When you apply for personal insurance – whether it is life insurance, critical illness cover or an income protection policy – you will be quoted a monthly or annual premium, and not everyone pays the same.
What decides your insurance premiums
Insurance companies have ‘underwriters’, who will look at your situation, and the bottom line is that the cost depends on the chances of you making a claim. The higher risk you are, the more it will cost. Therefore your premiums will depend upon :
- Your age – the older you are, the more likely you are to get ill or die
- Your health – the worse your health, the more likely you are to get ill, or die
- Your habits – anything that could speed up illness or death: smoking, drinking or even hazardous sports
Reduce your monthly insurance premiums
Sadly, your age is obviously unstoppable (beauty serums excepting).
However your health and your habits can improve. This means that you can become less of a risk to an insurer, which means that your monthly premiums can go down.
If you have an existing life insurance policy which you took out when you were a smoker, and you have since given up – it is well worth reviewing it. Your existing insurer may reduce the premiums, or if not, you could start again with a new policy (you should never cancel a policy until the new one is accepted).
Less obvious, though, are ‘medical ratings’. To give a real life example, I have a client who applied for life insurance two years ago. Because she had suffered from Post Natal Depression, the insurer applied a ‘rating’, ie. an additional premium. Because she has not had any symptoms of depression since she took out the policy, she has been able to reapply, and reduce the monthly premium from £27.75 to £18.80. This is significant saving over the next 25 years.
So if you have had any ‘special terms’ applied to your policy at the start, do not assume that they need to be there for ever. You might be paying over the odds.
Henrietta Oxlade is an Independent Financial Planner with Radcliffe & Newlands and MyFamilyClub’s in-house finance sage! She has been advising individual clients since March 1988, which is why many of her clients consider her part of the family. If you want to contact Henrietta, email us on [email protected] and we’ll put you in touch.