The safer you drive, the less you pay for insurance.

This type of policy is offered by some of the biggest names in auto insurance, as well as smaller, lesser-known companies. Let’s take a look at some of the most widely available options.

What Is Usage-Based Car Insurance?

Usage-based car insurance, also referred to as UBI is a discount program or policy that rewards safe drivers with lower insurance rates. This can come in the form of lower premiums, higher discounts, payment credits, etc.

Usage-based car insurance systems typically use an app on your phone to monitor your driving and record information about the way you drive.

Learn more: Dive into the most recent car sales statistics for 2024, including insights on popular models and EV market shifts.

What Information Do Usage-Based Car Insurance Programs Gather?

The information that is gathered for UBIs is referred to as telematics. This can consist of:

• Driving speed
• Acceleration
• Braking
• Time
• GPS location

Several insurers also collect data on phone usage.

While privacy can be a concern with the data collected, insurance companies do not share this data beyond settling claims or compiling with requests from law enforcement. Think about it this way: if the insurance company released the data, their competitors could access it, and they’d lose their advantage.

Learn more: Discover effective saving strategies for teens with our guide on ‘How to Save for a Car as a Teenager‘.

Who Is It Best For?

UBI programs are often best for those who don’t usually qualify for rate discounts. This includes those who are very young, old, have bad credit, or have a poor driving history.

These programs can also benefit single drivers (no multi-driver discounts) and those who don’t drive much (less driving equals safe driving).

These programs are not well suited to bad drivers, i.e., those who speed, brake hard, etc. Additionally, these programs can be a poor choice for those who drive at night, drive a lot, drive during rush hour, or are technology-averse.

Learn more: Get a fast answer to what credit score is needed for buying a car in our straightforward article.

Best Usage-Based Car Insurance Policies

BEST FOR LOCKED-IN DISCOUNT

Liberty Mutual – RightTrack

Best For Locked-in Discount

The biggest advantage of the RightTrack program offered by Liberty Mutual is the locked-in discount. Once you complete your 90-day evaluation, the discount you earn is locked in.

You will retain your percentage-based discount for the life of your policy with Liberty Mutual. Even if you get a new car, the discount will remain. No re-evaluation is necessary.

Pros:

• Automatic enrollment discount
• Discount locked in for life

Cons:

• Bad drivers are penalized
• Varying terms in different states

Quick Facts
Evaluation period	90 days
Discount	10% – 30%
Minimum device requirements	Android 7.0, iOS 14.0
App store reviews	4.6 Goolge, 4.8 Apple

Liberty Mutual has some additional restrictions and guidelines for different states. This can affect several factors:

• Driving information collected
• Minimum discount amount
• When the discount is applied

Additionally, depending on which state you reside in, you may be forced to have all drivers on your policy sign up for RightTrack.

What Information Does RightTrack Gather?

Once you sign up for RightTrack, the mobile app will begin tracking your:

• Braking
• Acceleration
• Night-time driving

In certain states, additional data is gathered, such as:

• Rush hour driving
• Low-speed driving
• Distracted driving (phone usage)

This information makes up your RightTrack score. You can view this information on the app and update it as needed (i.e., change driver).

You receive a 10% discount when you enroll, and your driving is tracked for 90 days. After this, your RightTrack score will determine your new discount. This discount is locked in for life.

Visit RightTrack

BEST FOR IMPROVING YOUR DRIVING HABITS

Nationwide – SmartRide

Best For Improving Your Driving Habits

SmartRide by Nationwide is a program that continuously monitors your driving habits; as long as you have a policy, the app will monitor your driving.

The upside here is the incentive to improve your driving habits. You receive personal feedback on your driving and an estimated discount updated weekly. So, if you have a bad week, you have time to improve your discount.

Pros:

• Rewarded for improving your safe driving
• Personalized driving suggestions

Cons:

• All drivers have to enroll
• You are monitored forever

Quick Facts
Evaluation period	4 – 6 months (as quick as 80 days)
Discount	15% – 40%
Minimum device requirements	Android 6.0, iOS 12.0
App store reviews	4.5 Google, 4.6 Apple

The RightTrack dashboard will update weekly with your potential policy discount based on your driving. Your discount is applied at policy renewal.

What Information Does SmartRide Gather?

Once you enroll and receive your 15% discount, the Nationwide app begins tracking the following driving habits:

• Miles driven
• Hard braking
• Acceleration (in excess of 7.7 miles per second)
• Nighttime driving (midnight to 5 am)

The initial evaluation period can be as short as 80 days or up to 6 months, depending on how often you drive. This information is used to calculate your new discount.

Your driving habits are monitored for the life of your policy, and your discount can change each renewal period accordingly.

Visit SmartRide

BEST FOR NEW CUSTOMERS

Progressive – Snapshot

Best For New Customers

If you have insurance with another company and are looking to switch, Progressive Snapshot offers some unique incentives.

You can try out the insurance before you switch using the 30-day Road Test program. This can give you a preview of what kind of discount you might qualify for.

Plus, as a new Progressive customer, you’ll receive an automatic enrollment discount that applies until your next policy renewal period.

Pros:

• Enrollment discount
• Try before you buy

Cons:

• Penalized for bad driving
• Your driving is continuously evaluated

Quick Facts
Evaluation period	Your policy period (6 or 12 months)
Maximum discount	$94 – $231*
Minimum device requirements	Android 7.0, iOS 13.0
App store reviews	3.6 Google, 4.4 Apple

* discount range based on average savings at sign-up and average savings after 6 months

Using the Progressive app with Snapshot, you can track your driving stats, view your discount, and view customized safe driving recommendations.

What Information Does Snapshot Gather?

Upon enrolling for Snapshot, you have 45 days to begin using the app or plug-in device to track your driving data. Information gathered will include:

• Mileage
• Hard braking
• Acceleration
• Late-night driving (midnight – 4 am)
• Phone activity (certain states only)

Your driving habits are monitored for the life of your policy, and your discount can increase or decrease for every policy renewal period if your driving habits change.

Visit Snapshot

BEST FOR THOSE WITH BAD CREDIT

Root Car Insurance

Best For Those With Bad Credit

All of Root’s auto insurance policies are based on driving habits. All policyholders are tracked, and rates are customized to your driving.

This is especially useful for those with bad (or no) credit. Insurance companies often penalize you for poor credit if they insure you at all. Root weighs driving history more heavily and is even working towards dropping credit scores from their calculations soon.

Pros:

• Try before you buy
• Doesn’t look at credit

Cons:

• Won’t insure bad drivers
• Continuously monitors your driving

Quick Facts
Evaluation period	As little as 3 weeks
Discount	Average $900 in savings a year
Minimum device requirements	Android 5.0, iOS 14.0
App store reviews	3.4 Google, 4.7 Apple

Through the Root app, you get access to your driver scorecard that details your driving behavior and what steps you can take to improve it.

What Information Does Root Gather?

Once you sign up for Test Drive through Root, your initial 3+ week evaluation will begin. According to Root’s website, they will track information “such as braking, speed of turns, driving times, and route consistency.”

You’ll receive your customized rate quote at the end of your evaluation. Your driving habits will continue being monitored for the life of your policy, and rates will increase/decrease accordingly.

Note: If your driving habits fall below Root’s safe driver minimum standards at any time, you can be dropped from the insurance program.

Explore our top picks for usage-based car insurance plans and save money based on your driving habits. #CarInsurance #SmartDriving

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Visit Root

BEST FOR LOW-MILEAGE DRIVERS

State Farm – Drive Safe & Save

Best For Low-mileage Drivers

The Drive Safe & Save program by State Farm may be best suited to those who don’t drive a lot. This is thanks to the odometer read requirement and separate low-mileage discount.

Mileage driven is also critical to the Drive Safe and Save discount. So the less you drive, the better your chances of scoring the maximum discount, which can be 30% or more.

Pros:

• Mileage-based discounts
• Beacon doesn’t record your location

Cons:

• Can increase your current rate
• Requires a separate Bluetooth device

Quick Facts
Evaluation period	Policy period
Discount	10% – 30%*
Minimum device requirements	Android 8.0, iOS 15.0
App store reviews	4.1 Google, 4.6 Apple

* After a trial period discounts can decrease below 10%. 30% is the maximum discount in NY, but can be higher in other states.

Drive Safe and Save is also available through select connected cars, such as 2020 or newer Ford vehicles. The program was previously offered through Onstar, but enrollment has since been discontinued.

What Information Does Drive Safe & Save Gather?

Once you enroll for Drive Safe and Save, you will receive an enrollment discount, and your Bluetooth Beacon will be shipped. Once installed, the device will begin tracking your:

• Mileage
• Acceleration
• Hard braking
• Sharp turns
• Speed (exceeding the speed limit by 8+ mph)

The app will also track your phone usage to determine distracted driving.

Your driving habits will be tracked for the life of your policy, and your discount will increase/decrease according to the changes in your habits.

Note: If you already have the low-mileage discount and the program records annual mileage over 7,500, you may lose your low-mileage discount.

Visit Drive Safe & Save

BEST FOR GETTING THE BIGGEST DISCOUNT

Bonus Option: Credit Karma – Karma Drive

Best For Getting The Biggest Discount

If you are unsure which usage-based discount program is best for you, then Karma Drive might be able to help. This tool, offered by Credit Karma, tracks your driving behaviors and uses the data to shop discounts at all their partner providers.

There is no risk with using the tool (your current insurance will not go up), and you can quickly see which insurance company will give you the biggest discount.

Pros:

• Shop discounts at multiple companies
• Can’t raise your current rates

Cons:

• No discount guarantee
• Records location data

Quick Facts
Evaluation period	Varies
Discount	Varies
Minimum device requirements	Android 8.0, iOS 14.0
App store reviews	4.7 Google, 4.8 Apple

Using Karma Drive also gives you access to all of Credit Karma’s other services, such as credit monitoring, credit product matching, and educational resources.

