#InsuranceDilemma #LifestyleCreep #FinancialAdviceNeeded
Hey everyone! 👋 I need some advice on whether I’m falling victim to lifestyle creep or just being overly cautious with my insurances. So, here’s the situation:
I’m a single 30-year-old female with a mortgage, and I’ve recently started earning more than ever before. As my income increased, I splurged on a range of insurances that I could never afford in the past. However, the premiums are now eating up a significant portion of my take-home pay. Here’s a breakdown of what I have:
– Car insurance with roadside assistance
– Gold health insurance covering top hospital options
– Home and contents insurance
– Life insurance including TPD, trauma, and income protection
In total, I’m shelling out about $250 every fortnight for these policies. 😳
But here’s the dilemma – most people my age don’t have this level of coverage and seem to be way ahead in terms of savings and their ability to travel. Am I being too cautious, or is this just a different form of lifestyle creep?
I’d love to hear your thoughts and if you have any suggestions on how I can optimize my insurance coverage without compromising my financial goals. Let’s discuss! 🤔💡
#FinancialManagement #InsuranceCoverage #SavingsTips #Budgeting101
Nope I think you have covered yourself insurance wise appropriate given the context.
Road side assistance can sign up in the spot with nrma. Only really saving 100/y.
Life insurance- check you have double up your insurance. Sometimes you will have this included in your super.
Apart from that 250 a fortnight isn’t insane. Part of having these situations covered.
Lifestyle creep is more about spending more on things that you would consider indulgence purchases, eg eating out, drinking, upgrading cars, having multiple streaming services.
Basically, spending more money on things you can go without.
Insurance is necessary for most things. You can save money in insurance by opting for larger excesses as your emergency fund increases in size.
Is your TPD, Life and Income Protection through your super? It should be.
Does your car insurance need to be comprehensive? Can you limit all drivers to over 30?
Home and contents insurance can be a large cost, but one that is easily miscalculated.
It takes just one “bad luck” incident to make you realise the value of insurance. However, it sounds like the $250 per fortnight isn’t leaving you with enough savings. While it may give you some peace of mind, you may want to reassess some of the things you’re insured for, and the level of insurance you require. I’m about the same age as you, and I only have the most basic health insurance for myself and my partner (we’re both in relatively good health), middle-tier insurance for my pet (which _really_ came in handy in the last few weeks), and car insurance with roadside assistance.
If you asked this 10 years ago, I would have said you’re throwing your money away. Having seen the hardship and stress that results from not having the appropriate insurance, I can say that for me, insurance would be my last expense I’d cut out if I needed to.
Insurances is something you don’t need until you do. What I would say is do yourself a favour, and make sure that you have fully gone through the details of whatever insurance you get/have and question anything you don’t understand. I have known people to pay a fortune for insurance only to find when they needed to use it, it was basically useless in there situation.
What’s the point of life insurance when you’ll be dead.
I only have (as a DINK 30F)
3rd party car insurance. It’s a 15 year old Mazda that I’ve had for 6+ years now. Ive made my money back by not paying comprehensive for the entire time i will own it. And I can buy another car with my savings if I have to.
Home insurance only. no contents. I have enough savings to replace everything I currently own if I have to.
I don’t have life insurance – no dependents. My partner and parents are financially independent and don’t need a payout if I became disabled or died. I would revisit this if I had kids.
I also have just the bare minimum private health hospital cover (to minimise tax) – I don’t use it, and I also have more trust in the public health system (but I have had different life experiences from you. Just explaining why I do things.)
Edited to add: don’t forget that out of pocket fees also exist. So far in my life, it’s been more worth it to just pay out of pocket, than pay insurance throughout the waiting period + pay the out of pocket. This includes SMILE laser eye surgery, the time I knocked a tooth out and dental did a fancy post & core for me, and buying a >$1000 medical device. I had private when I was filling several dental cavities (because of my disgusting boba addiction lmao) but the out of pocket meant I wasn’t significantly better off with the insurance anyway.
I also pay yearly, since it usually works out cheaper that way. And insure what I can’t easily replace (e.g., crashing into someone’s Tesla)
Honestly it just depends on your risk tolerance in every day life. And how much this costs relative to your income.
>Everyone else my age who I speak to doesn’t have this full suite of insurance and it feels like they are miles ahead of me in terms of savings and ability to travel etc.
