There are several ways to reduce your Insurance Premiums, and by implementing these methods you can save yourself thousands a year.

Excess

Most claims are subject to an excess which is stipulated in your policy. If you opt for a higher excess, your monthly premiums will be less. In an average policy the excess is usually between 750 and 1000. If you make your excess 2000, you will also protect your no-claim bonus, by not claiming for small amounts during the year, which will result in your premiums being lowered the following year.
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The word insurance, on a broader sense means ‘Promise of reimbursement in the case of loss; paid to people or companies so concerned about hazards that they have made prepayments in the form of premium to an insurance company’.

In principles, insurance dwells on assumptions such as
1.The losses and consequences are uncertain
2.Rates of losses are fairly quantifiable and predictable
3.Losses are not calamitous
4.Losses are substantial

This unambiguously infers that speculative risks such as those involved in stock investments and gambling are not covered.

Very broadly, insurance can be said to be having two categories; one: Life Insurance and two: Non Life Insurance.

Life Insurance
Life insurance is generally meant to be covering the risk of ‘life insured’s’ life for a predetermined sum, which is called the ‘sum assured’ to be paid either upon death occurring within the term of the insurance or upon expiry of the term itself. As a matter of fact, most of the life insurance policies are based and developed on this premise.

Non Life Insurance
The instrument non life insurance refers to insurance policy for anything other than life insurance. However, the principles are pretty much the same and sum assured and premium values are estimated in the similar way. Nevertheless, there exist two major differences between life insurance and non life insurance. They are:

1. The premiums payments are calculated on the basis of depreciating value of the insured property, each time. This invariably means that premiums get increased every time to cover up for the depreciation in the value of insured property.

2. The premiums paid over the period of the insurance are generally not guaranteed to be accumulated for payback at the end of the term unless otherwise explicitly expressed in the policy document.
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Have you ever worked out how much you spend on insurance? Try totting up your premiums – we suspect you’ll be surprised! You’ll be even more surprised to discover that there’s a probability that you’ve also duplicated some of the cover you’re paying for. Cut the duplication out and you’re certain to save money.

Lots of people have insurance cover for legal expenses, loss of income, theft, even death, without even realising it. This can arise because many of us don’t fully understand what’s covered by the policies we have, especially if the policies had been arranged for us by financial advisers and brokers.

In a recent survey, The Financial Services Authority (FSA) discovered that optional extras such as breakdown recovery and legal expense cover, were frequently added to car insurance without checking whether the policyholder was already covered. It’s also not uncommon to find that people with Permanent Medical Insurance have duplicated their cover via payment protection policies taken out specifically to cover their monthly payments on mortgages, loans and credit cards. The point is that if they claim on their Permanent Medical Insurance, their payout will be reduced because part of their claim is also insured through their payment protection policies – so their payment protection insurance is really a waste of money.

The Financial Ombudsman has confirmed this saying, “People often contact us when they find themselves over-insured. They often do not realise until they make a claim that they have been paying for a policy that provides very little, if any, benefit”.

There’s also ample of evidence that some of us simply don’t understand what we’re actually insured for! For example, take the case of Amanda Lariviere from West Yorkshire. Amanda, aged 42 and mother of two, is recovering from ovarian cancer and had an allergic reaction to chemotherapy which kept her off work. Out of the blue she received an unwelcome tax bill so she decided to visit her building society to find out if she could raise some cash by re-mortgaging. The adviser at the Society wisely asked her to bring with her, her life insurance policies so that they could be used to support her re-mortgage application. So imagine Amanda’s surprise and delight when the adviser explained that her policies with Norwich Union and Scottish Provident, which had been costing her £80 per month, were not life insurance policies at all – they were actually critical illness policies with a combined insured value of £100,000. She was able to claim on these policies and the £100,000 she received was sufficient to pay off most of her mortgage and her tax bill!

Here’s some typical insurance policies to check out.

Critical Illness Insurance

Critical Illness insurance is often sold as an optional extra within a life insurance policy. In fact that’s usually the cheapest way to buy it. However, some enlightened employers already provide critical illness insurance as part of their employment package. Ask your employer if you are one of the lucky ones!

Life Insurance

Some employers also provide life insurance cover within their pension schemes. It’s called death-in-service benefit and typically pays out a tax-free lump sum worth 3 to 4 times the annual salary if the employee were to die whilst employed by the company.

Permanent Medical Insurance and Payment Protection Insurance

Permanent Medical Insurance (PMI) is also known by some people as Income Protection Insurance. PMI pays out the insured monthly sum if the policyholder is off work due to illness due to one of a wide range of specified illnesses – and some policies will even pay out during redundancy. PMI policies pay out indefinitely or at least until the policy comes to the end of its insured term.
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