Industry story
Raise Your Insurance Deductible Once Your Net Worth Can Cover the Gap
family-finances financial-behavior retirement-income
Insurance is a hedge against losses you cannot cover yourself. Once your net worth is strong enough to absorb a $5,000 or $10,000 hit, a high homeowner's deductible just means you're paying lower premiums to protect against something you could handle anyway. Financial planner Adam Grossman's point is straightforward: as wealth grows, the case for carrying heavy life insurance or low deductibles weakens, because you've effectively become your own insurer for the smaller losses. The question worth running is where your own number sits.
Full analysis
Adam M. Grossman makes the case that insurance should protect against losses you genuinely could not absorb yourself — and that once your net worth reaches a certain level, raising deductibles significantly can cut premiums without meaningful added risk. As a concrete example, he suggests that someone with a seven-figure net worth might consider raising their homeowner's insurance deductible to $5,000, $10,000, or more, and re-evaluating life insurance coverage as wealth grows, since at some point a person effectively becomes self-insured.
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