Teens and Cars

Families dread adding teenagers to their auto insurance. But Ian and Vickie Ross of Plainview, N.Y., were pleasantly surprised that their premiums didn't rise very much after their daughter, Alexa, got her license. Ian has had coverage through State Farm since he was in his twenties, and he benefits from discounts for long-term customers with good driving records. The Rosses keep all of their insurance -- homeowners, an umbrella liability policy and coverage on three cars -- with State Farm, which makes them eligible for extra discounts. Having all their policies with one company "gives me peace of mind," says Ian.

Alexa's good grades helped keep her premiums low, and younger brother Evan knows how big a difference grades can make when he gets his license in the fall. When Alexa headed off to college in Buffalo without a car, she qualified for a lower rate but is still covered when she returns home for vacations. Pairing a young driver with a safe car can also make a big difference in your premiums (find vehicle ratings at www.carsafety.org).

More from Kiplinger's Personal Finance: • Save Thousands on Insurance • Paying Too Much for Car Insurance? • Street Smarts for Teen Drivers

If you don't have a long-standing relationship with one company, check out the market when your kids start driving. An insurer offering the lowest rates for adults may have some of the highest premiums for teenage drivers.

Keeping all three kinds of insurance with one company also simplifies the Rosses' finances. State Farm sends them a consolidated bill every month, so "you don't take a hit in any particular month," says Ian.

He also decided to simplify his life insurance this year by replacing several small, annually renewable term policies with two 20-year term policies, which will provide coverage at a fixed price until his mortgage is paid off. "Now I don't have to mess with anything until I'm 68," says Ian.

Shopping through AccuQuote.com, Ian purchased two $750,000 policies for just over $1,000 per year for each. He also bought extra coverage through his employer, Orbitz. Because insurance rates have dropped so much over the past decade, you may be able to lock in a longer term with little impact on your annual premiums.