What Information Does Karma Drive Gather?

Once you sign up through the app, your driving information will be recorded. Information used will depend on matched partners but can include:

• Mileage driven
• Times of day
• Average speed
• Typical routes
• Acceleration
• Braking

This information forms your safe driving score, which is shopped around to UBI programs. You’ll see a preview of your potential discount with each partner and can request a customized quote.

The evaluation period varies from driver to driver, and there is no need to keep using Karma Drive once you receive your personalized offers.

Visit Karma Drive

Comparing Usage-Based Car Insurance Companies

It’s not easy to select the best usage-based car insurance plan for your needs. To help with this, we compare factors such as maximum discount and program availability to highlight the differences between programs.

The post Best Usage-Based Car Insurance Policies appeared first on FinMasters.

What is Root Insurance?

Root Insurance is an InsurTech company that offers usage-based auto policies and a more modern customer experience than many established competitors. It was founded as a startup in 2015 by Alex Timm and Dan Manges, eventually going public in 2020.

Root capitalizes on the fact that most leading insurance companies fail to live up to modern customer expectations of convenience and personalization. It’s one of the first insurance providers to build an app that can facilitate the entire auto insurance customer journey.

The app’s most notable feature is a telematics-based test that assesses your driving habits. Your performance during the test is the primary determining factor in your policy premiums.

Traditionally, insurance providers have relied on demographic data to determine the cost of your coverage. These data include your age, gender, zip code, marital status, and credit score.

Unfortunately, demographics-based underwriting can cause you to overpay, especially if you’re a young driver. Root Insurance minimizes the impact of these factors. They’ve even promised to remove credit scores from the equation entirely by 2025.

Root’s test helps the company focus on the following instead:

• Braking habits
• Speed of turns
• Total miles driven
• Driving routes
• Phone usage
• Time of day on the road

If you drive well during your assessment, you may find that your insurance premiums are significantly lower with Root Insurance than with other providers for the same level of coverage.

Conversely, Root may not offer you any coverage if you perform poorly. The company refuses to insure high-risk drivers to keep its claim costs and customer premiums down.

Learn More: If you’d like to lower your insurance premiums, check out our favorite ways to reduce the cost of coverage: 8 Insurance Renewal Tips: How We Saved 20% on Insurance.

How Does Root Insurance Work?

To get a quote from Root Insurance, you have to download its mobile app, which is compatible with iPhones 6 and above and most Androids. You can download it via the App Store or Google Play.

Next, you’ll need to sign up for an account. Root asks for standard identifying information such as your name, email, address, and date of birth.

The next step in the process depends on where you live. In some states, Root Insurance will let you purchase an insurance policy immediately, even before you take its driving test.

In that case, you can have Root Insurance cover you while you take its test. Once you complete it, the company will tell you whether they can continue to insure you at the same rate, a lower one, or not at all.

If you live in a state that doesn’t qualify for the day one option, you’ll need to complete Root’s driving test before you can proceed any further. Once again, Root will assess your performance and offer you a quote or tell you that they can’t insure you.

You can initiate the test from the Root Insurance app with no additional equipment. It usually gathers data for a few weeks, though the duration can vary, depending on how much you drive.

Root Insurance claims that the app can tell when you’re the driver versus the passenger. This addresses a common complaint about usage-based insurance apps.

In addition, there’s no need to keep the app open during the test. It can simply run in the background, so you don’t have to worry about it distracting you.

During the test, you’ll receive a scorecard that rates your performance on a scale of 1 to 10 in various factors, helping you improve your driving habits in real time.

Is Root Insurance Legit?

Root Insurance is a legitimate insurance carrier. Its primary legal entity is admitted in Ohio, which means it holds a license from the state and is regulated by the Ohio Department of Insurance.

In addition, the company went public in 2020, and its shares are traded on the NASDAQ stock exchange. It’s also accredited by the Better Business Bureau (BBB) and receives an A+ rating from the platform.

However, the company isn’t as well-established as some of its older competitors. It’s never received a financial strength rating from AM Best or a customer satisfaction rating from J.D. Power.

Root Insurance Pros

Let’s explore the most significant reasons to consider using Root Insurance.

Potentially Lower Premiums

Root Insurance’s primary selling point is it can get drivers with low-risk habits the same or better coverage for less. Since the average annual cost of full coverage auto insurance is $2,014, reducing your premiums can mean significant savings.

Root Insurance advertises that you could save up to $900 per year by switching to one of its policies, though it doesn’t explain where that number comes from on its site.

Modern Customer Experience

Insurance is an old-fashioned industry that’s been taking its time to join the 21st century. In 2021, 62% of insurers reported that most new policies are completed via phone calls or in person.

InsurTech companies like Root Insurance are attempting to disrupt the industry by offering consumers a more modern, Amazon-like experience. Through the Root mobile app, you can purchase a policy, complete your driving test, and file a claim instantly without having to deal with an agent.

Free Roadside Assistance

Root Insurance includes free roadside assistance with its policies. It covers a wide range of emergency services, including:

• Towing
• Jump starts
• Fuel delivery
• Spare-tire installation
• Lockout service
• Winching

The benefit covers up to three $100 incidents per vehicle every six months. You can make a request for Root assistance through the app or use another provider and email your receipts to Root for reimbursement.

Opportunity to Improve Driving Habits

Root Insurance’s driving test assesses your risk levels primarily to help the provider determine whether you qualify for coverage. However, it’s also an opportunity to receive an objective assessment of your skills, which many adults haven’t had since getting their licenses.

Even if you don’t qualify for a Root Insurance policy, taking the test can help you identify ways you can improve. If you take the advice to heart, you can lower your risk of accidents in the future.

Root Insurance Cons

Root Insurance has its advantages, but it’s not perfect. Here are the most significant reasons to avoid using it.

Savings Not Guaranteed

Consumers that drive safely or infrequently may qualify for lower premiums with Root Insurance than they would at other providers, especially if their demographics make them high-risk. However, that’s far from guaranteed, and you may take their multi-week driving test only to get an inflated quote or an outright rejection.

Even perfect test scores don’t guarantee you a favorable quote from the carrier. Root Insurance makes driving habits the most important factor in its underwriting, but demographics, credit scores, and vehicle type still play a significant role. They have enough weight to stop you from qualifying for coverage.

Location Limitations

Root Insurance policies aren’t available everywhere. It’s a relatively new insurance company and can’t provide coverage yet in certain states. It claims to be expanding into the rest of them as quickly as possible but that the differing regulations make some states take longer than others.

As of the time of writing, Root auto policies are available in all but the following 16 locations: Alaska, Washington, Idaho, Wyoming, South Dakota, Minnesota, Michigan, North Carolina, New York, New Jersey, Washington D.C, Rhode Island, Massachusetts, New Hampshire, Maine, and Vermont.

Privacy Concerns

Fighting to preserve your privacy may feel like a lost cause these days, but it’s still worth noting that signing up for Root wouldn’t help. The company requires that you give up your precise location and telemetrics data for weeks at a time.

Root claims it won’t sell your personally identifiable data but also states: “At our discretion, telematics can be utilized in the maintenance of your policy, investigation of a claim, or for any other lawful purposes.”

In addition: “The persons or organizations with whom we may share your information may include, among others: Other business partners and/or financial institutions with whom we have a joint marketing agreement.”

It might be a pointless hill to die on, but I chose not to share my telemetrics data with my insurer when it offered me a similar deal.

Root Insurance Reviews

Here are Root Insurance’s ratings across some popular review sites:

• Better Business Bureau: 1.22 of 5 stars (235 reviews)
• Trustpilot: 4.2 of 5 stars (646 reviews)
• Google Play: 3.4 of 5 stars (36.5K reviews)
• App Store: 4.7 of 5 stars (64.4K reviews)

The discrepancy between some of the scores isn’t abnormal. Companies have incentives to manipulate the reviews, and each site has different standards for accepting or rejecting submissions.

For example, Trustpilot admits that Root may be using unfair invitation methods to artificially inflate its score on the site. Meanwhile, the BBB is much stricter about protecting the integrity of its ratings, but primarily accepts complaints.

Fortunately, the compliments and condemnations were fairly consistent across sites anyway.

Generally, people were most likely to rate their Root Insurance experiences highly because the company saved them money. Many report that Root’s emphasis on driving skills in underwriting helped them qualify for lower premiums.

Happy customers also consistently praise the convenience of the app, noting how easy it is to manage everything digitally. However, the ratings are significantly higher on the App Store than the Google Play store, so it’s possible that Root works better on iPhones than on Androids.

Meanwhile, the criticisms are usually about the company’s premiums unexpectedly increasing. Root may be luring in customers with low rates and increasing the prices upon renewal faster than it should.

However, many of these complaints seem to be from customers who don’t understand how much factors other than their driving habits affect their premiums, including inflation and extreme weather events, which have both been increasingly rampant in recent years.

The other primary issue seems to be that customers believe the company is unfairly avoiding claim payouts. Unfortunately, that’s the most common complaint people make about insurers in general.

Root Insurance Alternatives

Root Insurance’s claim to fame is that it can help you get a lower policy premium for safe driving habits. However, telemetrics-based tests are increasingly becoming an industry standard. Many top insurers offer a similar feature, including Progressive, Nationwide, Geico, and Statefarm.

However, these providers don’t emphasize driving habits in their underwriting as much as Root, so you may or may not save as much. In addition, you should use caution when taking these tests with your current provider, as some can cause your premiums to increase.

If you’re primarily interested in Root Insurance for its Amazon-like customer experience rather than its good-driver savings, you may want to consider Lemonade. It’s another InsurTech company attempting to disrupt the industry using advanced digital technology.