I guess you could consider those not having the same level of insurance as accepting the risk of things going wrong. For example a person you know has no car insurance with roadside assist breaks down in a dodgy area an hour from home with no-one to call.. or they have an accident which is their fault and writes off their car.. they are going to chew up all their savings replacing it.
Another example, they have a medical problem which is deemed elective under our weird medicare rules, or something that is covered but has a 12-18month waiting list. Maybe something that makes their life difficult every single day, hard to go to work and sure they can get it done on a waiting list but they have to deal with it until it is fixed.
Another example they hurt themselves and cant work for 12 months, you get some income protection but someone taking the risk without protection has to live off their emergency savings for 12 months.. and most people only work on 3-6 months of emergency savings
Basically, you have elected to take a low risk approach to life by covering things with insurances, where as the people you are speaking too have elected (potentially without fully understanding just how much) to take a risk by putting that money into savings instead. Neither is actually “right” or “wrong” it’s a different approach to take on the level of risk you feel comfortable with.. your way is a perfectly fine and a good option if you are a cautious person who does not want to run a lot of risk.
I see lifestyle creep as things like.. damn it I’m working harder and stressed more, why not I’ll just order ubereats tonight because I cant be arsed cooking.. which ends up happening a lot more than it used to, maybe going out to restaurants more, buying the most expensive brand of something “because it will last 10-20 years” even if it’s something you probably will only use for 1-2 before its no longer in fashionable to use or have lol instead of buying something more mid-tier, all that sort of thing, just creeping up how much you spend on discretionary things.
Only one there I’d question is life insurance. If you die will there be kids or a partner who will suffer and need help with home loans and expenses for raising a kid? If not who is the beneficiary and why?
I’m not surprised you’re paying so much. Trauma insurance, tpd and income? Do you have dependents?
Our family BUPA policy reduced from $600 to $400 a month by going gold to silver. Theo my thing we gave up with pregnancy related (fine) and some specifics around kidneys which we fine with. Have a look at gold v silver would be my tip
Hello, I work in the health industry.
Just want to point out that gold cover =/= better quality of healthcare. It’s very obscure to see a young person with gold cover unless they have specific medical conditions. You’ll get the same quality of treatment for silver or bronze. If you haven’t already, I’d be taking a look at that level of cover and seeing if it’s necessary. You could be paying for things to be covered that you likely will not need at this life stage.
Also probably some recycled advice here but COMPARE prices with other companies. It is absolutely worth it to shop around.
Is top hospital coverage necessary? We are on bronze plus coverage which covers everything except psychiatric, obstetrics and rehab. The ‘top’ gold policy doesn’t mean you get better care.
Unless it’s changed, the difference between silver+ and gold health cover is entirely to do with reproductive medicine – if you’re single there may not be any benefit at all to that uplift for you
As a side note, my family silver+ insurance costs about $500/month on its own
Is it cheaper to have road side assistance outside of your insurance? Worth having, but also can be more expensive within insurance.
Gold health is probably more than you need unless you’re after reproductive services (like IVF) in the near future or have health complications you’ve not mentioned. Silver will probably provide adequate coverage and save you a bit.
I’m not sure your circumstances, but if you don’t need cover for pregnancy, weight loss, is inpatient mental health services, then you’re probably over-insured with Gold health insurance cover. You can save quite a bit of money going to a Silver product and you can always upgrade your cover to Gold when you need it (although there will be waiting periods) like if/when you plan for a family. Gold is an increasingly expensive cover.
I’ve worked in Health Insurance and it’s wild how many people pay for Gold that don’t need to. There is a misconception that Gold pays more of your bills, it doesn’t – it just covers you for those extra health needs mentioned before. You still get private care under a Bronze or Silver product. For example, Gold is not going to pay for more of your bill if you need a joint replacement than Silver cover would.
Just don’t forget income protection premiums are tax deductible.
The only one of these that isn’t completely standard is the (outside of superannuation) life insurance IMO?
You can’t not have house insurance – it’s likely a condition of your mortgage. Car insurance just makes sense?
Our insurance bill is a bit higher than yours. It’s a lot cheaper pp when you’re insuring as a family.Â
Ppl our age have car insurance, home and contents and at least TPD.
I know many who also have income protection, and life if they have kids. Health insurance if you’re over a certain level of income.
You could look into getting the TPD, life and income protection out of your super.
I really doubt $6,500 a year is limiting your ability to save/travel.
