It is important to review your insurance plans on an annual basis or at least when there's a key milestone in life like child birth, buy/sale of property and change of job.
And if you feel you are over paying for your insurance plans, take note of these methods to reduce your insurance expenses today!
I have recommended some of these methods when doing a portfolio review with private clients.
Towards the end of the article, I'd give you bonus tips on what to note first BEFORE buying a plan
Method #1 Review the benefits of your term plans
Some of the older generation term plans are not competitive.
While it is true that premiums are affected by age and you are older now, there are still many instances that a newer term plan can be cheaper.
However, before switching plans, it is important to ensure that the benefits are comparable and that the terms and conditions affected by your health status is also comparable.
If you have several term plans, it may be favourable to amalgamate them into bigger term plan.
For example, premiums of three $400k sum assured term plans may be more expensive than one single $1.2m term plan. This is due to discounts given with larger sized policies, thus reducing your insurance expenses in total.
If in doubt, do speak to a qualified adviser first.
Method #2 Reduce your early critical illness coverage
Early critical illness is important to you as it allows claims for instances like early stage cancer. There may be temporary loss of income that you want insurance on.
However, I've frequently seen excessive Early critical illness coverage amounts.
Premiums for an early critical illness accelerator rider can be expensive and if you feel you may be over-insured in this area, you may consider removing it.
If in doubt, do speak to a qualified adviser first.
Method #3 Pay premiums on an annual mode
A simple step such as adjusting your premium payment frequency can help you to pay less for your insurance policy.
Premiums can be paid on a monthly, quarterly, half-yearly and annual mode
If you would like to pay less, always choose annual mode as savings can be around 3%.
In the example below, its about $120/y!
Method #4 Convert to "paid up" for whole life plans
This option should only be explored if you are cash strapped and you'd want to stop premiums.
Most whole life plans allow you to convert coverage to "paid up".
However, there may be changes to the policy such as to the rider and the Surender value.
If in doubt, do speak to a qualified adviser first.
Method #5 Quit smoking if you are a smoker
Premium rates for smokers are at 50% more or higher from my experience!
This is due to higher probability of health issues.
If you quit smoking permanently for a period (usually 12months) and become "non-smoker", you may get a premium revision to your policy. This would greatly your insurance expenses
Note: For medical insurance and accident insurance, there is usually no difference in premiums between smoker and non smoker.
Bonus before buying policy: Backdate if possible
There is generally confusion on backdating policy and most often then not, the premium savings justify a backdate.
If you birthday is 2/1/1991, backdating policy to 1/1/2021 means you buy the policy at age next birthday (ANB) 30. There will be premium savings as compared to ANB 31.
Policy starts from 1/1/2021 and that is when renewal premium is needed also.
The maximum backdating is usually 6months and it applies mainly to term and whole life plans.
If you'd like to learn more, check the video below which was shared on my YouTube channel.
It should share more strategies with you! Click below and hope it helps!