When Money is Tight: What Personal Insurance Can You Consider Reducing?
2024 was tough! Everything in our lives got more expensive and money in the home got tighter and tighter. If you’re finding it hard to make ends meet or need to cut back on expenses, it might be time to reassess your insurance coverages. While personal insurance is vital for protecting your financial future, there are some policies you may consider adjusting or even cancelling to free up valuable money for your home. As Insurance Advisers, we get that it is more important to be able to pay your mortgage and put food on the table than pay an insurance premium so we have put together some options to reduce your insurance costs:
It is important to talk to your insurance adviser before making any changes to ensure you are not leaving yourself exposed if anything were to happen.
1. Life Insurance
Life insurance provides a safety net for your loved ones in the event of your death. However, if money is tight, you may be able to adjust your life insurance policy to reduce your premiums:
Reduce the Coverage Amount: If you’ve taken out life insurance to cover your mortgage or provide for your dependents, consider lowering the payout amount to match your current needs. For instance, if your financial obligations have decreased (e.g., your mortgage is paid off or your children are financially independent), you might not need as much coverage.
2. Health Insurance
Health insurance can be an important safeguard against medical expenses, but it’s also a significant cost. If you’re feeling the pinch, here are a few ways to reduce your health insurance premiums:
Reduce the Level of Cover: You could downgrade your plan to cover only essential services, such as hospital stays and surgery, and exclude extras like dental or optometry. Alternatively, look for a more affordable health insurance provider that offers similar coverage.
Increase the Excess: Many insurers allow you to increase your excess (the amount you pay out-of-pocket in the event of a claim), which can help lower your premiums. Just be sure you can comfortably cover the excess if you need to make a claim.
3. Income Protection Insurance
Income protection insurance provides a safety net if you become unable to work due to illness or injury, but it can be costly. If you’re finding it hard to afford your premiums, here are a couple of options:
Reduce the Benefit Period: Some income protection policies provide payouts for extended periods, such as until you return to work or reach retirement age. If you’re looking to cut costs, consider reducing the benefit period to a shorter duration.
Increasing your Wait Period: Your wait period is the time you need to remain off work due to an accident or illness before your first payment is made. If you have savings or a large amount of sick leave, consider increasing this wait period to a long time frame to decrease your premiums.
Decrease the Monthly Benefit: You can also reduce the amount of money you receive each month through your income protection policy. Consider what you can afford to live on in the event of illness or injury and adjust accordingly.
Final Thoughts
While insurance is important for your financial security, it’s also essential to be flexible and adjust your coverage according to your circumstances. If money is tight, there are ways to reduce certain types of insurance without sacrificing your overall protection.
However, before making any changes, it’s essential to carefully evaluate the impact of reducing or cancelling coverage. Speak with your insurance provider or a financial advisor to ensure you’re still adequately protected while also making adjustments that align with your current budget.
Remember, your insurance needs may change over time, and it’s always a good idea to reassess your coverage regularly to ensure it’s still the right fit for you and your family.
Amy Callon
Financial Adviser
New Vision Financial Services
Plan your future and let us help you have peace of mind along the way.