Insurance World

We’re not being insensitive, honestly! We’re talking about your last gasp of smoke – have you given up smoking recently?

Did you know that smokers paying up to 60% more for their life insurance cover compared to non-smokers. So, besides the health dividend and the money saved on cigarettes, insurance companies will chip in with lower life insurance premiums. And the insurance savings aren’t to be sneezed at! A typical policyholder could save at least Ј10 or more per month.

With most insurance companies, you qualify for non-smoker premium rates if you haven’t smoked or otherwise used nicotine products, within the last five years. Now five years is a long time to wait for the extra spending money if you’ve only recently given up smoking. However, people in the know have pointed out a way to speed things up.

They point out that some insurers have adopted a more relaxed definition of a non-smoker. Some insurers have shortened the 5 year smoke free period to just twelve months. So if you haven’t smoked for a year, find out how much you can save by moving your life insurance to one of these insurers. But be careful. You must never cancel your existing policy until you’ve received written acceptance from the new insurer.

How do find the right insurer?

First go onto Internet because that’s the best way to find cheap insurance. Then search for a life insurance broker that fulfils three criteria:

The broker must search the whole insurance market for the lowest price – this means that they will find the cheapest insurance company for you.

The broker must be prepared to discount the prices – they achieve this by rebating some of their commission back into your policy. That ensures you get a really cheap quote.

They’ll phone you with the quote and provide further help – this is essential as the chances are that the price they will initially phone you with, will be from an insurer using the a five-year smoking definition. You have to tell them that you need the cheapest quote from a company using the twelve-month smoking definition . That means they’ll have to call you back after doing some digging.

If you use a web site that provides an immediate on-screen quote, you won’t know whether the quote provided comes from an insurance company that uses the 5-year or 12-month smoker definition. Online systems never tell you. That’s why you need to be able to speak to a life insurance adviser on the phone so you can explain what you need. Of course, to be able to be able to make a direct comparison with your existing policy you need to get a quote on an identical policy that terminates in the same year as your existing policy.

Once you’ve got the right quote, you’ll be able to see much you’re likely to save. So if the price looks right, make a full application.

One of the main aspects that will affect your premium is your age. Therefore, if your existing policy was bought some years ago, the savings could be less than the 60% we have indicated. However, life insurance is one of those things that’s become cheaper over recent years - so until you get the figures in front of you, the savings are hard to predict. You’ll just have to get a quotation and find out! As all the brokers we know are only too pleased to provide free quotations without any obligation, you’ve nothing to lose and possibly lots to gain.

After finding a cheap quotation from an insurer with the 12-month smoker definition, you’ll have to complete a full application form. Be sure to read every question carefully and answer all the questions fully and honestly. Far too many people try to ensure they qualify for a low premium by being “economical with the truth”. Don’t be tempted. If there is a claim, the insurer will recheck the information you provide, even if it’s many years later.

Over the last few years insurance companies have become more choosey about whom they accept on standard insurance terms – that’s the first price you were quoted. The company’s selection rules about health and weight have become far tougher resulting in more clients having their premium loaded. That’s why you must not cancel your existing life policy until you’ve got a final acceptance notice at a price that gives you the savings you’re looking for.

Whilst the process to switch a policy may sound a little daunting, it isn’t really too bad. Just think of the money you’ll save! Just reward for the stress of giving up smoking.

Best of luck.

Buildings Insurance went up again last year, costing homeowners another 1% a year, taking the average to just over Ј205 for a year’s insurance. Contents insurance also went up, this time by 2% - now it costs the average homeowner Ј151 a year. However, some lenders are hiking prices even higher than that – Norwich Union for example, raised its prices by a whopping 6% last year.

The question is - why? There’s so much competition out there, you’d expect prices to be falling, not increasing – but there are other forces at work, as we go on to discuss.

No 1 – the cost of having a house repaired or rebuilt

Labour and building materials are getting more costly, so when the insurance company calculates how much it would cost to rebuild your house, prices are higher. This is due to inflation, and the same thing affects the insurance company and its own operating costs. Wages, bills, office rental – all these costs are increasing year on year – so of course insurers have to factor these in.

No 2 – the weather

The British weather is getting more and more tempestuous, whether it’s due to global warming we are not qualified to say, but it’s a fact that we have been experiencing a lot of extreme weather in the past few years. The 1987 hurricane was a freak occurrence, but flash floods such as the incident in Boscastle, Cornwall, Helmsley in North Yorkshire, and Carlisle are making the headlines on a regular basis. The Association of British Insurers has stated that the average insurance claim due to flood damage could be anything from Ј15,000 to Ј30,000, making huge dents into the insurance industry’s profits. In fact, floods cost insurance companies millions every year.

No 3 - Burglary

Claims due to burglary have been going up, now average at around Ј1,400. The 2 main causes are:

• From digital cameras to laptops, game consoles to ipods – our houses are full of electronic gadgets with a high value bought new, and a high value resold. Burglars are after these items and it’s hitting the insurance industry where it hurts – their pocket.

• Burglars pick posh neighbourhoods to ensure they get away with the best items - with expensive items like jewellery for the taking, the value of these kind of claims is increasing.

Insurance companies use statistics relating to a postcode area to calculate premiums for everyone in that area. If your neighbours have suffered subsidence, or your area is near a river which has been known to flood – you will have to pay higher premiums. Similarly, if people in your area have been broken into, then it will be assumed that you are at a higher risk of making a burglary claim too.

Having a no-claims discount is a help when it comes to offsetting the annual rise in premiums, but insurance companies cap these discounts once you have 5 years no claims, so you will not get any further discounts.

So is there any way to avoid the rising cost of home and contents insurance?

The first thing you can do is look around for the best deal. Try the Internet for the best deals, because most insurance companies offer a discount, often 10%, for customers that buy online. You will also save if you pay by direct debit. It’s tempting to accept your current insurer’s renewal quote but don’t be fooled – the small amount of effort it will take to shop around will pay good dividends. One of the reasons for this is because insurers always offer their best deals to new customers, existing customers are virtually penalised for showing loyalty!

Improving your home security is another good way to reduce premiums – while giving you essential peace of mind. Neighbourhood watch schemes, external security lighting, a burglar alarm, security locks on windows, and industry-recognised locks on external doors will make a difference. Obviously these things cost money to install, but they pay for themselves in the long run.

Play the insurance company game and you will always win – shop around, be prepared to move insurance company every year, and don’t accept any high prices. There’s always a better deal out there!