Being young comes at a premium price when it comes to auto insurance. Insurance companies view young people under 25 as a high risk for making claims. It’s not that they hate you. They have factual statistics to back it up. Teenage and college aged individuals are the most likely age group to get into an accident. Some of it is due to inexperience driving, making poor decisions, and reckless driving. But, this doesn’t mean that every college student is a bad driver. In fact, the vast majority of you are very responsible drivers. Here’s a look at five tips to help you get better rates on your car insurance premiums.

1. Choose a higher deductible. For collision and comprehensive coverage, choose $500 or $1000 for your deductible, but make sure that you stash enough cash away in an emergency fund to cover your deductible if you do get in an accident.




2. Choose a safe car to drive. You can’t get around the fact that an insurance company will give you high rates based on your age. But, you can control what type of car you drive. Typically, a 4-door sedan with high safety ratings will yield lower premium rates than a sports car or SUV. I know, the Honda Accord doesn’t get the chicks, but the money you’ll save on insurance premiums can go towards money for dates.




3. Skip on collision coverage. Most young people drive clunkers. I drove a 1987 reddish-pink Nissan Sentra for two years. It was worth about $1,000. A friend of mine drove a $2,000 Pontiac Firebird for a year. If you have a clunker, you probably don’t need to pay for collision. Any car with a book value of less than $3,000 warrants skipping out on collision. The amount you’d spend on the premium could be saved every month and pay for another clunker.




4. Get good grades. Most auto insurance companies will give you a 10% to 15% discount on your auto insurance premium for having good grades. A 3.0 GPA or higher is usually the standard for receiving the discount.




5. Buy another policy with the same carrier. Many insurance companies will give you a discount for having multiple policies with them. I recommend coupling your auto insurance with renter’s insurance. Most college students don’t buy renter’s insurance. It will protect your personal property in an apartment from theft, vandalism, fire, water damage, and many other perils that can destroy your stuff. The best part is that you can pick up a $20,000 policy for $10 to $15 dollars a month.

Search Online Insurance Quotes
The web makes it easy to shop around for coverage. Here are a few places you can get insurance quotes online so you can compare their rates right away:

Saving money is a learned habit. You’re not born with the gift of knowing how to save money. If you develop this habit throughout your college years, you will be very successful with your money. You will typically spend 10% to 15% of your monthly income on insurance premiums in your lifetime. It’s worth it to put the effort into saving money on your premiums.

Some of the earlier articles in this series cover the best checking account for college students, how you can make extra money in college, and the best student credit cards.

Stay tuned for tomorrow when we’ll cover saving money with student discounts.

These tips for saving money on auto insurance for college students is part of the College Student Money Guide.

Does open enrollment seem to sneak up on you every year?  Your human resources department sends out an email announcing the enrollment period and before you know you’re scrambling to make your selections on the last day before it closes. 

You’re going to be stuck with these choices for a whole year – why not take a little extra time to research your options ahead of time so you can understand your potential choices and make the best decision for you?  The Financial Planning Association sent me this guide to reviewing your benefit options before open enrollment.

Check Your 401(k) Holdings
Most companies allow more than one chance per year to adjust the holdings in your 401(k) retirement accounts, but generally, it’s a bad idea to be constantly changing your investment allocations. However, fall is a good time to see if your holdings still fit your age, your risk tolerance and the kind of retirement you want. Get some advice, and obviously, if you’re not a member of your employer’s 401(k) or 403(b) plan, try to join, particularly if your employer matches your contribution.

Review Your Health Plan Choices
During open enrollment, make sure you think about all the health issues you’ve experienced throughout the year. It could be a diagnosis of a chronic disease, the birth of a child, or the need to place a new spouse or partner on your coverage. A new spouse or child can usually be added with proper notice throughout the year, but open enrollment is a good time to review all current and future situations.

If you’re healthy– and make sure you confirm that you are – you might want to opt for a lower-premium plan that requires higher co-pays or deductibles and try to put more into your retirement savings. Just try not to go below any plan that limits lifetime benefits to $1 million – you’d be surprised how little time it takes to get there for an accident or serious illness.

Review Your Prescription Coverage
You need to look at your prescription needs and find the best insurance choice to cover them. While you may have a co-pay of $5 to $10 for generic drugs, will your plan pay for a brand-name drug that you really need, or will you get stuck with a co-pay of $50 or more? Make sure you understand the tier system within your pharmaceutical plan and pick the right one for you based on your expected needs.

Understand the FSA/HSA Maze
A flexible spending account (FSA) is an account some employers offer so workers can deposit funds on a pre-tax basis to pay their out-of-pocket health and dependent care costs. However, workers need to make a good estimate on the funds they’ll use by yearend because excess funds can’t be carried over.

Health Savings Accounts (HSAs) allow workers to save pre-tax dollars for health care costs without the “use it or lose it” restrictions in FSAs, though they require the enrollment in a qualified high-deductible health plan. These dollars often can be directed into different investment accounts and used on a tax-favored basis in retirement. In 2007, individuals can deposit up to $2,850 in their HSA, even if the minimum single person deductible of $1,100 is selected. Insured individuals with family coverage can deposit up to $5,650, even if the minimum family deductible of $2,200 is selected.

Check on Education Benefits
Tuition for college or professional seminars is extremely valuable because it can help you advance in your career. If your company offers to pay for coursework of any kind – even courses taken strictly for fun – don’t ignore that benefit. It might help you in your next job or a promotion with your current employer.

