Don't cancel your insurance policy to cut costs! Save with this tip
For cash-strapped South Africans, saving a portion of their monthly income has become nearly an impossible task as the economy continues to bite.
Budgets are re-looked, expenses are cut as families look to keep head above financial water.
In their relentless effort to cut bills South Africans should not, however, throw the baby out with bathwater by cancelling their insurance policies to reduce their monthly expenses as this could have a disastrous impact on their finances later on.
Christelle Colman, insurance expert at Old Mutual Insure, shares some valuable tips that consumers can employ to ensure that they pay the lowest price for only the cover that they need and retain their insurance policies despite the hard economic times:
- Get professional help. Develop a good relationship with your insurance company or, better still, work with an independent broker able to explain and negotiate better monthly premiums.
- Consult broadly. Take the time to list your risks and needs with your insurance company or broker - and then only purchase the cover that you need.
- Shop around. Understanding and comparing the content of different covers (not just the price) often results in savings as it allows people to pay for the risks that they have. “Don’t just buy any old cover for your home or car because the price is right,” cautions Colman.
- Combine covers. Significant savings can be achieved through umbrella policies that cover your home, car, possessions, life etc. in a single umbrella cover. “Not all insurers offer umbrella cover, so, again, it makes sense to shop around to see who does,” advises Colman.
- Make annual or biannual payments. Paying premiums in chunks in advance often attracts a discount. “Not all insurers will tell you this as a matter of course, so be sure to ask your insurance company or broker whether paying in advance is an option and how much discount it will attract,” says Colman.
- Consolidate your insurance policies. Even if you don’t choose umbrella cover, significant savings can be realised by combining your existing covers into a single policy. “The consolidation process also often highlights overlaps or redundant covers which, once eliminated, will also help reduce costs,” adds Colman.
Stay up to date. It is important to re-look at what you have covered each year, especially when your life or lifestyle circumstances change. For example, “have you bought new electronic goods, sold jewellery, installed an electric fence, acquired an artwork, downscaled to a smaller apartment, or decided to become a one-car family?” asks Colman. Sometimes very small changes can result in large premium savings.
The main take-away, however, is not to panic as bills mount.
Instead, “take a good hard look at what your risks are and what is most precious to you,” says Colman. Once you understand these, prioritise what is most important to you, “especially what you will not be able to replace, or repair should you lose it or have it destroyed,” explains Colman.
If done right, the result should be a reduced premium payment each month that will cover the risks that matter in is a one’s life. This will also help consumers resent insurance payments less, consider insurance less of a grudge purchase and, “achieve the peace of mind which is, after all, the real purpose and value of insurance,” concludes Colman.