Learn More: Karma Drive is a telematics-based driving test created by Credit Karma. Find out if it’s worth taking: Karma Drive Review: When Is It Worth Using?

Is Root Insurance Worth It?

You’re most likely to receive a favorable quote from Root Insurance if you drive safely and infrequently, especially if you currently pay inflated premiums due to demographic factors such as age or gender.

In that case, it may be worth taking Root’s driving test, as long as you’re not worried about privacy issues. However, you should also shop around with a few other providers to ensure you get the best possible terms.

The post Root Insurance Review: Is It Worth Using? (2024) appeared first on FinMasters.

If you’re one of those drivers, you’re in the right place. Let’s look at some ways to save money on car insurance.

What Affects the Cost of Car Insurance?

Car insurance costs can vary widely. These are the factors that most insurers will use to calculate the cost of your policy.

• The amount of coverage
• Location
• Age
• Driving record
• Credit history
• Gender
• Marital status
• The vehicle being insured

Location is a major factor. The average cost of full annual coverage in California is $2,291 per year, for example, but the same coverage in Maine might be somewhere around $941 annually.

You probably won’t change states to save money on car insurance, but there are plenty of things you can do.

 Learn more: Wondering about Karma Drive or Root Insurance? Our reviews provide insights to help you choose the right one.

14 Ways to Save Money on Car Insurance

Even though you have no control over some of the factors that influence the premiums you pay, such as your age, gender, and marital status, you can do plenty of good work by focusing on the factors you do control.

1. Update Your Policy

Some of the factors that influence your premiums, such as your age, are beyond your control. Other factors may be managed simply by updating the information in your policy. For example, Additionally, if you have a teen son or daughter who is on your policy, your premiums will rise.

However, teenagers grow up eventually. But if you don’t update your policy information regularly, you will still pay for your teen drivers even though they are in their 20s now, living in different cities, and carrying car insurance policies of their own.

To make sure that you aren’t paying more than you have to, you need to update your policy, especially when you go through any large transitions in your life.

 Learn more: Find out how much car insurance typically costs for a 17-year-old with our detailed analysis.

2. Increase Your Deductible

A deductible is the amount you have to pay from your own money to cover a claim. For instance, if you have a deductible of $500 and the insurance claim is $3,000, then your insurance company is on the hook for $2,500. You cover the rest.

You can save money on car insurance if you are willing to increase your deductible. The decrease in insurance premiums differs from company to company, but it can be substantial.

If you plan to save money on car insurance by increasing your deductible, be sure that you have an adequate emergency fund. You will need it if you ever need to make a claim!

3. Change Your Coverage

Insurance companies offer different types of coverage, including the following:

• Liability insurance covers you in case of personal injuries or property damage from an accident that was your fault.
• Uninsured motorist coverage, which covers you in case a driver with no auto insurance hits you.
• Full coverage car insurance contains both comprehensive coverage and collision protection. Comprehensive insurance protects your car from any damage that is not accident-related, such as hitting a deer or getting vandalized. Collision insurance protects you if you crash into any object, such as a tree or wall.

79% of car drivers in the US opt for comprehensive coverage, and three-quarters buy collision coverage^[1].

You need to meet your state’s minimum requirements, which are usually liability insurance and uninsured motorist coverage. If you are still paying off a car loan, your lender will require full coverage to protect its interest in your vehicle.

Beyond those minimum requirements, the choice of how much coverage to purchase is up to you.

It is a good idea to avoid paying for coverage you don’t need. For example, if you have an old car that isn’t worth much, buying full coverage might not make fiscal sense.

4. Review the Assets Being Protected

If you own more than one car, you can bundle your policies, insure all those vehicles with the same insurance company, and lower your overall costs. The reason is that insurance companies are happy to offer you discounts if you carry multiple policies with them. Think of it as a way to get more of your business.

Combining policies can save you anywhere from 10-25%. What’s more, these bundled policies don’t all need to be car insurance. You can bundle home and car insurance together. If you own a boat, you can add that to the mix.

In addition to offering you savings, bundling policies can make your life more convenient. You can manage different insurance policies all from the same website.

5. Change How You Pay Your Premiums

Most drivers pay their insurance premiums every month. If you pay the entire annual lump sum upfront, your insurance company may be open to lowering your premiums. You could pay for six months in advance, and you should still save money on car insurance.

You might also get a discount if you agree to set up automatic payments. Not only are you choosing the paperless route, but you are also telling the insurance company that you are less likely to miss a payment.

6. Ask About Discounts

Almost every insurance company offers discounts. You may not get them if you don’t ask.

And just so you know what to expect, here are some of the main reasons you might get a discount:

• You are a member of a certain group, such as the AAA.
• You work as a teacher, a nurse, or any other profession that is granted discounts
• You have served in the military.
• You are a senior citizen.
• You have stayed with the same insurance company for some time.

There are many more reasons an insurance company might give you a discount, and the good news is that you can stack the different discounts, one on top of the other, helping you shave loads off of your premium.

If you have other family members on your policy, such as a son or daughter, there are some discounts you should look into:

• Good student discounts. If your teen has good grades at school, your insurance company may offer you a discount.
• Distant student discounts reduce your premiums if your son or daughter is away at a school more than 100 miles away from where you live, as their car isn’t driven by someone else.

You may be able to get an employer-based discount, a special rate employers obtain for their staff through an agreement with an insurance company. You will only get an employer-based discount if you remain with the employer who got you that special rate. If you leave that job or are fired, you will lose that discount.

7. Drive Safely

The simplest thing to do to lower your insurance cost is to drive safely. The fewer accidents you have on your record, the lower the premium you will have to pay. Any form of driver negligence, such as speeding tickets, DUIs, and other traffic violations, will increase your premiums.

Learn more: Uncover the sobering car accident statistics and learn about the annual toll on our roads in our latest analysis.

8. Take Driving Courses

In the pursuit of being a safer driver, you might want to explore taking a defensive driving course. This will help in two ways. First, the course can lower the number of violation points on your license. Second, insurance companies may be willing to lower your premiums once they see you’ve finished the course and earned a certificate.

There are two caveats worth mentioning here:

• You should only sign up for accredited courses. Otherwise, you might end up wasting your money and time. Every state sets its own rules regarding accreditation.
• Before signing up for the course, be sure that your insurance savings exceed the course costs. Ask your insurance agent about how much of a discount you can expect after completing the course.

Even if you have a spotless driving record, taking a defensive driving course could still help you save money on car insurance.

9. Drive Less

How much you drive every year can affect your insurance premiums. The rationale here is that more miles on your odometer translates to higher chances of you getting into an accident.

Ready to cut costs? Learn how to save money on #car-insurance in our new guide. #BudgetFriendly

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If you can lower the amount you drive each year, you can save on your premiums. Better yet, you want your insurance company to see you as a low-mileage driver, which would usually require you to drive less than 7,500 miles every year. What qualifies as a low-mileage driver can vary by state, age, and gender.

To reduce your annual mileage, you can take the public transit system or carpool when possible.

10. Try Usage-Based or Pay-Per-Mile Insurance

If you are a very safe driver, it’s worth considering usage-based insurance. This is when the insurance company tracks your driving through your phone and charges you according to your driving habits. These programs typically track data like:

• Miles driven
• Acceleration
• Braking
• Speed
• Nighttime driving

If you meet company criteria you can save money on car insurance.

You can also try pay-per-mile insurance. You will pay a base rate along with a per-mile rate. If you drive a low number of miles you can save money on car insurance.

Not all insurance companies offer this type of insurance, so you might have to switch companies if you feel this is the right choice for you.

11. Buy an Insurance-Friendly Vehicle

Some vehicles are cheaper to insure than others, and this is even more so if you are purchasing collision and comprehensive coverage.

You may not want to switch vehicles, but if you’re shopping for a car or considering replacing an existing vehicle you can save money on car insurance by selecting a car that’s cheap to insure.

There’s no universal rule for what cars are cheapest to insure, and the cheapest vehicles may vary from state to state. Insurers consider repair costs and rates of accidents and theft in a given area before setting rates.

It’s worth taking the time to look into what vehicles are cheapest to insure both nationally and in your area before choosing a car.

12. Install Anti-theft Devices

Another way to make your vehicle more safe is to put in an anti-theft device. For example, GEICO can reduce your premium by up to 23% if you install an anti-theft device^[2].

Ask your insurance company which devices will entitle you to a reduction in premiums. You’ll need to decide for yourself whether these savings are worth the cost and hassle of installing the device.

13. Improve Your Credit Score

Your credit score can play a huge role in lowering your premiums. In some cases, it could have a larger impact on your premiums than your driving record.

There are some states where your credit score has no effect on your premiums because these states prohibit insurers from using your score to decide your rates. These states are California, Hawaii, Massachusetts, and Michigan.

In any other state, a better credit score can help you save money on care insurance, along with many other benefits!

14. Shop Around

You may have tried to lower your premiums with your current insurer but gotten nowhere. You may be unhappy with your coverage in general. You may be able to save money on car insurance by shopping around and opting for a cheaper insurance company.

Even though they all use the same inputs, different insurance companies use different models to calculate your premiums. For instance, one company might weigh your age more heavily than another, so if you are young, the first company would charge you more than the latter.

A company that might be cheaper for you might also be more expensive for someone else. This is why you need to actually request quotes and compare them side-by-side. Online research isn’t going to cut it.

When conducting quote comparisons, you should always compare apples to apples. In other words, make sure that you are requesting the exact same coverage from each insurance company and that all the other details, including your deductibles and payment schedule, are identical.

As you compare quotes, don’t forget to consider factors other than cost. For example, does the insurance company have an app that you can access? How good is its customer service? How quickly do they pay their claims?

