Ever found yourself thinking, “Why am I paying so much for insurance every year?” Or maybe someone in your family said they wish they could cut down on insurance expenses, but are not sure how. You are not alone. Whether it is health insurance, car insurance, life insurance, or home insurance, premiums can feel like a big chunk of your yearly budget.
Moreover, the rising costs of living and unforeseen expenses have made 'saving on insurance premiums' the talk of most households. Are you also looking for some hacks to save money on your insurance premiums? There is some good news! You can reduce your insurance costs without compromising on your coverage.
Let's take you through some simple and real-world strategies to help you save money on your insurance premiums.
Insurance Premiums - Why Do They Matter?
First, take a look at this quick refresher: An insurance premium is the amount you pay out-of-pocket regularly, either monthly, quarterly, or yearly, as per your policy, to keep your insurance active.
For example, you shell out INR 12,000 per year for your car insurance premium to keep your car and finances protected, or INR 5,000 per month as health insurance premiums to safeguard your health.
If you happen to save on these premiums, you can save a chunk of money without interrupting your extent of coverage.
9 Hacks to Save On Your Insurance Premiums
Here we have listed some effective hacks to help you cut insurance costs without cutting your coverage:
1. Compare Policies Before You Buy
Imagine buying a new smartphone. Would you check prices at just one store? Probably not. You would rather compare online, ask your friends, and visit two or three shops. Right? The same logic applies to insurance. Don’t settle for the first quote you get. Compare multiple policies to find the one that perfectly suits your needs and budget.
2. Increase Your Deductible
A deductible is the amount you agree to pay from your end when making a claim. And the formula is "the higher your deductible, the lower your premium".
For example, your vehicle insurance deductible is INR 2000. If you happen to increase this amount to INR 5000, your premium is likely to drop by 10 to 20%.
Pro Tip - Make sure to increase the deductible only if you can comfortably afford it during emergencies without having to strain your financial planning.
3. Go for Long-Term Policies
Many insurance companies now offer multi-year health and motor insurance policies. How does it help you save money? Well, when you buy long-term insurance plans, you get a lower premium rate for locking in for two to three years. So, it protects you from yearly price hikes.
For example, instead of renewing bike insurance every year, you buy a 3-year policy at a discounted rate.
Pro Tip - long-term policies not only save you money but also save you from the hassle of remembering renewal dates. It also reduces the risk of policy lapses and fines.
4. Bundle Multiple Policies Together
Buying more than one policy from the same insurer often gets you a discount. So, how much can you save? Although it depends on your insurance provider, it could be somewhere around 5 to 10% of your total premium amount. For example, buying a car and health insurance or life and personal accident insurance from the same insurance company.
Pro Tip - Never compromise on essential benefits just for a discount. Always check if the combined coverage meets your individual needs.
5. Maintain a Good Credit Score
Insurance providers are likely to consider your creditworthiness, especially for motor and health insurance. So, a better CIBIL score means better rates and easier approvals.
Pro Tip - Always pay your EMIs on time and avoid maxing out your credit cards to improve your CIBIL score.
6. Use No-Claim Bonus (NCB) Wisely
NCB is a reward or bonus from your insurer for not making any claims during the policy year. Also, you can transfer this bonus if you ever wish to change your current insurer.
For example, if you do not make a car insurance claim for one year, your next premium might get reduced by 20 to 50% over time.
Pro Tip - For minor car dents or medical costs, check if it is cheaper to pay from your pocket instead of using insurance and losing your NCB.
7. Install Safety Components
Adding safety devices in your car or home can help reduce your premiums. It works on the concept of " Enhanced safety means fewer risks and fewer claims". The most common gadgets people install are:
Car Insurance: Anti-theft alarms, GPS tracking, etc.
Home Insurance: Fire extinguishers, burglar alarms, CCTV, among others.
Pro Tip - Only recognized and certified gadgets will qualify for premium discounts. Make sure the safety devices you install are approved by your insurer.
8. Stay Healthy and Safe
In India, health and life insurance premiums often depend on your lifestyle choices. There are lower benefits available for non-smokers, non-drinkers, and people with a healthy Body Mass Index (BMI).
Pro Tip - Schedule regular health check-ups and maintain medical records.
9. Review and Update Policies Annually
Many people forget to review their insurance, leading to wasted money. Always remember the following things:
Your car’s value depreciates. So, you can adjust the IDV (Insured Declared Value) to lower your premium at renewal.
Your family situation may also change (marriage, kids). So, you might need to adjust your life or health insurance. You can do these changes during renewal.
Pro Tip - Set a yearly reminder to review all your insurance policies at least a month before renewal.
Summary
Saving on insurance premiums is not just for finance experts. It is something every Indian household can do with a little awareness and planning. By following the tips discussed above, comparing policies, increasing deductibles, bundling plans, improving credit scores, and not making claims for every little thing, you can reduce your insurance bills without cutting back on the protection you need. If you’re unsure where to start, an insurance advisor can help you assess your needs, compare options, and guide you toward policies that offer the best coverage at the most competitive premiums.
