High inflation is hitting the headlines and hip pockets, and in this kind of environment it’s natural to review the household budget – what is going out and what could be reduced.
Insurance is of course one of those expenses. But it’s not one that can easily be turned off and on like a Netflix subscription – there can be some costly consequences of cutting cover.
Having said that, there are a number of ways policy benefits can be adjusted to provide some cost-relief (depending on your circumstances), and as always, we’re here to help. Read on for a quick summary of some of the options we can look at, and don’t hesitate to get in touch if you’d like to talk through your needs.
A quick look at premium-management tools…
Inflation and premiums: With many policies (but not all) cover amounts increase with inflation every year – it’s an insurance feature designed to ensure that policy benefits keep pace with the effects of inflation. But of course, when the amount of cover increases, so too do premiums.
In times of high inflation, this can have a significant impact on the cost of cover. So, one option to manage premiums, is to remove the indexation feature from your policy. This means that your cover amount (and associated premium) will not increase in line with inflation.
Cover amounts: While we’re on the subject of cover amounts, another option that can help alleviate premium-cost pressures is to review the amount of cover on your policy, to see whether it is appropriate to reduce it. You might, for example, be carrying less debt than when you initially took out the policy, and may therefore only need a lower cover amount.
Now, this is something to carefully consider – it is important to ensure that your level of cover is appropriate for your needs. But, if you think a review is in order, don’t hesitate to get in touch.
Wait Periods: For those with Income and Mortgage Protection Insurance, taking a look at Wait Periods and Benefit Periods can provide options for premium savings. A longer wait period (i.e., a longer period of time before your benefits kick-in) and a shorter Benefits Period (i.e., a shorter period of time that benefits would be payable) are two options.
Once again, it is important to consider the potential impact of these changes – for example, if you changed your Wait Period on your Mortgage Protection Insurance from four weeks to 12 weeks, would your savings or emergency fund cover the difference? And how would using these funds impact other financial needs? We’re here to help you weigh up the scenarios and make a call that is right for your personal circumstances.
Policy Excess: For those with Health Insurance, increasing the Excess Amount can reduce premium costs. If you think your budget could comfortably afford to pay out more to access your health cover at claim time, this could be an easy option to consider.
Long term peace of mind
At Advice4Life, our goal is to ensure our clients have the protection they need for their personal circumstances. And during high cost economic times, we’re focused on helping clients manage the cost of their cover by finding appropriate premium savings, where possible.
As you’ve seen above, there a number of ‘levers’ we can pull to help alleviate premium-cost pressures, while ensuring the ongoing value and peace of mind of having cover in place. We’re here to help if you’d like to talk through your options. Reach out at any time.
Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current developments or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.
