In recent times when everyone has been getting their renewal notices for their personal insurances such as income protection and life insurance, they have usually been subject to a decent rise in cost of premiums. Most people don’t like paying for insurances but understanding it’s importance, however no one likes to receive a letter stating a decent increase in the cost of that insurance, so in today’s blog I’m going to run through some of the things you can do to curb the cost of your insurance premiums.
This one is quite obvious but one way to stop insurance premiums going up can be to lower the amount of cover you have if you have lump sum covers such as life insurance, total and permanent disablement and trauma covers. If you have income protection you could also maybe look to lower the cover however it may be better to look at other options such as extending out your waiting period.
Your need for insurance may be less as you go through different stages of life, especially if your children are getting older or you have paid down more of your debt then you may find that the level of insurance you signed up for at the start is not appropriate any more and you may be over insured.
There are plenty of options in terms of other insurers and like the way you shouldn’t just take out a mortgage and leave it with the same lender for the whole life of the loan without reviewing, you should be reviewing your insurance provider. This is where you should make sure to be getting in touch with someone like a financial adviser to review your current insurances and to see if there is a better option out there for you.
It is important to note that if you are changing insurers you should always make sure to keep your old insurances in place up until your new policy is put in force, this will ensure that you are never left without cover or you are able to hold onto your old cover if the new insurer offers you amended terms that aren’t as favourable.
It may be that you have a very comprehensive level of cover with all the bells and whistles which you feel you may need, and you may be able to save some costs that way. You can also look to see if you have indexation turned on for the policy, this is where the policy automatically increases your cover each year and you may feel that you no longer need that. Make sure that you will not need the extra policy definitions though because sometimes these can be the difference between getting a successful claim and not been successful.
As with any part of your financial plan, insurances should not be a set and forget strategy. You should be constantly reviewing and making sure what you have is the best option for you both in terms of cost and policy definitions. If you feel your insurances have grown a lot higher lately be sure to reach out to us and we can review them to see if there is a better option.
Zac is a qualified financial planner at Pekada and host of the Wealth Collective Podcast. Living in Melbourne, Zac has six years of experience in advice and specialises in wealth accumulation and protection strategies. He loves to keep his finger on the pulse for the best strategies for wealth accumulators looking to build and protect their wealth tax effectively. Zac has been featured as an expert in Money Magazine.