This column is produced in association with the Financial Planning Association (FPA), the leadership and advocacy organization connecting those who provide, support and benefit from professional financial planning.

Our insurance company sent us an advertisement listing several questions about life insurance. The spin was “don’t let unanswered questions keep you from getting the financial protection your family needs.” So I called them up to see how they answered the questions. My plan is to go back and do my own research on life insurance and see if what I find matches up with their answers.

1) Do I need a doctor’s physical before getting a life insurance policy?
Yes, some insurance companies will send someone to your home to perform the checkup at your convenience.

2) How do I know what amount of life insurance is right for me?
The insurance company looks at your assets, liabilities, and dependents and recommends how much insurance you need.

3) I’m young and healthy. Why should I buy life insurance?
The answer to this one was to plan ahead. Whether you qualify and how much you pay for life insurance depends on factors such as your health, age, occupation, and others. His argument was that 15–20 years from now you may find yourself in a much more expensive category or even uninsurable so you should lock in your insurance rates now.

4) I have a life insurance policy from my employer. Isn’t that enough?
He recommended against relying wholly on my employer for coverage. If a person wants coverage their company doesn’t offer, moves to a new job that doesn’t have the coverage they need, or wants to start their own company then having a separate life insurance policy would fill those gaps.

5) Wouldn’t I be better off investing the money I’d otherwise spend on insurance premiums?
He gave a pretty simple answer to this one. You could just put the money in the stock market but there is more risk using this approach. You could lose all your money in the stock market but the coverage provided by the life insurance policy is guaranteed.

6) Can children be named as beneficiaries of a life insurance policy?
Yes, but he stressed that it should be done through a will. The legal documents should appoint an executor to manage the money and a guardian to take care of the kids.

7) Why should I care if a company charges sales commission?
This one is pretty obvious but I asked it anyways because it was on the list. Sales commission will make your premiums higher. If you have a policy that builds value over time it will take longer to accumulate money

Should I buy life insurance on my children?
People do this for two reasons. The first is to help through a transitional stage in the horrible event you do lose a child. The second is to lock in life insurance at a low rate for your kids.

Of course the insurance agent ended by asking if I was ready to start the application process for a life insurance policy. I thanked him for his time and said I’d look into it. Now that I’ve heard the answers from the insurance company’s point of view my next step will be to go to an independent third party to research them farther. I’ll let you know what I find out. Do you disagree or find fault with any of their answers?

How much coverage does the travel insurance you purchased for your big summer trip actually offer? The Financial Planning Organization gives us a few things to consider when shopping for travel insurance.

Start at Least a Month in Advance
Most people make major trip reservations fairly far in advance to get the best fares, and you need to do the same for travel insurance. Book early and you’ll get the best coverage and rates. You’ll find that carriers are particularly picky about pre-existing conditions for medical or dental treatments, so read the fine print.

There’s No Such Thing as Full Coverage
Unless you’re willing to pay for it, that is. What’s full coverage? That’s a good question, and it sometimes depends on dozens of factors unique to your trip. Your carrier might not offer protection on your chosen airline or cruise line. You’ll find that terrorism insurance is rare and complicated. And you have to examine medical insurance options closely to understand exactly what is covered. The rare soup-to-nuts coverage – covering trip cancellations, lost luggage, delays that leave you stranded, flight accident, emergency medical and medical evacuations – is typically priced in the hundreds of dollars and may only cover up to 75 percent of the total cost of your trip.

Start Shopping Online
If you really want an eye-opening experience in buying travel coverage, go to some of the leading Web sites that deal in single or multiple-insurer offerings. InsureMyTrip.com is a market leader and a good first stop in analyzing coverage – you start by punching in the necessary information on your trip (dates, age of travelers, medical coverage needed, etc.) and it spits back more than a dozen possibilities at all price levels. Clicking on any of the choices will give you a detailed view of what those policies will and won’t cover.

Check With Your Credit Card Company
It’s time your credit card company earned its money. Call customer service and find out what kind of travel protection they offer automatically or by fee. You may end up saving money – or, if you travel often enough, you may want to go with a particular card company that provides better travel coverage. But even for cards that tout their travel benefits, it’s critical you investigate exactly what their insurance covers relative to where you want to go. Take the time to make them explain the coverage to you.

Call Your HR Department or Health Insurer
Your health benefits may not cross state or country lines. Before you take any trip, check to see if your employer’s or your own personal health coverage will be effective there. An emergency room visit can cost at least several hundred dollars and a short hospital stay can cost thousands more. You might be interested in travel insurance if you find your own domestic insurer won’t pay claims in certain parts of the country where you’re going.

Ask About Hurricane Coverage
The Atlantic hurricane season begins June 1 and runs through Nov. 30. Even if you don’t live in a hurricane area, severe hurricanes can disrupt flights all across the nation, which may lead to a delay of your trip here or abroad. Ask whether your travel insurance has hurricane coverage and what it entails.

If You’re Stuck, Never be Afraid to Ask for a Break
If you’re sidetracked as the result of a major disaster (weather-related or otherwise), always ask if your airline, hotel or other components of your vacation might be willing to give you a credit or discount on your bill. It’s rare, but some destinations might see it as a chance to build goodwill. Ask nicely — the worst they can do is say no.

This column is produced by the Financial Planning Association (FPA), the leadership and advocacy organization connecting those who provide, support and benefit from professional financial planning.