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Insurance On A Budget

Purchasing insurance can be daunting. The choices are vast and, for many of us, the costs can seem overwhelming. Follow our budget-friendly tips to help you get the coverage you need at the right price.

Start with the essentials

As a minimum for those looking to ‘cover the bases’ and provide peace of mind, it’s advisable to consider these types of coverage:

  • Health – are you covered through work? If your employer provides coverage for you and your loved ones, then you can probably skip an additional health policy, but check the small print for things like maternity coverage. If the pitter-patter of tiny feet is a future possibility, and you aren’t currently covered, you’ll need to assess the option of buying extra coverage up front (and in a timely fashion, because many policies only kick-in after an initial period – usually a minimum of 9 months). It may seem like an unnecessary expense right now, but will prove to be a wise move if low cost public healthcare is not a viable option. Don’t skimp on healthcare due to financial reasons: going to the doctor only when absolutely essential may suffice for a few years, while youth and good health are on your side, but it’s a risky strategy in the long term.
  • Auto – car ownership and insurance go hand-in-hand and, along with health coverage, should be considered essential. It is not only generally illegal, but highly irresponsible, to drive without basic coverage. As a bare minimum all drivers should be covered for third party liability, which provides protection in the event of a crash that results in claims against you for vehicle damage and/or injury to third parties, where you are at fault. For owners of newer cars, it would also be wise to insure against theft or collision with other objects.
  • Life - review your family situation. Single people with no dependents can probably skip life insurance – for now. But anyone with dependents should consider a policy that provides coverage in the event of death, and ensures that beneficiaries receive a lump sum to cover any financial commitments. Rather than purchase an expensive ‘whole life’ policy, consider going with a ‘term’ policy that covers you for a fixed amount of time only; typically 10-20 years, or until any dependents are grown. The younger a person is when the policy is taken out, the cheaper the monthly premium.
  • Household – if you’re a homeowner, your lender will have already required you to take out home insurance on the structure. It makes sense to consider insuring the contents of your house as well, in case of fire or theft, and renters may want to consider this type of insurance too.

Get the best deal

Once you’ve established what types of policy are right for you, it’s time to do your research and find a balance between what suits your needs and your pocketbook. Consider these general tips to help you get the best deal:

  • Keep mileage down – many insurers will offer discounts on premiums in return for low monthly mileage.
  • Play it safe – auto insurance premiums can vary widely. Young, inexperienced drivers will attract higher premiums, as will those who choose to purchase sporty gas-guzzlers. Budget-conscious drivers of all ages should therefore consider purchasing a reliable, economical model of a common brand, with parts that can be easily replaced.
  • Get a health check – find out the state of your health to determine any potential health risks in advance, in order to help you seek out policies that will provide adequate coverage in the event that you fall ill. A clean bill of health and no red flags will lower your costs and widen your choices. Consider quitting smoking to decrease health risks, and premiums.
  • Honesty is the best policy – it’s wise to be completely up front with your insurer when it comes to life and health policies. Answer questions truthfully relating to your health, any pre-existing conditions and whether or not you smoke. Failure to do so may negate future claims if it’s discovered that you were hiding something, which could prove devastating to you in terms of both finances and health.
  • Shop around – many insurers offer discounts and incentives to new customers, and it pays to compare policies and do your research to get the best deal. Combining more than one type of insurance policy into a package or ‘bundle’ is a great way to qualify for a sizeable discount. Don’t be afraid to ask for discounts and bonuses even if one isn’t advertised – many insurers will try to match or better other quotes.
  • Raise your excess – it’s common to tailor insurance policies by adjusting the deductible level to suit your budget. This refers to the amount you pay out of your own pocket when a claim is made. The higher the excess, the lower your monthly premium will be.