Self Insuring

[ENT Doc]

There was a time when I could not afford the replacement cost of my wife's wedding ring.  Those days are behind me, yet I am paying the same insurance for its potential loss/damage.  Similarly, I drive a 14 year-old Honda.  It's probably worth $1,100 if I'm lucky.  I think I already know the answer, but should I stop paying for or remove the total replacement cost in these insurances?  When have others pulled the plug and on what kinds of insurance?

Happy new year!

[Miss Bonnie MD]

For the car, you can def cancel collision. And yes you got it, once you are comfortable self insuring you can cancel the respective insurances like life and disability. Life and disability you usually cancel once you reach FI.

[Hatton]

As you become financially independent you can start cancelling insurance.  I never bought any life since no kids.  I cancelled disability in my mid 40s.  My house is insured but no special riders and a high deductible.  The car is insured.  It is only a year old so I have more than collision.  You need an umbrella.  To get an umbrella you need a certain level of home and auto so that means you keep these.  I do not insure my phone, jewelry, etc.

[ENT Doc]

Cool. Fully planned on tapering down or cancelling my life and disability once FI is reached (likely a bit beyond for market fluctuation buffer), but the rest of the crap just seemed to be a needless fixed cost worth avoiding. On a somewhat related note, do malpractice insurers adjust their tail coverage pricing if you are in part time mode in your last years of practice?

[bean1970]

At this point only our umbrella is needed and minimums for the car to have it registered. I only have free life and disability from my employer now. Husband with nothing (also physician). We were military so never had our own disability or life policies, by the time we left military we were FI. Really high deductibles for house and car and just kept the minimums needed (which when you own your home, not the bank you can go really low on coverage, .....)  I don't insure anything else or buy extra warranties, etc....

[ENT Doc]

Being former dual military with (I assume) pensions certainly provides good safety! Nice!

[Hatton]

ENT Doc wrote:

On a somewhat related note, do malpractice insurers adjust their tail coverage pricing if you are in part time mode in your last years of practice?

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My malpractice carrier does not charge for tail coverage if you have been insured with them for 10 years.  This OB/GYN coverage.  If you go part-time the cost drops also.

[VagabondMD]

ENT Doc wrote:

Cool. Fully planned on tapering down or cancelling my life and disability once FI is reached (likely a bit beyond for market fluctuation buffer), but the rest of the crap just seemed to be a needless fixed cost worth avoiding. On a somewhat related note, do malpractice insurers adjust their tail coverage pricing if you are in part time mode in your last years of practice?

Click to expand...

This is something that I am also exploring, too. Even though I am working a total of 136 days in 2018, I am having some difficulty negotiating a part time rate med mal insurance rate. Full time is considered more than 24 hours per week, and if you add up all of the days/hours, I hover around the threshold.

Our med mal insurance policiy offer a free retirement tail if you have been covered for x many years, have a good history, reach a certain age, etc. I hope to take advantage of that benefit. What I do not know (but will find out) is what happens if I “retire” from my practice and, six months later, unretire and join another. Do they track me down and forced me to write a check for the tail?

As for the personal policies, I have been shedding them, too. Dropping last disability policy today (cost $3000/year) and last year cut back on life insurance, the latter now just a $500k policy that I will keep as long as I am working. I do maintain a $5M umbrella and comprehensive coverage on all cars. On my 2011 Prius, I could probably drop it, but it’s pretty inexpensive. Same with coverage on wife’s engagement ring and other jewelry. Perhaps when we are retired, I will drop these, also.

[Hatton]

Vagabond MD wrote:

ENT Doc wrote:

Cool. Fully planned on tapering down or cancelling my life and disability once FI is reached (likely a bit beyond for market fluctuation buffer), but the rest of the crap just seemed to be a needless fixed cost worth avoiding. On a somewhat related note, do malpractice insurers adjust their tail coverage pricing if you are in part time mode in your last years of practice?

Click to expand…

This is something that I am also exploring, too. Even though I am working a total of 136 days in 2018, I am having some difficulty negotiating a part time rate. Full time is considered more than 24 hours per week, and if you add up all of the days/hours, I hover around the threshold.

Our med mal insurance policiy offer a free retirement tail if you have been covered for x many years, have a good history, reach a certain age, etc. I hope to take advantage of that benefit. What I do not know (but will find out) is what happens if I “retire” from my practice and, six months later, unretire and join another. Do they track me down and forced me to write a check for the tail?

As for the personal policies, I have been shedding them, too. Dropping last disability policy today (cost $3000/year) and last year cut back on life insurance, the latter now just a $500k policy that I will keep as long as I am working. I do maintain a $5M umbrella and comprehensive coverage on all cars. On my 2011 Prius, I could probably drop it, but it’s pretty inexpensive. Same with coverage on wife’s engagement ring and other jewelry. Perhaps when we are retired, I will drop these, also.

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I think you need to ask those specific questions to your carrier.  I actually looked at a job with my hospital as a part-time Laborist/hospitalist after I had quit OB about 18 months prior.  I talked with them several times and no one asked for any money if I started back.  Another gyn only doc who had been doing just gyn for 20 years was asked to sign a statement that she would not practice again to get the tail covered. (she was 62).  OB premiums are much higher than GYN so I dont know how they figure this out.

[bean1970]

not sure if you were referring to my post. one pension, one military buy-back so i'll collect eventually, but yes....the pension in essence covers the ability to drop life/disability along with having no debts to pay. Having no mortgage allows to tweak home owner insurance (or drop it....many of my FI friends don't even have it..just buy another home..pay cash). Car without financing allows to tweak auto, drop certain coverages, etc...

[bean1970]

ENT Doc wrote:

Being former dual military with (I assume) pensions certainly provides good safety! Nice!

Click to expand...

I posted above..i can't figure out posting sometimes.....

[GXA]

The only life and disability policies I have are the relatively small ones provided by my insurer.  I typically cancel the collision on our cars once they are 3 or 4 years old.  Deductible for our home is $10,000.

Given our current income and financial situation, I am comfortable reducing insurance coverages and self-insuring.

[MPMD]

fairly obviously point but with cars when they get to the point that you could easily afford to replace them the replacement insurance on them drops to such a tiny expense it's fine to just pay it.

heck i just bought a 2011 4runner with 93k miles on it and my premium is <$100/mo.

[Dont_know_mind]

It is hard to justify keeping collision insurance for cars after 5 years. It just becomes bad value. I spoke to a broker and they said people with older cars are more likely to make a claim, so it is priced quite poorly compared to newer cars.

Property contents is also prone to fraud and also seems bad value relatively.

Death, total disability in your 40's is good value I think. Particularly, death is not prone to fraud and from what I remember, for $500-$1000 you can get 1m in coverage. Same might get you 10-20k in car or 50k property contents insurance in one year. Which doesn't seem to be good value.

I would consider pulling the death/total disability insurances when I am in my late 40's/ early 50's and price starts increasing exponentially. It seems like great value in your early 40's if you have any children. I had a work colleague who died suddenly from a brain aneurism bleed a few months ago. Luckily she had some death insurance for her kids. I have a 2m policy and have kept it even though it is not necessary now. Still I think if I died, 2m probably would come in handy. And for $1000/ year it seems like good value. I still have income protection and maybe I should pull that soon.

[Donnie]

I’m not FI, but I’m not sure I would cancel my life insurance after FI. Life insurance becomes a better value as you get older since you have a higher probability of death but are paying the same premium as when you are younger and have a lower death rate.

I would cancel other stuff like collision, which I already don’t have.