This is a guest post by Dave, who is also looking to retire no later than 45, but unlike Tim has no kids and doesn’t want any. Dave is from Ontario and is working towards his CGA certification.
My work has decided that I need to learn about Insurance, specifically the Chartered Insurance Professionals courses in order to get an insurance designation. This is great (I like to learn new things), other than I was already taking accounting courses for a Certified General Accountant’s designation. So, for the next month or so I will be a little busier in the evenings and weekends then I was really planning on being.
In taking this first insurance course, there are a couple of things that I thought would be appropriate to share with readers of this blog:
1) It doesn’t pay to lie: Insurance companies work on the premise of “utmost good faith”. Basically, the onus is on me to inform the insurance company if there are any changes in what I’m doing that would change my current policy. For example, a few weeks ago I was assigned temporally to a job that would require me to use my personal vehicle for work. In total, this may mean only 1,000 kilometers I would have to drive for work.
I called the insurance company and told them what I was going to be doing for the next few months. They reclassified my car to account for the added activities I would be undertaking and changed the premium I would be paying. I don’t really appreciate paying the higher rate, but at the same time if I hadn’t told them what I was doing and gotten into an accident they may not have covered the claim.
Personally, I never want to be in a situation where I have been paying for insurance, get in an accident and find out that it isn’t covered – it doesn’t really pay to not disclose material facts about your activities. You may pay a lower premium, but being turned down on a claim would not be good financially.
2) Make sure you’re properly insured: Meaning make sure you haven’t bought too much insurance or not enough. From an early retirement perspective, being properly insured is probably the best way you can spend your money.
How do you know if you’re properly insured? Basically think of the worst things that could happen to you financially and protect yourself against that – there is insurance available for the majority of types of occurrences that would limit your ability to make money and retire. Examples of personal insurance are liability, disability, and automotive. If you’re not sure what you need, an insurance broker or agent would be more than happy to explain (and sell) any of these products to you.
I don’t particularly enjoy paying for insurance, but at the end of the day there is a certain feeling of peace-of-mind knowing that I have handled most of the catastrophic events that would hinder my future financial plans. I try to ensure that the insurance companies know what I am up to so that I am being covered for everything and not just thinking that I am.
How do you figure out where to draw the line with insurance? Do you keep your insurance company up to date on any changes that happen in your life that would change your policy?