HOW TO RE­DUCE YOUR IN­SURANCE PRE­MI­UMS

As the cost of liv­ing con­tin­ues to rise, you may be re­vis­ing your monthly bud­get to re­duce ex­penses and save money wher­ever pos­si­ble. How­ever, in­stead of run­ning the risk of miss­ing an in­surance pay­ment and be­ing caught with­out cover, we look at what you

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Ac­cord­ing to the lat­est Mo­men­tum/Unisa South African House­hold Wealth In­dex, the abil­ity of South African house­holds to buy durable goods and re­pay their debts has wors­ened con­sid­er­ably over the past year. The de­cline in house­holds’ net wealth – which is the value of their as­sets minus their li­a­bil­i­ties – means that a grow­ing num­ber of house­holds strug­gle to main­tain their cur­rent life­styles and find it in­creas­ingly dif­fi­cult to re­cover from un­ex­pected shock ex­penses, such as the cost of med­i­cal treat­ment, a car ac­ci­dent or theft. All of this means that in­surance has an in­creas­ingly im­por­tant role to play when it comes to en­sur­ing your fi­nances re­main sta­ble.

If you are bat­tling to man­age your fi­nances and you miss a pay­ment with­out mean­ing to, it is worth not­ing that, un­der the Long-Term In­surance Act, you are al­lowed a 15-day grace pe­riod within which to pay.

Mark van der Watt, CEO of Life In­surance So­lu­tions at MMI Hold­ings, says that although the min­i­mum grace pe­riod in the act is 15 days, many in­sur­ers (in­clud­ing Mo­men­tum) have a longer grace pe­riod (30 days).

“If you be­come dis­abled or die dur­ing the grace pe­riod, and your pre­mi­ums were up to date oth­er­wise, the claim will still be hon­oured. The pre­mium will sim­ply be de­ducted from the pay­ment,” he says. The same process would ap­ply for your short-term in­surance. Gus­tav Jenk­ins, di­vi­sional di­rec­tor for prod­uct man­age­ment at Lib­erty In­di­vid­ual Ar­range­ments, says that although Lib­erty has a 30-day grace pe­riod be­fore ter­mi­nat­ing the cover, in some in­stances the cover will only be terminated up to 55 days later.

Gra­ham Craggs, spokesper­son for Bud­get In­surance, notes that Bud­get In­surance of­fers you free pre­mium waiver cover for six months if you are un­able to pay your pre­mium due to re­trench­ment or dread dis­ease.

“This means your in­surance pre­mi­ums will be cov­ered for up to six months, with­out your pol­icy be­ing can­celled, while you get back on your feet fi­nan­cially,” he says. WHAT YOU CAN DO TO RE­DUCE YOUR PRE­MIUM

We rounded up some key ad­vice from the in­dus­try on what steps you can take to re­duce your pre­mium so that you can to be in­volved in ac­ci­dents and smash-and-grab in­ci­dents. These be­hav­iours, which are gauged by the Mo­men­tum Safety Score, could lead to an an­nual cash-back ben­e­fit of up to 20% of your short-term in­surance pre­mi­ums, even if you claim.

In­crease your se­cu­rity: Your car, home or build­ing in­surance pre­mium is cal­cu­lated based on your risk pro­file. Craggs says your risk pro­file is based on a num­ber of things, such as where you live, the type of car you drive and the se­cu­rity mea­sures you have in place.

“You could re­duce your car in­surance pre­mium if you’ve fit­ted your car with ad­di­tional safety fea­tures such as a track­ing de­vice or an alarm, for ex­am­ple. Sim­i­larly, you could re­ceive a re­duc­tion on your home in­surance pre­mium if you’ve in­vested in an alarm sys­tem for your home or if you’ve moved to a safer neigh­bour­hood,” he says.

Long-term in­surance:

Re­wards pro­grammes: Life in­sur­ers are now pre­pared to re­ward you for ex­hibit­ing be­hav­iour that re­duces their risk. For ex­am­ple, if you are ac­tive and healthy, you are less likely to get sick or die from health com­pli­ca­tions. Van der Watt says Mo­men­tum Mul­ti­ply clients can qual­ify for life in­surance pre­mium dis­counts of any­thing from 5% to 60%.

Re­vise your pre­mium pay­ment: Look at dif­fer­ent ways to pay for your cover. For ex­am­ple, in­stead of pay­ing a level pre­mium, you could choose a pre­mium that in­creases ev­ery year (for ex­am­ple, by 5%). This makes pre­mi­ums more af­ford­able in the short term. If you choose this route, en­sure that pre­mi­ums do not be­come un­af­ford­able in the fu­ture (es­pe­cially if in­creases are greater than in­fla­tion).

Re­visit load­ings: If you had a load­ing or an in­creased pre­mium on your pol­icy as a re­sult of health con­di­tions or dan­ger­ous pur­suits, you could ap­proach your in­surer to re­con­sider the pre­mium if your health has im­proved sig­nif­i­cantly or you no longer take part in the dan­ger­ous hobby.

Healthy life­style: Smok­ers are gen­er­ally charged more for life in­surance than non-smok­ers. If you smoked pre­vi­ously and have since stopped, in­sur­ers of­ten re­duce the pre­mium (as long as you haven’t smoked for a spe­cific pe­riod, for ex­am­ple six months). Pre­mi­ums for smok­ers can be sig­nif­i­cantly more ex­pen­sive.

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