When it comes getting your monthly debts under control one of the things that many people look at is whether they should pay their insurance premiums or credit card debts first. This is an argument akin to a double edged sword. The truth is that both of these items are vitally important to the overall financial security ones needs in life. Credit card debt can skyrocket out of control very fast if left unchecked, insurance however is a necessity that you must have in order to protect your health, home, family and property. So, which is it? Do you pay insurance or credit card debts first?
The simple fact is there is not an easy answer to this question; each person will have to look at this according to their own individual situation. In general, it’s probably a better idea to make sure that your insurance is paid as a lapse in your premiums will lead to the suspension of your coverage and possible the cancellation of your policy. This is not good as you will have no protection in the event of accidents or calamities. If it is in your mind that you can simply take the chance now and will get coverage again after your debt situation is in a better condition, thin about this, the cost of your monthly premiums are usually only 1/4 of the cost of getting new coverage established and often there is a buildup period of anywhere from 30-45 days (or in some cases even longer) for new insurance coverage to be in full force. Is it worth the extra cost and the risk of being without coverage for an extended period of time just to save the cost of your premiums now?
You should also bear in mind that you may not be able to easily get coverage down the road. In many cases the company that you dropped the policy on will not issue you a new policy as they now feel that you are untrustworthy to meet your obligations to them. They may even post your information to an industry database which could make it difficult to get coverage with any national firm, as you will be seen as a risk in terms of staying current with your premiums.
You can see that there are several good reasons to choose to pay your insurance first. While you may at first be intimidated by the throught of your credit card debt getting even bigger, the truth is that it is not going to go away by merely applying the cost of your insurance premiums one time. What will happen is that you will not have the insurance that you need in the event of an unforeseen emergency, which will leave you with much bigger problems than dealing with credit card debt.