Insurance premiums have skyrocketed in the last few years. This has led people to explore ways to keep their insurance premiums in check. One way to do this is to negotiate your premium during policy renewal. Deploying the right negotiating strategy when renewing your policy may get you significant financial relief in terms of premiums. The question is, how should you negotiate with your insurance provider?
Here are some essential points that can help you negotiate and save money during policy renewal.
Compare insurance prices before renewal
Several policy comparison tools are now available online, which help you compare your existing insurance policy versus those available in the market. You can compare different policies against your own based on factors such as features and price. When switching policies from one provider to another, don’t let the price be the only criterion. Consider other crucial factors such as claim settlement ratio, claim processing time, post-sales service, and consistency in claim settlement before you switch. In case of car insurance renewal, confirm the new provider’s tie-up with your car manufacturer so as not to lose out on the cashless claim benefit.
Also Read: How can your parents help you save tax & earn more?
Increase the deductible
Another way to lower the cost of your insurance coverage is increasing your deductible in case of a claim. The deductible is an amount the policyholder agrees to pay to cover expenses in the case of a claim. For example, in the event of a claim, you agree to bear expenses worth Rs 1 lakh before the insurance coverage kicks in. The deductible directly impacts the cost of your insurance – a higher deductible can lower your premium significantly, be it car insurance or health insurance.
When increasing your deductible, keep your financial situation in mind. Increase it to an amount you can afford without affecting other expenses. A higher deductible can help you save on premiums when you are young. But, if you are about to or have already retired, avoid a voluntary deductible. Since old age comes with increased medical issues, a voluntary deductible may turn out to be costlier with frequent medical expenses.
Rework the size of the insurance cover
If your car is old and has been driven extensively, its depreciated value is likely to be lower than its insured value. Considering this, it might be worthwhile to reassess the car’s insurance coverage to save on premiums.
In the case of a health insurance policy with high premiums, you can save money by lowering the cover size of your base policy. Instead, purchase an adequate super-top-up health policy, which may likely be cheaper than the base health policy.
However, as per applicable policy rules, your new super top-up policy may be subject to a waiting period. So, if you are 45 or above, or have a pre-existing medical condition, avoid disturbing your base policy size.
Avoid unnecessary add-ons
Insurance providers often offer add-ons with insurance policies which can drive up their premiums. Assess your needs and decide whether or not to take the add-on. If you have an add-on you no longer need, remove it when renewing your policy to save on premiums.
Renew the policy before it expires
One of the most important benefits of renewing your policy before it expires is to receive your No Claim bonus (NCB). Insurers offer the No Claim Bonus to policyholders who have had a claim-free policy year. Health insurance providers usually increase the insurance cover size as a reward against the NCB. On the other hand, car insurance companies typically offer NCB benefits through applicable discounts on insurance premiums.
Claim the active life benefit
Some health insurance companies offer premium discounts on renewal to policyholders who lead an active life. If you are a fitness enthusiast, ask your insurance provider about such a discount, as it may help you save on premiums.
Insurance is a crucial risk-mitigating tool which must be chosen carefully. To successfully negotiate for better premiums, prepare in advance and discuss the terms with your insurance provider at the time of renewal.
(The author is CEO, Bankbazaar.com)