Overpaying For Your Insurance Policies?

We all know that insurance is there to protect us; some may be legal necessities, such as car insurance or buildings and contents insurance, while others might be optional such as travel, pet or even life and health insurance and income protection. 

No one wants to pay more for insurance than they need to. In fact, many of us choose our insurance firms purely on the cost of the monthly or annual premiums without questioning whether it’s giving value for money and offering us the protection we’re looking for. 

Hundreds of thousands of people every day turn to comparison websites to find the cheapest insurance premiums without really understanding what they are looking for. But that could be a financial misstep. Without taking the time to understand what you’re searching for, you could be overpaying for your insurance or duplicating the protection that you already have in place. 

To help you figure out if you could be paying more than you need to on your insurance policies, Andy Mellor from The Insurance Surgery, the UK’s leading life insurance broker, tells us some of his insider tips to help you save cash. 

Travel Insurance

If you’re going away on holiday, you should always take out travel insurance. Depending on your policy, it could out if you require medical assistance, lose your luggage, miss a flight or even break your phone.  

You could reduce costs by choosing an annual rather than a single-trip policy. In many cases, this could lower your premiums significantly. But before you select the lowest possible price, make sure that it provides adequate protection to cover you for baggage claims, cancellation and medical expenses. You should compare like-for-like policies to check what financial security you are choosing. 

Andy’s top tip is to double-check if you already have insurance in place. 

He says: “Often, people buy single trip insurance policies without realising they’ve already got some form of travel insurance through their bank or building societies. Many offer European travel insurance as an incentive for specific products. However, it’s always worth checking what cover is available within the policy to check that it’s enough for your needs.” 

Mobile Phone Insurance 

There’s nothing more frustrating than breaking your phone or tablet screen and having to cope with a cracked screen (or worse). 

If you upgrade your phone, you’ll likely be upsold an insurance policy at the same time. It makes sense – the latest iPhones and Androids now cost £££, so you want to check that it is fully protected from damage, loss or theft. 

Always double-check your home contents insurance before you take out a specific policy. If you’ve chosen to add a gadget cover to your policy, you might not need an additional plan. 

Buildings & Contents Insurance

It’s possible to overpay for buildings or contents insurance by not shopping for the best deal. Auto-renewals don’t always offer the best choices. You could play around with minor changes, such as increasing the excess payments to reduce your home insurance costs. 

An easy way to reduce your home insurance premiums is to proactively take steps to increase your own security. You could save money if you can show that you have CCTV systems installed, an alarm system or even the latest lock mechanisms. 

It’s also important to check that you select the right cover amount. Rather than guessing the value of your contents insurance, there are ways to actively calculate the value of your belongings.

You may find that if you are working from home regularly, you might benefit from a reduction in your insurance costs. That’s because insurers will see your home as less risky. After all, the property is occupied during the day. 

Andy also recommends taking out buildings and contents insurance at the same time.

He says: “It is most likely that your insurance costs will be lower if you take out a combined insurance plan rather than separate policies. Not only will this save on money, but it will also be logistically simpler for you when it comes to renewal time.”

Life Insurance

Life insurance will offer long-lasting financial protection for your loved ones if you pass away or are diagnosed with a terminal illness. 

As a life insurance broker, Andy knows the importance of financially protecting yourself and your family. But many people may be surprised to learn they already have protection without realising it. 

If you work for a large employer (such as the NHS or the armed forces), you may be eligible for death-in-service benefits, so a stand-alone life insurance plan might not be suitable for you. Or, if you want additional protection, you could take out a smaller policy to supplement your death-in-service clause.

If you rely on your death in service benefits, ensure you are aware of any eligibility clauses within your contract. For example, you might have to actively pay into a workplace pension to receive the benefits. 

Andy’s top tip is to always speak to a broker rather than relying on a website offering an instant life insurance quote. That’s because a broker will be able to understand more about your personal circumstances.

He says: “If you talk to a broker, not only will they be able to find you deals that may be unavailable to the general public, but they’ll also be able to clarify how much cover you need, find you a cheaper premium or change the way that your policy is paid out. If you’re serious about setting up financial protection for your family, a broker is the best way to guarantee that you have the right policy for your needs.” 

Income Protection

Along with life insurance, it’s important to think about taking out an income protection plan. This is protection that could pay out if you were signed off sick or injured and unable to work. 

Too many people rely on their savings or statutory sick pay. But if you were self-employed and not eligible, or your savings ran out, you could be at financial risk when you should be focusing on your health. 

Income protection could pay out up to 70% of your salary until you are medically able to return to work or you reach retirement age (or the end of your policy term).

Income protection is often an add-on with life insurance, and most people think about it when looking for a mortgage. That’s because lenders will want to know how you plan to pay the bills if you can’t work. If you’re looking to save money on your expenses, it’s usually more financially viable to take it out as an addition to a life insurance plan, although separate policies are available. 

Andy believes it’s always better to speak to a broker rather than rely on online quotes because a broker can find better deals and check if you are eligible for an employer’s sick pay policy.

He says: “The trick to reducing your income protection payments is to speak to someone about your current protection. A broker can build a policy around your employer’s offerings – whether they offer enhanced or just statutory sick pay. For example, if you work for the NHS, you can have up to 6 months of full pay before reducing to half pay. Rather than receiving an income protection payout immediately, you could reduce your premiums by waiting until your salary reduces and then receiving the payout – that way, you’re not duplicating the protection you already have. It will also naturally lower your insurance costs.”

Get The Insurance You Need

If you are looking for an insurance plan, it’s always worth talking to a broker rather than relying on a computer algorithm because you’ll have a better opportunity to have a policy built around you. 

You can ask questions and check that any potential payout will match your expectations. And you could even benefit from lower prices because a broker has access to better deals that you might not be able to secure yourself. 

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