Putting It All Together…

To lower your car insurance costs, you have one of two options: Get a better rate from your current insurer, or switch insurers. If you want to stay with your current insurer, then the best way to obtain a better rate is by changing your policy, improving your driving record, replacing the vehicle you are insuring, and boosting your credit score.

Whatever you do, be sure that you are covered at all times. Insurance companies hate seeing gaps in your insurance records. The longer your insurance record is, the better the rate you can expect from an insurer.

Trying to save money on car insurance is much like saving money on anything else. Understand what you’re buying, understand how it’s priced, shop around, and don’t be afraid to ask for a better deal!

The post How to Save Money on Car Insurance appeared first on FinMasters.

Let’s take a closer look at why claims get denied and what you can do about it, including two health insurance appeal letter templates.

What Is a Health Insurance Appeal Letter?

When your health insurance company receives a claim from your doctor or a healthcare facility, it will review that claim. The insurer may approve the claim and make a payment. They may also deny the claim.

If the insurer refuses to authorize payment for treatment, you’ll usually get a denial notice or explanation of benefits explaining that the claim was denied and that you’re required to pay the medical bill yourself.

This decision from your insurer isn’t final. You can use a health insurance appeal letter to ask the insurer to reconsider. Depending on the reasons for the denial and your appeal, the insurer may change its decision and cover your bill.

Learn more: Our recent post delves into the statistics of how many Americans lack health insurance and the factors behind this issue.

Why Claims Are Denied

Claims can be denied for many different reasons. One of the first things to do before submitting an appeal to your insurer is to make sure you understand why your claim was denied. It’s important to understand why your claim was denied before preparing your health insurance appeal letter.

Common reasons for denial include:

Timely Filing

One of the simplest reasons your insurer might deny a claim is that your healthcare provider was slow about filing the paperwork. For most insurers, the deadline varies from 90 days to a year from the date service was provided, but some have shorter deadlines.

Learn more: Explore our expert picks for the best healthcare stocks & ETFs to consider for your investment portfolio.

Non-Covered Services

Not every insurance plan covers every type of medical care or every medical service. Under the Affordable Care Act, certain essential health benefits must be included in your plan, but some things can be excluded.

Some plans also sidestep ACA rules, so you might find unexpected exclusions. For example, your plan may not cover prescriptions or mental health care.

Learn more: Explore your options with our guide to the best health insurance for the self-employed in 2024.

Lack of Pre-Authorization

Some insurance plans require that you work with a primary care provider before seeking help from a specialist. There are also plans that make you get certain services pre-authorized.

Bundled Services

Healthcare, especially when you have an issue serious enough to lead to an ER visit or hospital stay, can be incredibly complicated. Many services and tests are closely intertwined, so insurers may see them as effectively bundled together.

Data Discrepancies or Paperwork Errors

Simple paperwork problems or data discrepancies can also be a source of denials. If your doctor submits a claim to your insurance company and lists your name as “Jim Smith” when your name is really “James Smith,” that could lead to a denial.

Entering the wrong codes for treatments or entering incorrect treatments or tests by accident could also lead to denials.

Network Issues

Depending on your insurance plan, you may have to visit specific in-network health providers. Out-of-network providers won’t be covered. If you get care at an out-of-network facility, expect to see your claim denied.

Learn more: Learn how to secure health insurance while self-employed with our practical guide, designed to navigate you through the process.

Levels of Appeal

If your insurer denies your claim, you shouldn’t panic yet. It can be scary to suddenly owe a large amount of money, but you still have the chance to appeal the decision.

Insurers are required by law to offer two levels of appeal: internal and external. You will have to initiate both appeal processes with a health insurance appeal letter.

Internal Appeal

The first level of appeal is an internal appeal. This is a request to your insurance company to look at your claim again and conduct a “full and fair review” of the decision. In urgent situations, the insurance company must expedite the review for you.

When filing the appeal, you must write a health insurance appeal letter. It must include your name, claim number, and insurance ID number. You can also provide supporting evidence, such as a letter from your doctor explaining why you believe the treatment should be covered.

If you need help filing, you can work with a Consumer Assistance Program in your state.

You have 180 days from the time you receive notice of claim denial to file your health insurance appeal letter. Once you file, your insurer must complete the appeal within 30 days if you haven’t received the service yet or 60 days if you’ve already received the service.

External Review

Requesting an external review lets you take the decision out of your insurance company’s hands and ask a third party to review your claim. You must file your health insurance appeal letter for an external review within four months of receiving a final determination that your claim was denied. You can also work with your doctor or another representative to have them file the request on your behalf.

The external review process will vary with your state of residence. In some cases, the federal government’s Department of Health and Human Services or an independent review organization will oversee the process. Some states have a process that goes beyond the minimums of federal consumer protection standards and will manage the process.

External reviews are more limited in scope than internal appeals. You can only request an external review for:

• Denials involving a medical judgment where you or your provider disagree with your insurer
• A denial that involves a determination that a provided or requested treatment is experimental or investigational
• Cancellation of coverage based on your insurer’s claim that you provided false or incomplete information when you applied for coverage

Standard external reviews take no more than 45 days, while expedited external reviews take a maximum of 72 hours or less, depending on the medical urgency of your case.

In most cases, external reviews are free, though insurers that have contracted with an independent review organization or using a state’s review process may charge a maximum of $25 for processing the review.

Learn more: Learn how to negotiate a medical bill effectively with our step-by-step guide to reduce your healthcare expenses.

Letter Templates

If you need to appeal a health insurance denial, you can use one of these health insurance appeal letter templates to help you get started. Consider sending the letter using certified mail to ensure that you can confirm that it has been received.

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Health Insurance Appeal Letter Template 1: Internal Review

Health Insurance Appeal Letter Template 2: External Review

Work With Your Provider

Dealing with a health insurance denial can be difficult, especially if they’re denying coverage for treatment that your doctor believes is necessary. Don’t be afraid to ask your doctor for help in communicating with your insurance company. A letter from your physician explaining why the care is essential could help your case.

In the worst case, if your insurer still refuses to approve your claim, you should reach out to the provider’s billing department to negotiate. Many healthcare providers are able to significantly reduce your bill or help set up payment plans if you’re having trouble paying for your care.

The post The Health Insurance Appeal Letter: Overcoming Coverage Denials appeared first on FinMasters.

If you drive less than 10,000 miles a year, you can potentially save money using pay-per-mile car insurance. These policies let you pay premiums based on the mileage you drive.

Let’s take a look at some of the top pay-per-mile insurance options.

Pay-Per-Mile Car Insurance Providers

In this article, we’ll look at four pay-per-mile car insurance providers. All of these companies have policies that charge you based on the number of miles you drive.

1. Allstate Milewise – Best for Safe Drivers
2. Metromile – Best for City Drivers
3. Nationwide SmartMiles – Best for Program Availability
4. Mile Auto – Best for Data Privacy

These pay-per-mile car insurance programs have minor differences in how and when mileage is charged. There are also differences in what information is tracked and what features are offered.

We’ll highlight these differences as we explore each of these insurers.

Learn more: Wondering about Karma Drive or Root Insurance? Our reviews provide insights to help you choose the right one.

BEST FOR SAFE DRIVERS

Allstate Milewise

Allstate offers a pay-per-mile insurance plan with discounted rates that can be further discounted if you are a safe driver. In 10 states, information on your driving habits, such as acceleration and braking, will be calculated into your personalized daily and mileage rates. The safer your driving habits, the lower your rates.

Even in states where this driving data can’t be used to determine your rates, you can still earn Allstate safe driver reward points redeemable for gift cards, retail items, sweepstakes entries, and more.

Maximum daily miles charged	250 (150 in OR, IL, IN, OH & NJ)
Equipment needed	App & plug-in device
Additional discounts	Allstate rewards and rate discounts for safe driving
Program availability	20 states

Milewise FAQs

What Information Does Mileswise Track?

In addition to miles driven, Allstate tracks the following data

• Speed
• Time
• Location
• Events

Depending on the state in which you reside, this information can be used in your daily rate and mile rate calculations (AZ, FL, MA, MN, MO, OK, PA, SC, TX, WI).

How is Milewise Charged?

A Milewise policy is charged daily and consists of your daily rate plus your mileage rate.

For example, Allstate offers sample rates of $1.50/day and $0.06/mile. If you drove 16.7 miles a day, you would be charged approximately $2.50/day ($1.50 daily rate + $0.06 x 16.7). This totals $75/month if you drive the same amount daily.

When Do You Pay?

When you open a Milewise policy, you prepay a set amount to your account. Your base rate and mileage are deducted from your account funds daily. You can reload your account as needed or set up auto-reload.

Visit Allstate Milewise

BEST FOR CITY DRIVERS

Metromile

Metromile is the smallest insurer on our list, currently offering pay-per-mile insurance in only 8 states. As their name suggests, they can be a good fit for those living in major metropolitan areas.

There are 4 main reasons for this.

1. You can track your car if it is ever lost or stolen
2. Driving habits, which can be negatively influenced by rush-hour traffic, are not tracked in CA, NJ, or WA
3. Metromile provides free street-sweeping alerts to help you avoid being ticketed
4. Try before you switch to Ride Along

Maximum daily miles charged	250 (150 in NJ)
Equipment needed	Device only
Additional discounts	Multi-car, safe driving
Program availability	AZ, CA, IL, NJ, OR, PA, VA, & WA

Metromile FAQs

What Information Does Metromile Track?

In addition to mileage, Metromile’s plug-in device tracks

• Average speed
• Time of day
• Day of week
• Trip duration

This information cannot affect your rates in California, New Jersey, or Washington.

How is Metromile Charged?

This insurance policy is charged in two parts: your base rate and mileage.

On its website, Metromile features a real customer base rate of $29/month and a mileage rate of $0.06. If you drove 500 miles in one month, your final total would be $59 ($29 + $0.06 x 500).

When Do You Pay?

