We’re all familiar with insurance payments. There’s car insurance, home insurance, home contents insurance, boat insurance, natural disaster insurance, life insurance, funeral insurance, health insurance! There are so many types of insurance, and not many of us take out all of them, but most of us have at least a few.
And in a year, a few insurance premiums can add up to a pretty large sum. Insurance companies make their insurance premiums look more attractive by advertising weekly or fortnightly rates to you, the consumer. But not only does this conceal the total cost per year, it also fails to mention that providers commonly place a surcharge of anywhere between 5% and 15% on monthly or fortnightly payments as opposed to paying for the insurance premium in a single annual lump sum. Eg. if your insurance premium is a total of $800 per year, but because it’s paid monthly you pay a 10% surcharge equalling $880 per year.
For every $1000 that you pay for an insurance premium or premiums, you could be paying up to $150 a year just for the convenience of paying in instalments.
For instance, if you have a very expensive car, for instance, or if you are a family with several cars, you might easily be paying $500 a year to your car insurance company just in surcharges. Obviously, it is more convenient for many people to pay their insurance premiums monthly, but if you have the ability, it is possible for you to save quite a bit of money by paying your insurance premiums in full as an annual payment – especially if your annual insurance premiums are high. Consider that the average family has two cars insured, the family home insured, and the home contents insured – that’s already four premiums that you could be paying hefty surcharges on.
Also, some insurance companies now give you the option of raising and lowering your claim threshold, for instance the claim threshold is usually about $300 for damage to your car, but if you put the threshold up to $400 the company may then drop your premium by quite a lot. Just say you manage to go 6 months without damaging your car; then you’ve broken even, and anything above that is money saved.
In short, it’s worth giving your insurance companies a call as soon as you are able, and find out out how much money they are charging you over and above the basic price of insurance.