Many of us waste £100’s every year on expensive or unnecessary insurance policies, making it a prime target for recession-induced cost cutting.
But rather than ditching your cover outright – as many people have done in response to the rising cost of living – it is far safer to simply reduce the cost of your premiums to a manageable level.
Payment Protection Insurance
Payment protection insurance (PPI) can be very expensive, especially when it is automatically tacked onto a loan/credit card/mortgage. Always take the time to compare the various products out there - standalone policies tend to be much cheaper.
Furthermore, research shows that one in five full-time workers currently have more than one PPI policy and could save themselves up to £570 per year by taking out a single product that could cover all major household bills.
Car insurance
Figures from price comparison site Confused.com suggest that you can save over £200 on average by shopping around for car insurance.
You can reduce your premiums further by paying for your policy annually rather than monthly and by taking advantage of discounts for buying online (these can be as high as 25%).
Read more about cutting your car insurance premiums here.
Life insurance
Yes, it’s the ultimate personal finance cliché, but that doesn’t make it any less true: Stopping smoking will save you money on your life insurance.
How much? If you wanted to take out £200,000 of life cover for 20 years for a 35-year-old man, the monthly premium for the lowest-cost policy for a smoker is £26 per month and for a non-smoker £15 per month. The non-smoker gets a 42% discount, which works out to an annual saving of £132 or £2,640 over the term of the policy.
So at what point can you benefit from being reclassified as a non-smoker? In almost every case it’s 12 months after you quit. You must sign a declaration that you haven’t smoked for a year, and if there’s any chance the insurer may contact your GP, take the obvious step and make sure you’ve told your doctor that you have given up.
It’s also worth your while to stay slim: Overweight Britons are being charged up to 50% more for life insurance, as the “fat tax” becomes standard practice for many of the nation’s insurers.
Home & contents insurance
Again, shopping around for quotes is key - Confused.com reckons you can save on average £186 by doing so.
Avoid the temptation to undervalue your contents or cut corners in an effort to get a cheaper quote. Do this and you’ll actually be wasting money if it turns out your policy is worthless when it comes time to claim.
Finally, don’t simply assume fitting an alarm will prove a sound financial investment. Research by Tesco Finance found that the average saving on home insurance from adding an alarm to your property is just £5.
Read more about finding the right home insurance here.