Metromile policies are charged monthly. Each month, you’ll pay that month’s base rate plus your total mileage for the previous month.

Visit Metromile

BEST FOR NATIONWIDE AVAILABILITY

Nationwide SmartMiles

The biggest downside to pay-per-mile insurance programs is that they are often only available in a limited number of states. This is where SmartMiles excels, as the program is offered across 44 states, including California.

You can also mix and match your insurance, having traditional policies on some vehicles and pay-per-mile policies on others. This can be great if there is a significant usage discrepancy between the vehicles in your household.

Maximum daily miles charged	250
Equipment needed	Plug-in device or connected car
Additional discounts	Safe driving
Program availability	44 states

SmartMiles FAQs

What Information Does SmartMiles Track?

In addition to mileage, SmartMiles tracks the following information

• Hard braking
• Acceleration (above 7.7 miles per second)
• Nighttime driving (midnight to 5 AM)

How this information can be used varies based on state. For example, California only allows mileage to be used in rate calculations.

How is SmartMiles Charged?

This insurance is charged in two parts: your monthly base rate and your rate per mile driven.

Nationwide’s website offers a real-world example of a $60/month base rate and a $0.07 mileage rate. If you drove 500 miles in one month, your total charge would be $95 ($60 base rate + $0.07 x 500).

When do you pay?

Your SmartMiles policy is paid on a monthly basis. Each month, you’ll pay your base rate premium plus the total mileage charge from the previous month.

Looking to save on #car-insurance? Explore our top picks for #pay-per-mile car insurance plans.

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Visit Nationwide SmartMiles

BEST FOR THOSE CONCERNED WITH PRIVACY

Mile Auto

Your data can be very personal, and you may want to keep your insurance company from knowing where you go every day. If this is the case, Mile Auto may be a good pay-per-mile insurance fit.

Mile Auto does not require using an app or installing a device in your car. Instead, they simply ask you to snap a picture of your odometer each month and send it in. That is all they need to track your mileage.

Maximum daily miles charged	Not capped
Equipment needed	Smartphone camera
Additional discounts	none
Program availability	AZ, CA, FL, GA, IL, OH, OR, PA, TN, TX, & WI

Mile Auto FAQs

What Information Does Mile Auto Track?

Your mileage, that’s it.

How is Mile Auto Charged?

A Mile Auto policy comes with a base rate month charge plus a mileage rate.

On its website, Mile Auto presents a $48 base rate and $0.08 mileage rate as an example. If you were to drive 500 miles a month at this rate, you would pay $88 ($60 base rate + $0.08 x 500).

When Do You Pay?

Mile Auto is not very transparent with when/how payments are made. After repeated attempts to contact them, we were able to verify that they do, in fact, charge a deposit, and policies are paid monthly.

Visit Mile Auto

Comparing Pay-Per-Mile Car Insurance Companies

These pay-per-mile insurance policies have many similarities, but there are some key differences. Below, we compare them using the 4 points we think are make or break in choosing a pay-per-mile insurance provider.

Learn more: Find out how much car insurance typically costs for a 17-year-old with our detailed analysis.

Pay-Per-Mile Car Insurance Alternatives

Remote workers, retirees, city dwellers, students, etc., who don’t drive very much, can benefit from pay-per-mile programs, but they aren’t the only way to save money on your insurance. Here are some other solutions.

1. Check your current provider for a low-mileage discount.
2. Look at usage-based car insurance – mileage is one of the metrics these programs look at.
3. Explore pay-as-you-go plans. Insurers like Hugo let you turn your coverage on/off and purchase as little as 3 days at a time.
4. Sell your car. If you seldom drive, it may be cheaper to sell your vehicle and rent or borrow one as needed.

And remember, your insurance choice is not permanent. If you don’t like your policy or your driving needs change, you can always switch insurance providers later.

The post Best Pay-Per-Mile Car Insurance appeared first on FinMasters.

Buying car insurance for a 17-year-old isn’t cheap, but there are a few ways you can make it cheaper. Let’s look at some options.

The Price of Car Insurance for a 17-Year-Old

According to online insurance company Clover, the average car insurance policy for a 17-year-old driver costs $5,900 per year. That’s a massive amount of money, especially for someone who is still in high school and may not have a job^[1].

Car insurance prices can vary significantly depending on many factors, such as where you live. In some areas, insurance will be cheaper, as little as $1,400 per year. In others, teens could pay as much as $10,500 per year to buy coverage.

Boys also tend to pay more than girls, with the average premium for a 17-year-old male reaching $6,300 compared to $5,500 for a 17-year-old female.

Average Insurance Prices by Age

The good news for 17-year-olds is that their insurance won’t remain expensive forever. As you gain more experience, your car insurance tends to become cheaper. In fact, 16-year-olds have to pay $7,200 per year on average for coverage, so just one year of experience has already cut your premium by $1,000.

That trend of big price decreases continues each year until you turn 20 or so. Prices continue to fall slightly until you turn about 60 years old, at which point they start to rise again.

According to data from car site Motor1, the average price of car insurance by age is^[2]:

What Is Car Insurance For a 17-Year-Old So Expensive?

Insurers use complex mathematical and predictive models to figure out what to charge for insurance policies. Their goal is to charge an amount that, on average, will leave them with some profit left over after paying out claims without charging so much that customers will look elsewhere.

That means that they adjust the price of an insurance policy based on perceived risk. A driver who is seen as more likely to get into an accident and file a claim will pay more than one who is viewed as a safe driver and unlikely to need the insurance company to cover costs after an accident or crash.

Age and Experience

We’ve already seen how age can impact insurance rates, but experience is another factor that plays a big role, and that’s closely tied to age. You can only start getting experience once you’re old enough to get a driver’s license, but waiting to get a license until you’re older won’t make insurance magically cheap at that age.

Insurers look at how long you’ve been driving to determine your premium. While a 25-year-old getting a license for the first time won’t pay as much as a 17-year-old who just got their license, they will pay far more than a 25-year-old who has been driving for years.

State Requirements and Selected Coverage

Every state has different laws regarding car insurance and the coverage that drivers are required to purchase.

The level of coverage that you purchase will affect the price you pay, with more coverage being more costly. If you want to buy the state minimum level of insurance, you’ll pay more in states with heftier requirements.

Car Make and Model

The type of car that you drive can cause insurance to be pricier or cheaper.

Some cars, such as trucks and SUVs, with high safety ratings can help lower your insurance costs. Luxury sports cars are more prone to theft and are often driven unsafely. They can also be more expensive to repair, so if you’re driving a high-end vehicle, you’ll face a higher premium.

Driving Record

Insurers will look at your driving record and ticket history to try to gauge how well you drive and the odds that you’ll get into an accident. Having a clean record can have a massive impact on the price of insurance.

If you’ve gotten into accidents, insurers see you as risky and will charge more to compensate. Even just filing insurance claims could make your insurer increase your rates when you renew your coverage.

Credit History

In many states, insurers will look at your credit history and score as part of pricing your insurance policy.

In general, insurers view people with good credit to be safer bets than those with poor credit. The idea is that someone who handles credit carefully is also likely to be a safe and careful driver. Someone with poor credit may not drive as safely.

Learn more: Discover practical and cost-free strategies to boost your credit score by checking out our guide on how to build credit for free.

In some cases, poor credit could raise your rates by as much as 50%.

If you live in California, Massachusetts, or Hawaii, insurers cannot use your credit to determine the cost of coverage. However, your credit can play a role in the other 47 states.

As a 17-year-old, you’re not likely to have a credit score, as you’re too young to apply for most forms of credit. Getting added to your parents’ card as an authorized user is a start, and building good credit will help you lower your insurance costs in the future.

Learn more: Starting your financial journey strong is crucial; our post on how to build credit at 18 offers eight effective strategies to consider.

Location

The state you live in determines the minimum level of insurance coverage you have to buy, but where you live within the state also plays a role. For example, if you live in a major city, you’ll probably pay more for insurance than someone who lives in the suburbs or a rural area simply because theft rates are higher, and you’re more likely to get into an accident with more people around.

Marital Status

While this isn’t typically applicable to 17-year-olds, it is a factor that insurers consider. In general, single people are seen as riskier drivers and pay more for insurance than married drivers.

Other Drivers on Plan

Having multiple drivers on the same insurance plan can be cheaper than insuring each individual separately. For a 17-year-old, the cheapest way to get insurance will often be to get included in your parent’s policy.

How to Save Money on Insurance

Given the high cost of insurance for young drivers, you should do your best to look for the best deal. Taking the time to shop around can save you hundreds or thousands of dollars per year.

Compare Multiple Insurers

The most obvious, and one of the most important, ways to find a good deal on auto insurance is to shop around. There are many auto insurance companies out there, so take the time to get quotes from multiple companies and compare them.

Consider the coverages that each insurer offers and how much each company is charging. However, make sure that the insurers you’re considering are reputable. Check their ratings from companies like AM Best, which rates insurers on their likelihood to default.

The last thing you want is to file a claim only to find that your insurer doesn’t have the cash to pay out.

Consider a Higher Deductible

The deductible for an insurance plan is the amount that you have to pay out of pocket before your insurance kicks in and starts paying for damage to your car or other liabilities.

Higher deductibles can be risky because it means more out of pocket when you have an accident, but it can reduce your premium.

Get Added to Your Parent’s Policy

Buying insurance for a 17-year-old on their own can be incredibly pricey. Adding a 17-year-old to a parent’s policy won’t necessarily be cheap, but it will likely be cheaper than getting insurance separately.

According to Car and Driver, buying insurance for a teen separately can be as much as twice as expensive as adding them to a parent’s policy.

Drive an Older Car

Driving an older, less valuable car can be a good way to reduce the cost of insurance. In the event of a major accident, the insurer will have to pay far less if the car is totaled than if you totaled a brand-new vehicle.

