- Budgeting
- Cash Management
- Consumer and Mortgage Loans
- Debt and Debt Reduction
- Time Value of Money 1: Present and Future Value
- Time Value of Money 2: Inflation, Real Returns, Annuities, and Amortized Loans
- Insurance 1: Basics
- Insurance 2: Life Insurance
- Insurance 3: Health, Long-term Care, and Disability Insurance
- Insurance 4: Auto, Homeowners, and Liability Insurance
- The Home Decision
- The Auto Decision
- Family 1: Money and Marriage
- Family 2: Teaching Children Financial Responsibility
- Family 3: Financing Children’s Education and Missions
- Investments A: Key Lessons of Investing
- Investments B: Key Lessons of Investing
Case Study #4
Data:
Catherine called her insurance agent to learn how she could reduce her $1,000 annual homeowners insurance premium. The agent suggested increasing the $250 deductible on her policy to $500: this would result in a 10 percent premium savings. Her agent also indicated that if Catherine was to increase her deductible to $1,000, she would save 18 percent, and if she was to increase her deductible to $2,500, she would save 25 percent.
Calculations:
a. How much will Catherine save per year in premiums if she increases her deductible to $500, $1,000, or $2,500?
b. What are the advantages and disadvantages of increasing Catherine’s policy deductible? What should be the key factor in her decision?
