Worried about insurance affordability? Read these expert tips.
With interest rate hikes, predictions of a recession, continually high property prices and the impact of unprecedented weather, many Kiwis are justifiably concerned when it comes to their finances.
When there’s an urgent need to curb monthly outgoings, paying for an insurance policy might seem difficult to justify.
However, as our experts explain, there are a number of ways to make the cost of insurance more manageable. They also share what to consider before you make the call to cancel.
Isn’t it sensible to cancel my insurance?
Insurance is there to help you protect the people and things that you love most – and help you get back to living the life you love.
As the last few years have shown, nothing is certain in life. Insurance, on the other hand, gives you the certainty that you’ll be protected.
What if I cancel now, but re-obtain my policies later?
Your policy will be a ‘guaranteed-renewable’ contract. Provided that you have made a full and correct disclosure when you applied for your policy (and you’ve abided by the terms of that contract), you can have complete certainty that you’ll be covered – even if your circumstances change. (For example, you have health insurance and go on to develop a serious medical condition.)
If you are considering cancelling your policy, also have a think about how:
Cancelling your insurance will mean you aren’t protected if a claim event occurs.
Choosing to re-obtain your insurance later on requires ‘fresh’ medical underwriting. This involves an updated assessment of your health history. It could mean that your pre-existing condition/s are no longer covered.
Insurance is one of those things that you need to have in place before you need it. Trying to get cover later on isn’t always successful – especially if your health has changed.
If it’s crucial to reduce your expenses, there are lots of options worth considering before totally cancelling your insurance.
What about adjusting my premiums – would that make them more affordable?
While each policy and policyholder is unique, it is certainly possible to keep your insurance more affordable by adjusting your premiums.
A qualified insurance advisor can advocate for you with your insurance company and use their extensive knowledge to recommend the ideal option for you and your family.
Here are a few of the things that you could consider together.
Premium Holiday
This allows you to stop paying your regular premiums for a specified period of time. Only some insurance providers offer this option:
You can still make a claim during a Premium Holiday.
You must demonstrate you are experiencing financial hardship to qualify.
A Premium Holiday can only be use once during lifetime of your policy.
Premium Suspension
This allows you to pause paying premiums for up to 12 months.
You cannot make a claim if you have a Premium Suspension.
You can continue with your policy (and keep you existing terms) at the end of the suspension period.
A suspension can only be used once during lifetime of your policy.
Reduce the sum insured
Decreasing your sum insured will mean that your premiums also decrease:
This can be a good option if you are younger and have life insurance.
Most life insurance policies have a built-in ‘special events’ increase which means you can increase your existing cover, without further medical underwriting.
Getting married, or having a child, are two examples of ‘special events.’ Learn more here.
Increase excess
Depending on your insurance policies, increasing the excess allows you to reduce your premium payments:
Be realistic about the amount of excess you could afford, should you need to make a claim.
Check if you can reduce the excess later on – or if it will need to remain fixed.
Increase wait time
The wait period is the amount of time between making a claim and then receiving a payout.
For some policies (like mortgage and income protection), lengthening the wait period can reduce your premiums.
Having the right people on your side
As the devasting recent weather events have shown, insurance providers want to help you when you need it. After all, it’s in their best interest to have you maintain your existing policies.
At Plus4, we’re on your side to offer the expert insurance advice you need through the good times – and the tougher times too.
Don’t assume that cancelling your insurance is the only realistic option when finances are tight. By taking the time to understand your needs, our experts will help you make the best decision for you and your whānau.