Cut Unneeded Coverage

Some auto insurance, like liability insurance, is absolutely essential, but there are other types of coverage that are good to have but not necessary in every situation.

Comprehensive coverage is similar but applies to non-accident damage, such as theft or weather damage.

Look Into Discount Options

Most car insurance companies offer a huge variety of discounts that can help you save money. Bundling is a common discount, letting you pay less if you get multiple types of insurance from the same company.

A discount that may be relevant for younger drivers is a good student discount. Some insurers will drop a student’s premiums by as much as $70 per month or $840 per year if they get good grades.

Typical requirements are to maintain a B average in high school or college. Keep in mind that your insurer will want proof, so be ready to send a copy of your report card or transcript.

Find out exactly how much #car-insurance is for a 17-year-old by checking out our new article.

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Consider Usage-Based Car Insurance

A good way for both young drivers and adults to save money is to sign up for a usage-based car insurance (UBI) plan.

Learn more: Dive into the world of usage-based insurance with our thorough reviews of Root Insurance and Karma Drive to see if they fit your driving style.

With UBI, your insurer collects data about your driving and determines the cost of coverage using that data. You’ll typically plug a device into your car’s diagnostic port, and that device will report your driving habits to the insurer.

The insurance company will collect data on when you drive, how far you drive, and things like how often you break too hard or accelerate too quickly. Depending on how you drive, you could save as much as 15% per year.

The average driver puts about 11,500 miles on their car each year, so if you log fewer miles than that, UBI can be a good way to save money. You’ll also benefit if you’re a careful driver and don’t break hard or accelerate quickly on a regular basis.

Some insurers even offer a pay-as-you-drive plan, charging you a small base amount plus a fee for each mile you drive.

Summary

Car insurance for a 17-year-old can be expensive, running upward of $5,000 per year. However, as you get older, insurance will get much cheaper, and with some effort, such as shopping around and looking for discounts, you can often find an insurer with a much more affordable premium.

The post How Much Is Car Insurance for a 17-Year-Old? appeared first on FinMasters.

What is Karma Drive?

Karma Drive is a usage-based insurance tool by Credit Karma, a well-known credit monitoring service. It collects data on your driving habits to determine whether you qualify for a discount on your car insurance premiums.

Initially, underwriters base your auto insurance rate primarily on your demographic data. Since everyone starts off without a driving record, they make educated guesses about your risk levels using data points like the following:

• Usage: The more miles you drive, the greater the chance you’ll have an accident that leads to a claim. As a result, auto insurers generally charge you more when you drive more often and for longer distances.
• Location: Where you live has a significant impact on your likelihood of experiencing accidents, car break-ins, and vehicle theft. You’ll generally pay less for auto insurance in areas with fewer incidents and vice versa.
• Age and gender: Younger people, especially men, are more likely to have car accidents. Generally, young males would pay more than experienced female drivers for car insurance.

As you develop a driving record, insurers will slowly start to factor it into your premiums too. If you consistently avoid accidents and moving violations, then your auto insurance rates should steadily decrease.

However, in the meantime, you’ll likely pay higher insurance premiums than you deserve, especially if insurers deem you high risk because of your age.

Usage-based insurance products like Karma Drive mitigate that issue and streamline the incorporation of your driving history into your premiums. They closely monitor your driving habits for a brief period and give you a driving score, which can determine whether you qualify for safe-driver discounts.

How Does Karma Drive Work?

To use Karma Drive, you must download the Credit Karma app to your mobile device. You can install it via Google Play or the App Store, and it’s compatible with Androids and iPhones.

Once you download the app, you’ll need to create a Credit Karma account if you don’t have one already. That involves confirming your identity by providing information like your name, address, and Social Security Number.

Next, you can go ahead and enroll in Karma Drive. It will start a 30-day trial during which the app tracks your location to assess your driving risk level. For example, it may consider the following:

• Phone use
• Overall driving speeds
• Acceleration and breaking
• Time of day driving occurs
• Total time behind the wheel

During this trial period, Karma Drive will also suggest ways to improve your driving habits. For example, if it determines that you frequently slam on your brakes, it might counsel you to decelerate sooner and come to smoother stops.

Warning: Some customers report an inability to tell Karma Drive when they’re behind the wheel and when they’re a passenger. To maintain the accuracy of Karma Drive’s assessment, you may have to avoid letting others drive you around during the trial.

Once your 30 days are up, Karma Drive will assign you a driving score and let you know whether you qualify for a discount on an auto insurance policy from Progressive. It may include other carriers in the future, but Credit Karma only has one partner in 2023.

How Much Money Can You Save With Karma Drive?

Credit Karma doesn’t state how much you can save with its Karma Drive tool. However, Progressive has a usage-based insurance program called the Snapshot Road Test that is virtually identical to Karma Drive, tracking your driving habits for 30 days to determine your potential safe driver discount with the carrier.

Since Karma Drive has yet to partner with any insurers other than Progressive, the discounts you stand to earn from the two tools should be similar. Fortunately, Progressive shares that Snapshot Road Test users see average savings of $145 per year.

Learn More: If you’re interested in paying less for insurance coverage, check out our favorite ways to lower your policy premiums upon renewal: 8 Insurance Renewal Tips: How We Saved 20% on Insurance.

Karma Drive Pros

Let’s look at the most significant reasons to use Karma Drive.

Potential Annual Savings

It’s important to emphasize that it’s possible to see a legitimate reduction in your car insurance rates after using Karma Drive. You can qualify for a discounted policy if you do well during your trial, even if it’s only because you were on your best behavior.

In addition, since both the Credit Karma app and the Karma Drive feature are free, there’s no financial downside.

Warning: Don’t let Karma Drive’s trial be your only attempt to lower your auto insurance premiums. Shop around and get an up-to-date understanding of your coverage options at least every one or two years to avoid leaving money on the table.

Opportunity to Improve Driving Habits

Even if you don’t qualify for a discounted insurance policy through Karma Drive, you may still benefit from Karma Drive’s safe driving recommendations during the trial.

Undergoing an objective assessment of your tendencies while on the road can reveal bad habits you weren’t aware of, helping you save money by reducing the likelihood of accidents.

Convenient for Credit Karma Users

Enrolling in Karma Drive is quick and easy if you already have the Credit Karma app. Since Credit Karma is one of the most popular finance platforms in the world, with a reported user base of more than 100 million, the tool is a convenient option for many.

In addition, already being a Credit Karma user means you don’t have to share your sensitive personal details with a new third party. In an age where your data is an increasingly hot commodity and your privacy is constantly eroding, it’s wise to limit the number of businesses you give access to that information.

No Obligation To Share Results With Carriers

Lastly, Karma Drive lets you assess your driving habits without sharing your results with insurance companies. Meanwhile, carrier-specific usage-based insurance tools don’t share that benefit.

As a result, using some of them can actually backfire. Your premium rates may increase if you demonstrate poor driving habits during their assessment periods. For example, Progressive reports that roughly 20% of existing customers who use the Snapshot program see their premiums increase.

Karma Drive Cons

Karma Drive has its advantages, but it’s not perfect. Here are the most significant reasons to avoid using it.

Provider Limitations

Credit Karma has yet to pair its Karma Drive tool with any carrier other than Progressive, which significantly limits its utility. You’d need to take multiple other trials to learn how much your driving habits could save you in the broader marketplace, which would be tedious and time-consuming.

In addition, Progressive is one of the more expensive auto insurance companies in the United States, with premiums higher than the national average¹. However, that varies by state, so don’t write them off without getting a quote.

Location Limitations

Unfortunately, Karma Drive isn’t available everywhere. When Credit Karma first launched the tool at the end of 2020, the company announced it would only be available in 39 states, but it would add two more in 2021 to bring the total to 41.

However, there’s yet to be an official update from the platform, and it’s unclear whether it completed its promise. Its website still notes the product is only available in select states and that more are becoming eligible in the future, so you may need to try it to confirm your state’s status.

The original 11 states where Karma Drive was unavailable included AK, AL, CA, HI, MA, NC, NY, VA, WA, FL, and SC.

Privacy Concerns

To use Karma Drive, you must first sign up for Credit Karma, which requires sharing identifying information, including your Social Security Number. Credit Karma’s security is as legitimate as any top-tier fintech company, but that still represents an additional opportunity for someone to steal your data.

That may be a sunk cost if you already have an account, but you’ll have to compromise your privacy even further to use Karma Drive. Remember, you must share your precise location with the platform for 30 days during the trial, during which it’ll collect data on all your movements.

Credit Karma promises not to sell your information to “unaffiliated third parties for their own advertising or marketing purposes,” but take that with a grain of salt, especially given the vague verbiage.

Personally, I decided not to give my auto insurance provider access to my location when it offered me a similar discount in exchange for monitoring my driving habits.

How Do They Know Who’s Driving?

One of the issues with usage-based insurance car insurance is that most systems depend on apps to trace your driving habits. Some users have complained that the app records patterns even when they are a passenger.

If that happens, your insurance rates could go up because of the way your Uber driver brakes or accelerates!

These claims are difficult to verify and companies offering usage-based insurance are introducing systems to assure that you are only graded on your own driving, but it’s good to be aware of the possibility and look into it before making a commitment.

Credit Karma Drive Customer Reviews

It’s hard to find user opinions on Karma Drive separate from the other tools and services on Credit Karma’s platform. However, Credit Karma’s general scores should give you some idea of what you can expect from its usage-based insurance tool.

Here are Credit Karma’s ratings across several popular review sites:

• Better Business Bureau: 1.1 of 5 stars (298 reviews)
• Trustpilot: 1.5 of 5 stars (573 reviews)
• Consumer Affairs: 3.8 of 5 stars (671 reviews)
• Google Play: 4.7 of 5 stars (2.69M reviews)
• App Store: 4.8 of 5 stars (6.4M reviews)

Based on these ratings and the comments in specific reviews, the primary reason users criticize the company is its credit account suggestions. Credit Karma encourages users to apply for new debt, claiming they have high approval odds, only for the users to receive repeated rejections.