Just for comparison, my house and contents is $800, health is $1800, car is $750. I have TPD and life via super and it’s about $250 a year. I do have corporate discounts via work.
MeDiCaL tRaUmA.
i’m slightly older and have comp car, my home insurance is covered by body corp, i pay contents, pet insurance, and super duper health insurance because i’m looking to get some elective surgery done in the next year or so. i think thats about it. Check with your super, they probably have life insurance for you already, most do.
30F, DINK w/mortgage. Excluding partners insurance:
– Ambulance cover (only needed for states that charge you for ambulances, but quite cheap – $60/yr or so.)
– Home and contents (shared. Tbh, should probably review this. Picked it very quickly when we bought a house and haven’t reviewed it – thanks for reminder!)
– Life and TPD insurance (covered up to around half the value of my house I think? With my super fund. Did look at others, and this was about the best. Can’t remember the cost off the top of my head)
– Basic hospital cover to avoid Medicare levy surcharge (cheapest I could find at the time – it was cheaper to get this separately to my ambulance cover and cheaper than rolling it together with my partners insurance)
My partner has a car and more than just CTP. I also can’t remember the details (sorry). I can’t drive due to a medical condition, but if I could and drove outside metropolitan regions my *gut feel* without research is that I’d get roadside assist. But you’re speaking to someone that literally doesn’t know how to start a car, let alone fix a broken down one.
Looking at yours, my understanding is:
– Health insurance extras/premium cover are often not necessary/beneficial, especially if you’re young and healthy. You’ll often have some out of pocket costs in the private system regardless.
– Income protection only protects you in a very limited set of circumstances: read the PDS and see if it’s actually worth it
– Being single I’d consider getting TPD without life insurance (or limit life insurance to enough to cover, say, the costs of a funeral) – I’m assuming you have no dependents
Please jump in experts!
All my life, TPD, income protection etc is held with my super so I don’t notice that charge. Car, home and contents I pay yearly. For some reason I find these better to pay yearly. If it was fortnightly I’d have a fortnightly reminder of how much I was paying.
Sounds like you value the private health insurance so I’d not look to change that.Â
$500 a month on insurances is pretty good, I pay that alone just for family health insurance.
You could look at taking higher excess or extending the time on your income protection you can claim for (e.g., waiting 3 months instead of 1).
If your car is really old then 3rd party insurance might be better off. If your car is <5 years old I wouldn’t bother with roadside assist
Most insurance is a total waste of money. The only things you must insure is your car (TPP) and your house if you are an owner. Income protection is only useful if you are self-employed in a job where any injury can be career ending (eg a surgeon or pilot).
Health insurance is for designed for elective procedures (but it never covers the full cost). It is useless for serious injuries or illnesses that will be treated for free in a public hospital.
Keep insurances for black swan events that you can’t afford… if you’re single with no dependents, it’s probably just home insurance (no contents) and high end medical insurance. With dependents, you’d probably need to consider life or income protection
It actually is a kind of lifestyle creep – you are spending to make yourself feel better.
It’s likely that you have an anxious sort of personality. This is probably something to work on as it might be preventing you from being as happy as you could be. But also the reason why you feel the need to have so much insurance.
Insurance is always overpriced. If you had the ‘average’ needs, you would always be better off self-insuring for everything. But it’s hard to see that if you catastrophise and always imagine the worst. Insurance advertising preys on this and makes things seem more likely than they are.
In the end if it helps you feel comfortable and secure it’s money well spent. But you can feel comfortable and secure without it, if you adjust the way you think.
Can I ask why you’ve got private health insurance? I’ve done a lot of research on it because I’m 30 also and my father in law has been adamant that I get it (my research has concluded I don’t need it and it would be more of a burden than anything.) because he’s filthy rich and can afford it for himself and needed a hip replacement because he’s over 60 and he got in straight away because of it, he thinks it’s necessary for everyone… but he also had to pay out of pocket for it, which could leave you depleted of savings if you ever had to get hospitalised care for any reason.
Is there a particular health reason you need it at such a young age or is it precautionary?
The so called money you save having it young rather than waiting until you’re older is diddly squat to be honest so if you’re really struggling financially I’d be looking more into whether it’s meeting the expectations and needs of yours.
Car insurance premium tip: I’m pretty sure Allianz gives free roadside assist for the first year of a policy. You could switch providers which may save you some money and then just cancel the policy after the first year and switch providers. May save you some money, I’m unsure if it would be a worthwhile figure.