Tips to Reduce Cost of Insurance Premium
The costs of insurance policies are determined based on different variables of both the insured and the characteristics of the product to be insured. The consideration for such insurance is carried out through a premium, which is covered by installments, either monthly, quarterly, semi-annually or annually depending on each policy to be contracted as well as the insurer.
The amounts of these premiums can be variable and even personalized depending on each user. However there are some suggestions that you can take into account so that the price of your policy is reduced considerably.
Some ways to save on the payment of your insurance premiums are:
1) Use insurance simulators: There are various insurance simulators or insurance quotes tools on which you can compare different options in minutes both in coverage and costs. One of the main advantages is that they even have exclusive promotions and discounts when contracting directly with them.
2) Increase the percentage of the deductible: This is one of the most common ways to lower the amount to be paid for the partial payment of your insurance. However, it becomes a two-edged sword because, although the financial benefit can be perceived immediately. In the long term, this can affect when covering accident expenses, since having a high deductible, you will cover a high fee in case of any accident. If you decide to take this alternative, it is suggested to have an additional emergency fund to be able to cover the deductible amount without any problem.
3) Compare options: When buying any type of insurance you should compare at least 3 different options to know the coverage and costs offered by each insurer, as well as the deductible percentages, amounts of insured sums, etc.
4) Contract only the coverage you need: It is very common to find different types of packages, ranging from the basic to the most specialized, where the more risk coverage contracted, the higher your premium payment will be. Look for a basic or limited policy that offers support for the most common risks based on your needs.
5) Avoid taking out additional coverage: Insurance companies, in order for you to build a personalized policy, provide you with additional coverage options focused on specific situations, avoid adding another type of protection unless it is necessary.
6) Contract low insured sums: As with the deductible option, this action could be counterproductive in the long term since the amount to cover your expenses will be minimal. However you can choose to pay less in your installments and manage an additional savings in case your payments exceed your insured sum.
7) Purchase several policies with the same insurer: If you are considering buying different types of insurance, or if you already have one and want to take out a different policy, consider doing so through a single insurer. These companies usually offer discounts when you take out more than two policies with them.
8) In the case of property insurance, improve the security of your property: Insurance companies calculate the cost of your premium based on the characteristics of the property you are about to insure, whether it is your car, house or business. The higher the probability of being involved in an accident, the higher the cost of your insurance.
9) Maintain a good credit history: Currently, insurance companies review your credit history to determine the cost of your premium, which is why it is ideal to keep your accounts up to date and avoid taking out more credit than you need.
10) Demographic and geographic factors: This is another variable that impacts the cost of your insurance. However, these are characteristics that are almost impossible to modify, since depending on each policy to be purchased, certain particularities such as age, address, gender, etc. may be considered.
Tips to reduce the most common insurance premiums:
We have talked about how to reduce the cost of buying insurance in general. Now the following section offers how to reduce insurance premium of the following types.
- Before buying a car, make sure it has a good safety system, such as ABS brakes, air bags, passing score in safety tests, etc.
- Make sure you buy a car that has a low theft rate. Otherwise it represents a higher risk and as a consequence the premium will increase.
- Consider taking driving courses, some insurance companies have their own workshops for safe driving, which provide points in favor of lowering your premiums.
Insurers that offer this type of insurance have alliances with different hospital networks. Most of these are identified through levels. Choose those that are standard level, if your goal is to save the ideal and avoid luxuries.
Decrease the medical fees: Depending on the hospital levels, you have to pay the fees of the doctors who will attend you. So choose to decrease the amount of the same.
Choose annual installments to pay your insurance: By paying in a single exhibition the cost of your policy, insurers usually offer a discount, as opposed to paying it in months since it may be perceived as a financing.
Create a safe space: Just like car insurance, having a property with security systems will reduce the risk of suffering an accident, so your insurance premium will automatically be lower. To do so, you can consider installing smoke detectors, placing specialized locks on doors and windows, installing emergency alarm systems, etc.
Build your house against natural disasters: Whether you are considering building your house or you are about to buy one already built, the ideal is to consider installing flood panels or a specialized drainage system for this type of situation.
Also try to have steel beams to reinforce the structure and foundation of your home to help against earthquakes.
As you can see there are different ways to reduce the payment of your insurance premium. However you should change the perception of hiring this type of services, since more than an expense it should be considered as an investment for the future. Because in case of unforeseen situations, it will support you economically. Taking out insurance is one of the best prevention practices that you can consider for you and your family and your patrimony.
I am Nikesh Mehta, owner and writer of this site.
I’m an analytics and digital marketing professional and also love writing on finance and technology industry during my spare time. I’ve done online course in Financial Markets and Investment Strategy from Indian School of Business. I can be reached at [email protected] or LinkedIn profile.