Self Insurance Tips

The health-care debate intensified when President Obama took office in 2008. Since then, business owners and individuals alike have become more interested in self insurance options instead of dealing with the constant rising insurance premiums. Health-care premiums have especially seen a rise, more than doubling between 1999 and 2008, and are expected to double again by 2020, according to The Commonwealth Fund. Self insurance is a method of regularly setting aside funds to use in case of lost or destroyed possessions or health issues. There are a number of tips for a successful self insurance program.

Evaluate

• An essential part of self insurance is evaluating all the potential losses and determining how much money could be lost in a disaster. For example, to determine how much money insuring a piece of property would cost, you must figure out how much it would cost to rebuild it if it was destroyed. However, the evolution process can prove to be tricky. For self health insurance, you must consider all the different variables in a claim. Medical bills can surely add up quickly, costing thousands or more, so it is highly advised people set a good amount of money aside for self medical insurance.

Safe Investments

• Individuals with self insurance have the power to do what they want with the money they have saved, unlike money paid to insurance companies. Careful caution should be taken, however, when choosing an investment. Steer away from investing self insurance money in regular investments such as stocks, mutual funds or any other investment that could lose money. It is important that the money be available when needed as well and not tied up elsewhere. Safe investment options include a high-yield savings account or CD account. These types of investment options have FDIC insurance protection and will also pay a small amount of interest.

Stop Loss Policies

• Individuals considering investing in self insurance should also consider looking into stop loss insurance. Stop loss policies are designed to limit the amount of money the self insured is responsible for. After a certain amount of money is lost or spent, the stop loss company will take over coverage. These types of insurance policies are typically very affordable, allowing individuals to limit their liability. Ultimately, they are a good value and investment for self-insured people.

Savings

• When self insurance is done right, it can save a lot of money that could be used for future plans. Insurance with 100 percent premiums will not compensate money that has not been used; it will simply be considered unrecoverable costs. Self insurance allows individuals to still have enough money to cover future losses and use it for other emergencies or expenses if needed. The money remains yours, no matter what happens, and if you do not need to use it for insurance purposes, you do not lose it.