Get the right insurance without breaking the bank

 
By George Kamel
 
If you’re trying to build wealth, I’m going to take a wild guess and say you’d like to protect your wealth as well. That’s where our oft-forgotten friend insurance comes in. Dave Ramsey puts it like this: “Insurance doesn’t make you money. Insurance protects the things that make you money.” Basically, insurance is your safeguard against the things that could really set you back financially, like a car accident or a hospital stay.
As you may have noticed, insurance prices have skyrocketed over the past few years. According to a report by Insurify,“The average annual [home insurance] rate increased by 19.8% between 2021 and 2023, from $1,984 to $2,377.”1
And as of October 2024, car insurance premiums were up 14% year over year.2 Tack on the fact that health insurance premiums were 6–7% higher this year, and you might have shed a tear or three looking at what remains your bank account.3
But don’t worry. We’re going to dive into why insurance premiums are on the rise, what you can do about it, and how to get the right coverage at the best price.
Why Are Insurance Costs Rising?
You’re not alone if you feel like you’re getting screwed over by an insurance company you’ve been loyal to for years. Let’s zoom out for a second. When you get insurance, you’re transferring risk to the insurance company. If you file a claim that gets approved, you get a payout. The more claims an insurance company has to pay for, the higher the premiums (the amount you pay for your insurance policy) become. So, when America has an inflation issue and claims from 24 natural disasters in one year—as a real life example—insurance company costs go up.4 And as a result, home insurance premiums start to rise, and we all hold hands and cry.
Now let’s talk car insurance. Since the pandemic, cars have become way more expensive. Due to that and the fact that they have more features and technology than ever before, the cost to replace them has gone up, which causes premiums to be on the rise. For instance, in 2016 the average price of a new car was $34,000, and in 2023, that number rose to $47,000.5 Ouch!
In terms of health care, prescription drugs are getting more expensive, which is the fastest-growing reason why health insurance is going up.6 Inflation, the need for mental health care, and just a general increase in people with chronic conditions also affect the rise in health care insurance premiums.
 
What Can You Control?
Good news—you’re not doomed to be at the mercy of high premiums. Just because natural disasters are part of life and you can’t sweet talk inflation into going away doesn’t mean you can’t fight back. Here are some things you can actually control to positively affect your insurance rates.
  • Homeowners insurance: Where you live is something you can control. If you live in an area with more extreme weather (hello, flood zones) or in a place with a higher crime rate, you should expect higher premiums. Also, if you improve your security features at your house—like deadbolting your locks or adding an alarm system—you could qualify for some extra savings once it’s time to renew your policy.
  • Car insurance: Factors like your driving record, commute, payment history, the type of vehicle you have, plus any extra safety features in your car all contribute to your car insurance rate. But be warned: If you have a newer car with some fancy-pants tech, it’s going to be more expensive to insure. You’re quite literally in the driver’s seat here—if you want a cheaper rate, get a used (and less tech-savvy) car.
 
  • Health insurance: You can choose a high-deductible health plan. With this type of plan, you take on a little more risk by having a higher deductible (the amount you have to pay until the insurance kicks in), but that risk comes with a lower premium, which means you’ll be holding on to some extra money from month to month. As a bonus, some high-deductible health plans give you access to a Health Savings Account (HSA). An HSA is great because it’s triple-tax advantaged: You fund it with pre-tax money, that money grows tax-free, and you can make tax-free withdrawals for qualified medical expenses. Score!
And remember, when it comes to health care, it’s simple—you’ve got to do your best to stay healthy. Avoid tobacco like the plague. Avoid plagues like the plague.
  • All types of insurance: Health insurance isn’t the only insurance that offers high deductibles. Choose a higher deductible for home and auto insurance plans as well. You can also look into bundling some of your insurance policies to save even more. And listen, the most important thing you can control is where you get your insurance from. Don’t forget to shop around for the best rates and the right coverage with an independent insurance broker—not a captive agent who can only sell one company’s insurance. I was recently able to save a friend $1,000 a year by getting her to do this. She ended up with more coverage for less money, essentially giving herself a raise. Win-win-win.
 
 
How to Get the Right Coverage at the Right Price
After all this insurance talk, you might be wondering what insurance coverage you actually need in a world full of gimmicks. (Fantasy football insurance, I’m looking at you. Yep, that’s a real thing.) The ones you really can’t go without are auto insurance, health insurance, life insurance, homeowners or renters insurance, long-term disability insurance, and (once you turn 60) long-term care insurance. The best way to figure out what insurance you have, what you need, and what you can let go of is to use Ramsey Solutions’ Coverage Checkup tool.
After you see what coverage you need, go ahead and look at your current policy to understand what it does and doesn’t cover. Then, it’s time to go shopping. Again, I recommend working with an independent insurance broker who can get quotes from a variety of top-rated companies to find you the best deal. (P.S. We have a network of insurance pros who are trusted and vetted by the Ramsey team who can help you find the best coverage at the best price.)
If you’re 65 or older, don’t forget that you qualify for Medicare. I highly encourage you to talk with one of our recommended Medicare advisors from our friends at Chapter to sort out the best option for you or a loved one. If you qualify for Medicare’s open enrollment period, it’s about to end on December 7. So, if you’ve been procrastinating (but you’re reading this before December 7), there’s no better time than today to sign up for a new plan. (Just to clarify, this is the deadline for folks who already have Medicare to make changes to their existing plan or switch plans.)
Once you have the right coverage at the best rate, you have to budget for it. Bonus tip: You can usually get discounts if you pay for the whole year up front. That’s what I do! I just use the EveryDollar budgeting app to set up sinking funds to save a little each month. Then when the due date rolls around, I’ve got the annual payment ready to go.
The moral of the story is that you don’t have to freak out about insurance. At the end of the day, it’s just another part of life. Budget for it and be thankful for it, because getting the right coverage is one of the most important lines of defense you can have against whatever life throws at you in your wealth-building journey.
*  George Kamel is a national bestselling author of Breaking Free From Broke and a personal finance expert. Following Ramsey Solutions’ proven money plan, George went from negative net worth to a millionaire in under 10 years. Since 2013, he has served on the Ramsey team, speaking across the country, co-hosting top-ranked Ramsey Network podcasts, like Smart Money Happy Hour and The Ramsey Show. George has been featured on Fox News, Fox Business, and The Iced Coffee Hour, among other networks. On his YouTube channel, George educates and entertains, exposing the financial system designed to keep you broke. His goal is to help people spend less, save more, and avoid money traps so they can live a life with more margin, options and freedom. Follow George on TikTok, Instagram, Facebook, YouTube, and X, or online at georgekamel.com.