Unfortunately, these allegations are now confirmed. On September 1, 2022, the company paid $3 million in settlement to consumers it knowingly misled into thinking they had pre-approval for third-party financial products.

That caused these individuals to apply, for which Credit Karma earns a commission. Unfortunately, it also creates a hard inquiry on each applicant’s credit report, damaging their credit score.

That suggests you can’t trust Credit Karma to look out for your best interest, especially since the reviews are also full of complaints about the company’s poor customer support.

Warning: Remember to take crowdsourced reviews with a grain of salt. Not only are they easily manipulated by companies, but consumers are more likely to leave reviews about complaints than compliments.

Karma Drive Alternatives

Usage-based car insurance tools are becoming increasingly popular among carriers. In fact, most of the popular providers now have usage-based car insurance tools, including Liberty Mutual, Nationwide, Geico, and State Farm. 

If you’re interested in getting a quote from a new insurance company net of your usage-based discount, you’ll need to use the carrier’s tool instead of Credit Karma’s since Karma Drive only works with Progressive.

However, be careful doing these tests with your current provider. Some of them can increase your rates if you drive poorly, including Progressive, Geico, and Farmers.

Is Karma Drive Worth It?

Since Credit Karma only partners with Progressive, Karma Drive is really just a way to get a quote from the carrier that incorporates your driving habits into your premiums.

As a result, Karma Drive would probably only be worth using if you have a Progressive policy and want to pursue the safe driver discount without risking an increase in your rates due to poor driving.

You can use Karma Drive to get your driving score without having to share it with the carrier like you would if you used Progressive’s Snapshot tool.

The post Karma Drive Review: When Is It Worth Using? (2023) appeared first on FinMasters.

To qualify for these programs, you’ll need to meet certain eligibility requirements, some of which vary by state. This guide will show you how to qualify for Medicaid and CHIP and give tips for those who don’t meet the eligibility requirements.

How Do I Qualify for Medicaid?

Before we take you step-by-step through how to qualify for Medicaid, let’s cover some of the basic details about the program:

Medicaid is a federal program administered locally by each U.S. state. The program was launched in 1965, and then expanded with the Affordable Care Act (ACA).

Medicaid provides free or low-cost health coverage to children or adults living below the federal poverty level (FPL).

What Does Medicaid Cover?

Medicaid recipients are eligible for a range of medical services. While states offer different levels of coverage, the federal government requires all Medicaid recipients to receive the following:

• Regular check-ups and office visits
• Hospital visits
• In-patient care
• Out-patient care
• Laboratory and X-ray services
• Dental care
• Early and Periodic Screening, Diagnosis, and Treatment (EPSDT)
• Nurse and midwife services
• Long-term care
• Transportation costs
• Certified Pediatric and Family Nurse Practitioner services
• Services provided at Federally Qualified Health Centers (FQHCs)
• Assistance for pregnant women to help them stop smoking

Additionally, Medicaid provides optional (or as-needed) coverage for the following:

• Vision screenings/care
• Prescription drugs
• Physical or occupational therapy
• Speech, hearing, and language disorder treatment
• Chiropractor services
• Prosthetics
• Hospice care

Medicaid recipients may also have access to a wide range of medical specialties such as respiratory care, podiatry, and more. To see the full range, check the Medicaid benefits page.

With the main details out of the way, let’s now cover how to qualify for Medicaid, starting with the eligibility requirements for both adults and children:

How to Qualify for Medicaid: Eligibility Requirements for Adults

Medicaid is generally available to the following:

• People who are pregnant.
• Adults over the age of 65.
• Those with disabilities.
• Children.
• Adults with low income.

The federal poverty level varies according to family size. As of 2023, the FPL for individuals is $14,580^[1]. To determine your family’s FPL, you can simply add $5,140 for each additional family member. Thus, the FPL range is as follows:

How to Qualify for Medicaid: Eligibility Requirements for Children

Under the Affordable Care Act, children may qualify for Medicaid as long as the household income falls below 138% of the federal poverty level^[2].

However, individual states can set their own income limits to determine eligibility. A number of states use a Modified Adjusted Gross Income (MAGI) limit, which went into effect on July 1, 2022.

States use the household MAGI and the child’s age to determine eligibility for Medicaid, CHIP, and other basic health programs. To determine your exact eligibility, search for your state on the chart provided on the Medicaid website and cross-reference your state against your child’s age.

For example, in Arizona, children under the age of 1 are eligible for Medicaid if the MAGI falls below 147% of the FPL, though the MAGI level falls to 141% for children between the ages of 6 and 18.

Expanded Eligibility by State

The above eligibility requirements apply to all states, though some states offer expanded coverage to all residents below a certain income level.

This means that if you live in one of these states and your household income is below 133% of the FPL, you qualify for Medicaid. To determine your exact eligibility requirements and costs, use the Medicaid website.

To date, 40 of the 50 U.S. states have adopted expanded Medicaid eligibility requirements. The only states that have not done so are:

• Alabama
• Florida
• Georgia
• Kansas
• Mississippi
• South Carolina
• Tennessee
• Texas
• Wisconsin
• Wyoming

The expansion in South Dakota takes effect on July 1, 2023, while North Carolina won’t officially administer the expansion until January 2024.

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How to Apply for Medicaid

If you believe that you are eligible for Medicaid, you can apply in one of two ways:

1. Use the Medicaid website to apply directly with your state.
2. Visit HealthCare.gov to complete the application.

If you choose the latter option, you’ll be asked if you’d like assistance in paying for coverage. Simply reply yes. Your application will be reviewed and then forwarded to your state Medicaid office, which will make the final decision based on the above criteria.

How Do I Qualify for CHIP?

As the name implies, the Children’s Health Insurance Program (CHIP) is a federal program aimed at providing health coverage to children from low-income households.

Like Medicaid, CHIP is a federal program administered by the state. States are able to use federal funds to enhance Medicaid coverage, create a separate program, or use some combination of the two.

What Does CHIP Cover?

CHIP is intended to be an expansion of Medicaid benefits aimed specifically at children. As such, the program has extended benefits that cover basic children’s needs, including:

• Well-baby and well-child visits
• Dental benefits
• Assistance with behavioral health and substance use disorders
• Vaccines

Some states offer additional benefits. Check with your state to determine what additional benefits you may have access to.

How to Qualify for CHIP: Eligibility Requirements

The financial eligibility requirements for CHIP mirror those of Medicaid (see above), though the program also has additional requirements that relate directly to the children.

To be eligible for CHIP, the child must be:

• 18 years of age or younger.
• Uninsured through other health policies/programs.
• A U.S. citizen or an eligible non-citizen.
• A resident of the state they apply in.
• Eligible within the state’s income range.

You can view your state’s income range on the Medicaid website.

However, certain children are not eligible for CHIP coverage. These include:

• Children of inmates of a public institution.
• Children whose parents are institutionalized for mental disease.
• Children who are eligible under a State health benefits plan.

Otherwise, CHIP eligibility extends to all those who meet the income requirements listed above.

Can Pregnant Women Receive CHIP?

Expectant mothers are eligible for Medicaid and/or CHIP benefits, which cover prenatal care, delivery, and postpartum care.

States must cover children under age 19 under Medicaid or CHIP, and they must cover pregnant women up to at least 185% of the federal poverty level.

Once a child is born to a woman in CHIP, the child is automatically enrolled in either Medicaid or CHIP with no need for another application. They will continue to receive CHIP benefits until their first birthday, after which they may be enrolled through the application process.

What CHIP Costs

While CHIP is designed to provide affordable healthcare for children of low-income families, it is not necessarily free. The costs can vary by state. You can view state requirements and more at InsureKidsNow.gov. Some states charge copays for medical visits, while others charge a small premium for using the program.

However, the program is designed to drastically reduce healthcare costs, which means that no family will pay more than 5% of their income toward healthcare.

How to Apply for CHIP

You can apply for CHIP in two ways:

1. By phone at 1-800-318-2596 (TTY: 1-855-889-4325)
2. By web through the household marketplace

You can apply through the marketplace, administered by the Department of Health and Human Services, by creating an account or logging in using your current account. If you qualify for Medicaid, you may already have an account that you can use to complete an application for CHIP.

How to Qualify for Medicaid or CHIP: Finding a Provider

Although these are federal programs, each state administers Medicaid and CHIP slightly differently. For that reason, each state will maintain records of medical providers who accept these programs, which can have significance when you’re looking up information on how to qualify for Medicaid or CHIP.

If you want to find a provider in your area, contact your state Medicaid agency or the provider of your health plan.

MedlinePlus — which is also run by the Department of Health and Human Services — maintains an online directory that you can use to find providers and facilities that may accept Medicaid and/or CHIP.

Alternatives to Medicaid or CHIP

Not everyone will qualify for Medicaid or CHIP. That’s especially true if you live in one of the states that do not offer expanded eligibility requirements based on household income. If this sounds familiar, you have other options to consider.

Affordable Care Act (ACA) Subsidized Plans

This can be a great option for those who formerly qualified for Medicaid but no longer do. It allows you to receive health insurance directly through the ACA marketplace.

Once you are disqualified, a special enrollment period (SEP) opens up, which is a two-month (or 60-day) period in which you can enroll in a health insurance plan. If you miss this window, you can still receive a plan, though you’ll need to wait until open enrollment.

Discounts Through the Affordable Care Act

Everyone knows health insurance is expensive. There are ways you can reduce the premiums to more affordable rates. You may be eligible for a subsidy for ACA coverage, depending on your income level. This also varies by state, but you can select your state when you apply through the HealthCare.gov website.

