Reducing the cost of your personal insurance cover

16 Oct 2012

By Shadforth Financial Group

Personal insurance is a necessary evil for most of us. Throughout our lives we want different levels of insurance cover and as we get older the cost of insurance increases as the risk of a claim also increases.

Insurance companies are effectively "risk transfer businesses" in that you are able to transfer your personal financial risk to that organisation. Like any business decision they assess the risks of you making a claim and the higher the risk the higher the premium.

When assessing a personal insurance application the following factors are usually taken into account: age and sex medical history / pre-existing conditions family medical history results of a medical exam (as the level of cover increases you will usually be required to undergo more stringent medical tests) smoker or not mental health record occupation lifestyle issues such as any risky hobbies which you undertake and features, coverage and limits selected.

How can you reduce your premiums?

Whilst you can't control your age and family medical history, you are able to control the lifestyle issues which impact your premiums. These lifestyle factors include: 

  • Smoking – non smokers generally live longer healthier lives and as a consequence the cost of an insurance premium is approximately half what it costs a smoker. To change your status from a "smoker" to a "non smoker" you generally need to have given up for a period of 12 months.
  • Weight – the heavier you are the more likely you are to develop chronic diseases. Losing weight can save you a small fortune with the premium.
  • Risky activities – If you are a daredevil or a risk taker your premiums will be higher.
  • Your occupation – certain occupations have higher risks and accordingly you will pay a higher premium.

A final word 

Having insurance is an essential component of your personal wealth protection package. However where you are able, it is worth taking a few small steps to reduce the premiums which you pay. It can save you a small fortune. If you have any questions or would like to discuss your personal insurance needs please don't hesitate to contact your adviser.

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