Enrolled Agent-licensed to practice before the IRS, Samuel N Smith, EA, South Carolina
In a former life I always anwered this question by reminding consumers you have four management areas if you effectively manage your financial affairs. The first area is the "cash" or the "readily available" funds with no surrender charges. The second area is the "insurance deductibles" questions. If I have a $1000 deductible on my auto insurance then that $100o best be in my checking or savings. The next area is the estate planning of my situation. The fourth area is "Retirement Planning. I always cringe when I have a client hand me a 1099R during tax season because most individuals do not understand the impact the withdrawal has on their tax consequences.
How much "deductible: should you have-the amount you can keep in your checking or immediately available savings account
Chief Executive Officer, Coastal Homeowners Insurance Solutions, Rocky Point, NY 11778
A good homeowners insurance deductible should balance your risk profile vs premium amount. I recommend to my clients to have the largest deductible possible because you are only going to put in a claim for a catastrophic event. If your screen door blows off you can fix that but if you have a major fire you would want to submit a claim. I usually use a formula of 5 years to justify increases. For example if the difference in premium between a $500 deductible and a $1000 is $125 then apply this formula. The increase in exposure to you is $500 (difference between $1000 ded and $500 ded.) multiply $125 x 5 and you get $625. So you will save $625 over 5 years if you do not put a claim in with an increase in exposure of $500 (if you submit only one claim.) Try and minimize small claims, keep your deductible as high as your risk profile will allow and save your insurance for catastrophic events like a hurricane or major house fire. Hope this helps.
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How much "deductible: should you have-the amount you can keep in your checking or immediately available savings account