Depending on your income level, you may be eligible for up to 100% off your insurance premiums. You may not qualify for full coverage, but you may still qualify for a subsidy that can make a marketplace plan significantly more affordable.

Short-Term Health Coverage Post-Medicaid

What if you lose Medicaid coverage? You can replace it with a short-term health insurance option. These plans can be purchased from most major health insurance providers and are designed to be a stopgap between your previous coverage and a more permanent plan.

Just be cautious — some short-term plans have restrictions on certain chronic conditions such as diabetes or asthma. Make sure to ask about out-of-pocket costs prior to signing up.

Bill Negotiation

If all else fails, you can always try to negotiate a lower doctor bill. For example, if you received medical treatment that your insurance won’t cover — or if you’re uninsured for any reason — you may be able to contact the medical provider and work out a payment plan or even a discount.

Medical offices would rather receive some money than no money, and they may be willing to work out a plan. Also, if you’re able to pay a large portion in cash, the provider may knock off even more from the bill.

How to Qualify for Medicaid and Get the Care You Deserve

With the high price of health care, knowing how to qualify for Medicaid and CHIP is an essential skill for those with limited incomes. Tapping into these programs can make it easier for you and your family to receive the care you need while you work toward greater financial stability.

The post How to Qualify for Medicaid or CHIP – We Take You Step-by-Step appeared first on FinMasters.

To help you get started, use this list of some of the best insurance providers for individuals. Try not to purchase plans from the companies directly, though. Just keep them in mind when perusing Healthcare.gov or your state’s marketplace. 

Required Reading: Are you still a little unsure how this whole health insurance thing works for people that run their own business? If so, check out our introduction to the process before reading further: How to Get Health Insurance While Self-Employed.

1. United Healthcare

Accessibility and Network

United Healthcare is one of the best-known healthcare providers in the country. Founded in 1977, they became the nation’s biggest health insurance provider in just a few short decades.

A subsidiary of UnitedHealthcare Group, the health insurance provider has the single largest market share at 14.1% in 2021.^[3] They offer plans in all 50 of the United States and 130 countries. In 2022, their network boasted over 6,500 affiliated hospitals and more than 1.3 million service providers.

If you’re one of those wandering freelancers who bounces from state to state or even plans to live abroad for a time, United Healthcare is a great company to use. Whenever you move somewhere new, you won’t have to deal with searching for a new provider.

In addition to their top-notch network, United Healthcare has some appealing benefits for members, such as:

• Reward programs for healthy preventative behavior.
• The UHC App, which lets members manage everything in one convenient place.
• The ability to chat with a doctor online 24/7.

From a financial standpoint, United Healthcare is rock solid. They received a Financial Strength Rating of A+ from AM Best in 2022 and an AA- for their Long-Term Issuer Credit Rating.

Unfortunately, their plans can be more expensive than the equivalent offerings from their competitors. As a quick measuring stick, United Healthcare doesn’t have the cheapest silver health insurance plan in any of the 50 states.^[4]

With such a large customer base, it’s not surprising that they also have mixed customer reviews and levels of satisfaction. UnitedHealthcare didn’t win any of the regions on the J.D. Power Survey in 2022, but they average just under four stars on Consumer Affairs.

2. Cigna

Most Convenient

Cigna is another titan in the health insurance industry. They have one of the longest track records in the business and have been providing services since 1792. They’re another provider with a significant market share, millions of customers, and a vast global network.

Their most significant appeal comes from their emphasis on technology, convenience, and innovation. The whole industry has been transitioning toward virtual care since the pandemic, but Cigna’s plans have included 24/7 access to virtual care for much longer.

Beyond that, Cigna also has a strong financial outlook. After all, they’ve been able to remain in business for over two centuries. Unsurprisingly, A.M. Best gave them a Financial Strength Rating of A, which is excellent.

Cigna’s plans are also on the more affordable side of the spectrum. They only operate in a dozen states, but they offer the cheapest silver plan on the market in three of them. 

Best Health Insurance for the Self-Employed in 2023

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Speaking of which, their main drawback is probably the fact that their health insurance plans are only available in twelve states. Other than that, their customer reviews are also mixed. They only have a 3.1 out of 5 stars rating from Consumer Affairs, but they did well in the J.D. Power Survey.

3. Oscar

Up and Coming

Oscar is virtually brand new compared to many of the other companies on this list. They just started doing business in 2012, but they skyrocketed to the heights of the top competition. They now have over 1M+ members and a rapidly growing provider network in twenty states, with more on the way.

Oscar’s startup status is a significant part of what makes them so attractive. They’re a young company and have the fire that often comes with meteoric rises. They can provide:

• Personalized care and stellar customer service through their concierge program
• The ability to communicate with doctors remotely at any time 
• A uniquely modern approach to connecting with members through technology

Of course, their youth is a strength, but it’s also their weakness. They don’t have the decades-long track record of some of their competitors, and they’re too new for A.M. Best to rate their finances. Because they’re still so new, they’re not accessible in as many states as a provider like United Healthcare.

Oscar plans also usually fall somewhere around the middle of the pack when it comes to price. They have affordable plan options, but members may have to pay more for better care.

Much like with Cigna, self-employed people will probably appreciate Oscar’s dedication to leveraging technology and convenience. They’ll undoubtedly continue to innovate as they grow in the coming years.

4. Kaiser Permanente

Best Value

Kaiser Permanente is a unique entry on this list. While they are an insurance provider, they also have their own facilities and providers. That integrated system allows them to offer seamless referrals and provide supremely smooth access to care.

Kaiser also boasts super customer satisfaction levels. They have a rating of 3.7 stars on Consumer Affairs and ranked number one in 5 of the 21 regions on the J.D. Power Survey in 2022. 

Their prices are also much more affordable than it seems like they should be, given their premier service. They have the cheapest silver plans in four states, which is the third most in the nation. 

Kaiser’s stability is also top-notch. They have been in business since 1945 and they rank number nine in market share despite operating in a relatively small geographical range. They have an A+ Insurer Financial Strength rating from Fitch Ratings.

Speaking of, that’s the only real downside to Kaiser: They’re only available in nine states. But if you live in a region that they cover, a Kaiser plan is very likely your best option. 

5. Blue Cross Blue Shield

Old Faithful

Last but not least, there’s Blue Cross Blue Shield. They’re another corporate giant with well-rounded value. They’re among the best in just about every category, so there’s not much to complain about when it comes to their services.

In addition to being a jack of all trades, they might also be the most affordable option in the country, on average. They offer the cheapest silver plans in a whopping nine states, which is the most in the nation. If you’re looking for the best prices, Blue Cross Blue Shield is the place to start your search.

They also have one of the biggest nationwide networks, contracting with 96% of hospitals in the country and 95% of its service providers. They have coverage in all 50 states and serve over 100 million members worldwide. Many of those are in the other 170 countries where they provide coverage.

They also receive solid customer satisfaction scores, coming out on top in 11 of the 21 regions on the J.D. Power Survey. That’s more than half of the country and more than any of their competitors.

The only drawback to Blue Cross Blue Shield is the potential inconsistency between branches. The provider is actually a conglomerate comprised of 34 distinct companies. Their quality and services may vary significantly between them, so check out their reputation in your state before doing business with them.

Keep an Open Mind and Get Help

There’s never going to be a single best health insurance for the self-employed. It’s always going to depend on your personal circumstances, including your age, health, family, and location. Start your search with these recommendations if possible, but don’t limit yourself if they’re not available near you.

If you find the process of searching for your own plan overwhelming, don’t be afraid to get help from people who are experts in the field. A local health care advisor can help you navigate the complexities, make recommendations, and answer your questions.

Learn More: Are you doing your research before transitioning to full-time entrepreneurship? Take a look at our guide to the process to help you navigate the other issues you’ll run into: How to Start a Business While Working Full-time (And Replace Your Job)

The post Best Health Insurance for the Self-Employed in 2023 appeared first on FinMasters.

Landis (2018) states that this strategy can only be used within the first twelve months of receiving benefits and a claimant may only use the strategy once in their lifetime (p. 239). 

Additionally, all received benefits must be repaid, without interest, to the Social Security Administration (SSA), not only for the claimant but also for all dependents receiving benefits through the claimant’s work record (Landis, 2018, p. 239).

When to Consider the Social Security Undo

There are numerous situations that an advisor may experience that could lead to a recommendation to a “Social Security Undo”. Landis (2018) proposes that the most obvious would be to correct a filing mistake (p. 240).

Examples may include filing too early (with a corresponding lower payment) or filing for the wrong type of benefit (such as a worker benefit instead of a spousal benefit, if eligible) (Landis, 2018, p. 240). 

Additionally, changes that occur after filing may lead to a recommendation of the “Social Security Undo”.

For example, a claimant filing before their Full Retirement Age (FRA) has more earned income than they anticipated, causing their Social Security benefits to be reduced due to the earnings test (Landis, 2018, p. 206). It may be prudent to repay the Social Security benefits received and withdraw their application, leading to a higher benefit payment when they refile in the future.

Or, an unexpected windfall received shortly after claiming benefits may reduce the need for Social Security income for a period of time. Thus, repaying the benefits that were received allows the future Social Security benefit to grow until claimed at a later date.

Understand the Risks

As with many Social Security options, there are potential risks surrounding the “undo” option.

Landis (2018) explains that plausible hazards include the SSA eliminating the provision from future use, dying before executing the “undo” (and thus locking your survivors into the lower payments), or not having the funds available to repay the SSA when required (pp. 240-241). 

In spite of these potential drawbacks, the application withdrawal and refiling strategy may offer a client the opportunity to reverse an unfavorable Social Security filing decision, benefiting not only them but potentially their spouse and dependents as well.

The post The Social Security Undo: A Possible Filing Do-Over appeared first on FinMasters.