurance covers the other person’s car, injury and property. You are required to have $25,000 property damage coverage and $30,000 bodily injury with a $60,000 bodily maximum coverage per accident. These are the minimum amount coverages…it would be wise to increase these amounts if possible. Would you be personally responsible for any amount above your insurance? YES! So it would pay you to check into more coverage.

Collision insurance covers your car. If you owe on your car, your lender requires you to have collision insurance. You should have collision insurance if your car has significant value.

Comprehensive insurance covers windshield damage, hailstorm damage, or if a tree falls on your car. Comprehensive insurance is good insurance. Your premiums do not go up because you have made a claim unlike liability or collision insurance.

Car insurance is not only a state requirement, it is a wise choice in protecting you, your family, and your assets.

☛Homeowners Insurance. Again, if you owe on your home, your lender will require you to have homeowners insurance up to the replacement value of your home. If you own your home, why would you not want to have homeowners insurance? The higher deductible (for instance $2500) the lower your premiums. In your “emergency fund” you should have at least the deductible amounts of all your insurances. Homeowners insurance is a very competitive insurance item. Shop around. Several other things are usually added to your policy which are benefits. Use wisdom and get the best deal.

If you rent, you need renter’s insurance.

☛Life Insurance. The best deal in life insurance is term life. Term life insurance can be bought in 10-year, 20-year and 30- year terms. A 35 year old male can buy $500,000 in insurance for 10 years for about $15.00 per month. A million dollars for about $25 to $30 per month. A good way to know how much insurance you need is to add your home mortgage plus ten years of annual salary. The earlier in life you purchase term life, the cheaper.

☛Disability Insurance. If you become disabled, you can not live on Social Security disability. Therefore, you need disability insurance. The amount that is usually offered is between one-half and three-fourths of your annual income. Your employer usually offers the best deals in disability insurance.

☛Health Insurance. Everyone needs it and more and more people either can’t afford it or have chosen not to be covered. The Health Savings Account plans have been noted recently as a better plan. The plan allows one to save for medical expenses in a tax-free savings account. Consult a trusted agent to give you the most coverage for the lower monthly premiums.

☛Long-Term Care Insurance. At age 60, one needs to take out this insurance. It is essential insurance for those approaching retirement age. Nursing home care can deplete a life-long savings account in just a few months.

There are insurance products that I personally don’t think are a good investment - one being Mortgage Insurance! This insurance is often required if you do not pay at least 20% down on your home purchase. This is very expensive insurance. This insurance pays off your mortgage in case of death. It sounds good, but again it is very expensive! You could include your mortgage in your term life insurance for only pennies on the dollar for what mortgage insurance costs.

If you have your home paid down to 80% you can cancel your mortgage insurance. You need to be sure you have term-life coverage for the life of your loan. Mortgage insurance makes the insurance companies very rich!

Another type insurance that I don’t promote is Universal Life or sometimes called “Whole Life”. It is a plan (very expensive) that builds a cash value and gives you life insurance coverage. It sounds good and is very profitable for insurance companies - but not for the customer. You can buy term-life so much cheaper. Invest the remainder in a good mutual fund and end up much better off.

Let me add this final note. Product insurance is usually a very bad deal for the customer. We buy a product (example a range) and they want us to take out insurance to repair it if it breaks down. I don’t buy them! If we need to insure their product before we even get it from their store - what does that say about their product?

Wisdom and care should always be used in purchasing insurance products. We can become “insurance poor” and we can also become poor if we don’t have the proper insurance.

UnTHINK MONEY: Ways to waste your money:

The Eternal Car Payment: Most Americans carry a car loan for most of their entire lives, paying about $378 a month. The same amount invested from age 25 to retirement would, on average, amount to more than $4 million dollars by age 65! “Sure hope you enjoy that smooth ride”