Unlike other insurance policies like home and motor cover, where the excess is an amount you have to pay when you make a claim, financial insurance excess is reflected in the deferral period for payouts.
You can lower premiums by choosing a policy that has a waiting period of 4, 8, 12 or more weeks. If you have some savings that will cover a waiting period or your employer provides sick pay for a certain period, critical illness cover with a higher excess may be more suitable for your circumstances.
When deciding on an excess level, consider how long you could realistically cover your expenses if you were unable to work.
How your health and lifestyle affect policy costs
When you take out an insurance policy, the insurer will assess the risk level that you present, and this involves reviewing your medical history. If your medical history shows previous serious illnesses or chronic conditions, you are more likely to make a claim and the insurer will base policy costs on this higher level of risk. This means you will have higher premiums than someone taking out the same cover with no previous serious health issues. Some insurers may also insert exclusions related to the specific illness or condition.
When to review and update your insurance policy
Your circumstances will change over time, so regular reviews of your insurance policy are highly recommended. Checking your current position on an annual basis will ensure that you are not over-insured or under-insured. You can also assess whether there are more suitable or more cost-effective policies now available to choose from.
In addition to annual reviews, you may want to update your insurance policy if there are any life changes such as:
- Taking out a new mortgage
- Paying off your mortgage
- A change of income
- Receiving inheritance
- Getting married or divorced
- Having a child
- Dependents starting work and becoming financially independent
- Health or lifestyle changes (improvements could reduce your premiums)
The benefits of using an insurance adviser
With so many different insurance policy types and cover variances between products, understanding what the most suitable product is for your specific needs and priorities can be overwhelming.
Using the expertise of an insurance adviser will help you to build a better idea of how much cover you realistically need and which types of cover will be most beneficial to you and your family.
An insurance adviser will perform a comprehensive review of your financial and personal position and use their insurance market knowledge to advise you on the most suitable options based on your unique circumstances.
How to avoid common mistakes when buying insurance
Before choosing your insurance policy, you can avoid common mistakes by doing the following:
- Do not base your decision solely on the lowest price
- Review the full policy details including exclusions and limitations
- Make sure you have accurately calculated the amount of cover you need to avoid over-insuring or under-insuring
- Disclose all information to avoid the risk of a rejected claim
Understanding policy renewal terms and conditions
When policies are due for renewal you will be sent new terms and conditions, which you should read carefully to check whether they have introduced any changes. For example, the conditions may have been adjusted due to factors such as your age or recent health changes.
Insurers sometimes change premiums to reflect the current market conditions, or they may add exclusions or limitations that were not previously included in your policy terms.
