To save money on insurance, many people consider the idea of providers, to see if that can save money. It isn’t uncommon to think that by going elsewhere, you might be able to ‘get a better deal’. The last time I filled my car up at Gull rather than BP, I did save money – and the car still drove fine.
So does it work the same for insurance?
We note that this should be considered carefully, and not simply taken for granted. The answer to this article or blog post is an interesting matter to consider.
Getting a better ‘deal’
With insurance, many experts feel that getting a better ‘deal’ isn’t about saving money on your weekly or fortnightly payments to the insurer. Instead, you’re probably actually getting a better deal if you are paying for a policy that lets you claim more easily on it.
Isn’t all insurance the same?
Certainly not. Insurance can be very different from one type to another. It could be inferred that sometimes people have the impression that insurance is extremely similar. This might be thought from the concept of vehicle/car insurance, for instance ‘If I crash, insurance will pay!’.
But insurance policies are very different from one another. This is especially true when it comes to life, income, trauma, and medical insurance. They can vary greatly depending on the policy wording (that is essentially, forming part of the ‘terms and conditions’ of the policy) – it defines what they will and won’t pay out for.
Try avoid keeping “cost” as the only deciding factor with an insurance company. For a saving of a few dollars, you might find that the new policy does not pay out easily.
Life insurance is relatively straightforward, in that it tends to work as “if someone dies, life insurance pays out”. It does have some terms and conditions, and exclusions, but these are relatively minimal.
Where the matter gets more complicated is with other types of cover.
Be careful of inferior types of insurance policies
Take for example “Trauma Cover” or “Critical Illness Cover”. These policies are designed to cover for critical illnesses. For example, types of cancer, strokes, and heart attacks.
But take a stroke for example. How serious does the stroke have to be, for the insurance policy to pay out?
Or with cancer, how severe, or at what stage must the cancer be, in order to receive a pay out – are questions that are often a bit more challenging to answer or understand.
Another complicated type of insurance is “Income protection”. Income protection can be an amazing type of insurance to have, as it is designed to help give you money when you have experienced an accident or illness. But in the nitty gritty of the terms and conditions of a policy, this is where it gets different.
For example, the insurer isn’t going to pay out if you have been sick for 2 days off work for a cold. But if you had a severe accident, and had to take several months off work, it might pay for that. Some policies pay, whereas others don’t, or may reduce what they pay, if ACC is also paying.
Policies also define the ability to pay based on their ‘disablement definitions’ – that is, they also define, what constitutes being temporarily disabled? Is it being able to only work under 10 hours a week, or is it possible to be partially disabled at 15 or 25 hours of work a week?
Be careful of online insurance deals that sell on price
It can often be tempting to see an ad offering to see the ability to save a little bit of money on insurance. However you need to be careful. Does this represent a good deal? Or does it put you in a harder position if claim time comes? If it does put you in a harder position, is that a risk or consequence you are willing to accept to save a few dollars?
Some insurers may be cheaper in the short term, but more expensive in the long term
There have also been studies conducted to review how some insurance providers may be cheaper in the short term, e.g. cheaper in your younger years. However, as you get older, the premiums increase at a faster rate than other insurers.
So what could you do if you are finding your insurance expensive?
It can help to get professional advice – and in many cases it does not hurt to have a discussion with a financial adviser. This can help to clear up the blur of simply shopping based on price or ringing around for cheaper quotes.
You could talk to a financial adviser that has the relevant skills and knowledge around insurance. It would be worth addressing to a financial adviser that cost is one of your concerns. However, a good financial adviser can work with you to understand that while cost is a concern, it is not the only concern.