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Here are some smart ways to reduce your insurance expenses without compromising on the total sum assured It's always a good time to learn how to reduce your bills. But when inflation is breathing fire at 8.51% for the month-ended August, these tips and tricks can be the lifeline for your strained budget. More so, when the bills in question are insurance premiums.

It may not be apparent, but the total cost of your health, car and life insurance policies puts you back by a few thousands every year. If you have a few traditional plans in your kitty, the sum will be well over 50,000 annually. So even a 25% cut in that expense can add 12,500 to your annual surplus. Is this possible without compromising on the total sum assured? Yes it is. Read on to find out how.

Kick The Butt:

Here's yet another reason for you to quit smoking. Insurers like Met Life, Max New York Life, Kotak Life and Birla Sun Life offer special term plans for non-smokers, which are cheaper by 20-40%. For instance, a 29-year-old man with a clean record can buy a 25-lakh preferred term plan from Kotak for just 3,943 a year. A smoker of the same age will have to cough up 5,459. Over 25 years, the savings total a tidy 37,875. The only catch is that these schemes are not available for term plans with low cover. For example, Kotak Life and Met Life offer this discount only if the sum assured is more than 25 lakh. Says Veer Sardesai, a Pune-based certified financial planner: "People must compare these special policies with other term plans and opt for the cheapest option."

Pay Annually:

Higher the payment frequency, greater is the total premium outgo from your pocket due to loading. So experts recommend paying annually vis-àvis monthly to avail the rebate. For example, if you are a 40-year-old male, then a 25-year-term plan of 25 lakh from Aegon Religare Insurance will cost you 987 every month or a total of 11,844 in a year. But if you choose an annual mode of payment, you have to shell out 11,350, which is 500 less than the earlier payment mode that you may have considered. However, only traditional policies offer this difference in pricing.

Take The Family Pack:

Not only are individual health plans expensive, you are also unlikely to use up the entire cover. Say, you are 45 years old and have bought a 5-lakh policy for each of the four members of your family. On one hapnd, the annual premiums will total a hefty 29,640 and on the other, a major chunk of the cover will be unutilised, as total medical expenses of the family will rarely touch 20 lakh. So, it is better to choose a family floater policy under which all the members can share a cover of 5 lakh. The cost benefit - about 10,000 a year. Of course, if you have a chronically ill or an old patient at home, an additional cover for them may be necessary.

Exploit Group Advantage:

Another trick to reduce your health cover premiums is to extend the employersponsored group insurance to your family. These plans are 20-25% cheaper than family floater plans. "The actual cost of these plans depends on the scope of the cover, past experience of the insurer with the company and the number of employees in the organisation. But they are certainly cheaper that individual or floater plans," confirms V Ramakrishna, managing director of India Insure Risk Management.

Top Up For Add Ons:

In case you have already signed up for a health policy and want more cover, don't pile on a second one. Instead, top-up the base plan for the same amount at 27% lower cost. Let's assume a 28-year-old man who wants to extend his existing health cover of 2 lakh to 5 lakh. A new plan will increase his current annual premium from 2,588 to 6,197. However, a top-up of 3 lakh, comes for only 1,875. However, it is activated only if your claim exceeds the threshold limit of 2 lakh. Though this is a great saving tool, only two insurers - United India and Star Health Insurance-offer this service currently. If you are not their customer, don't be disheartened. Competition should drive other companies to follow suit. So keep tabs on your insurer.

Start Gymming:

Memberships of health clubs earn valuable brownie points. For instance, New India Assurance offers a 2.5%-good health discount on premiums if you are a member of one of the fitness clubs that it recognises. A side benefit: if you actually shell out the money, there is a good chance that you will use the gym instead of just driving past it.

Avoid Claims For Small Damages:

For every claimfree year, motor insurers offer discounts that range from 20-50% of the premium. So it is a good idea to pay for minor repairs of your vehicle yourself. Experts suggest you get an estimate of the repairs whenever your vehicle gets damaged. If the no-claim bonus you stand to forfeit exceeds the estimate, do not make the claim. Delhi-based Amit Aggarwal followed this strategy when his car met with a small accident recently. "My car's bumper and rear lights were damaged which are covered for only 50% of the expenses. As the repairs cost only 4,000, I decided to pay it myself and retain the 20% discount due on my next premium," he explains.

These bonuses can also be transferred to a new car, provided you sell the old one. Darvesh Panchal, V-P, Prudent Insurance Brokers, explains: "Though you can transfer your existing policy to the new owner, this discount remains with you as it is earned for your personal driving skills and proper upkeep of the car."

Volunteer To Bear More Costs:

It is common knowledge that insurance companies do not reimburse the entire cost of repairing your vehicle, even if it is within the sum assured. What is little known is that if you volunteer to bear a larger portion of the cost in the event of an accident, your premium can decrease by up to 50%. The more you offer to contribute, the lower the premium. Obviously, for ultra-safe drivers with clean records, this arrangement works as a great saving tool. Similarly, if you install an anti-theft device in the vehicle, you can avail another discount of around 500. Members of a recognised automobile association enjoy a further 5% discount on own damage premium, subject to a maximum of 500.

Be Loyal & Club All Policies:

As insurers battle for more customers, they are doling out discounts galore to retain the loyal ones. New India Assurance offers a 10% cut in premium for its family floater plan if you renew the policy without any break. Though you can enjoy this benefit only after moving to the next age band, the discount is quite significant. Bajaj Allianz's Star Package Plan gives you the option to choose 4 policies out of 8 at a 15% discount on the total premium. So, call up your agent and find out if there are freebies and discounts that you are missing out on.

Source: The Economic Times