How to Optimise Insurance Premiums

How to Optimise Insurance Premiums

So there is a Bear out there ! And it is RED !!

After reaching historical highs, investment markets are well below what they were in Dec 2021. Bond markets were hit even harder due to rising yields across the globe. If we are to point a finger, there is one common enemy – Inflation

Inflation has sky rocketed due to number of reasons. Retirees were hard hit forcing them to eat into their shrunken capital just to maintain the status quo. Stock market losses are likely to make pre-retirees work longer than planned, and large households are particularly hard hit by mortgage stress, rising fuel and power costs.

In these challenging times our clients need guidance on managing their cash flows and savings amidst rising costs of living. Value of financial advice is more focused on managing household finances and cash flows to most of our clients.

Financial Advisers provide support to clients in managing their cash flow, which can be done through the provision of budgeting tools or cash flow modeling. Advisers can also help you reduce your mortgage costs through refinancing, if your adviser has a strategic alliance with a mortgage broker or assist you with your life insurance premiums as a major way of providing direct support.

While budgeting is an important subject, that’ll be topic for another day. But for now, lets look at how a qualified adviser can help you in optimising your insurance premiums. Here are some of the options available to you.

  • Level of Cover: What was right 3 years ago may not be quite right now. It is likely over time your personal circumstances change. For example you may have less mortgage now, your partner may be back to full time work. amounts need to cover private school expenses may be much lower and so on. Therefore a regular review of your insurance needs with an expert can be a good discussion to have.
  • Are you still smoking ??? When it comes to underwriting smoker status can drill a big whole in your budget. But if your circumstances are changed – generally speaking if you have not smoked for the past 12 months – you may be in a position to reduce your premiums significantly.
  • What about the past times: Similar to smoker status there may be significant loading applicable due to your hazardous past times – such as hobbies and sports, If your circumstances have changed, it should be an easy process to cut down loaded premiums.
  • Change of occupation? You may be able to reduce your premiums if your occupation has changed. Insurance premiums heavily depend on your occupation and what you did last year is not what your doing now, then its time to ring your adviser to have a discussion.
  • Have you lost weight ? Here is another perk of getting into Normal BMI range. If you have been previously loaded due to high BMI, you may be in a position to negotiate with your underwriter for lower premiums.
  • Funding through super: Some of your insurance covers can be funded through your super fund. Superannuation is your long term retirement fund and obviously funding premiums through superannuation can reduce your super savings. However, this is an option available to you and something you and your adviser should discuss in detail prioritising your goals. Generally speaking, this process should not include any medical underwriting – Your adviser can confirm this upon speaking to underwriting.
  • Indexing – A double-edged sword: Were you surprised to see your level premiums have gone up. Level premiums generally do not go up due to age, however premiums increase due to increased level of cover. Whilst indexation is important as it counter the effect of inflation. This is again a discussion you need to have with your adviser to understand whether there is a need or is this an option available to you to reduce premiums.
  • Monthly vs Annual: If you are in a position to pay insurance premiums annually instead of monthly, this option can also save you some premiums.
  • Linking lumpsum covers: Whilst there are advantages as well as disadvantages, bundling your covers can save you insurance premiums.
  • Cover with all extras: Cover extra’s can bring you benefits – however, at a cost. Have you checked what you have and have you discussed with your adviser what they are? Chances are you don’t have a clue ! These are the times you need to speak to your adviser and understand what optional extras you have and whether these are in line with your goals and objectives. Again – an insurance review is worth a discussion.
  • Level Premiums? Are they always good? Did you have a discussion with your adviser regarding the premium structure when your cover was initially set up? Did your adviser / insurance broker talked to you on your long term vs short term goals and structured your cover based on your needs? At times when you are short of cash, these are the important areas you need to address.
  • IP Cover Waiting and Benefit period: IP cover waiting and benefit periods are variables that you can discuss with your adviser to optimise your premiums whilst addressing your goals. For example you may have 3+ months worth of annual, sick and long service leave which you did not address when the cover was originally designed. Something worth looking at.
  • Compare the Pair! : A cover underwritten many many years ago might not have competitive premiums compared to current market pricing (within the same provider). Your adviser can assist you to compare cover premiums as well as features/benefits.
  • Medical History: Improved medical conditions overtime can reduce your premiums. Your adviser will be able to speak to your underwriter to negotiate removing medical loadings.
  • Shop around! : As many say, there is very little benefit in loyalty these days. Speak to your adviser today. You adviser is equipped with tools to compare premiums | benefits to investigate the best available cover in the market.

At Galleon Capital & Advisory, you are most welcome to approach us to review your existing insurance policies. We will provide advice to match your needs and budget, and our review service is complimentary. We do not charge any fee for reviewing your current insurance cover or going through a needs analysis.

Finally if you are considering to change / or even to cancel your covers, please speak to an adviser first. Once a cover is changed ( level of cover or a feature ) , it is likely you will have to go through underwriting if you are to change these covers back to what had before. And you may not be able to restore your cover back if you had a medical condition.

BY : Shan Muthukuda | Galleon Capital & Advisory Pty Ltd

Galleon Capital & Advisory Pty Ltd (Corporate Authorised Representative No. 001301679) and Shan Muthukuda (Authorised Representative No. 001233173) are authorised representatives of Spark Advisors Australia Pty Ltd ABN 34 122 486 935 AFSL 380552

General Advice Warning: “The information in this document has been prepared for general information purposes only and does not take into account your personal objectives, financial situation or needs. It is not intended to provide commercial, financial, investment, accounting, tax or legal advice. You should, before you make any decision regarding any information, strategies, or products mentioned in this document.

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