THE GOOD, THE BETTER AND THE UGLY…INSURANCE POLICIES
How much do you spend – and is it worth it – for all the insurance contracts you own?
After a few hours going through all of our policies recently – an exercise I haven’t done for a few years – the amount was pretty substantial, about €500 a month for protection, health, home, motor, travel and even the pet insurance.
The best value over the years, has been the life insurance and other protection policies like income and serious illness cover we have bought: all fixed terms and benefits, but properly staggered to mature at different stages as our child became less care-dependent and our incomes, savings and pension funds increased in value. The cost has been pretty reasonable for the peace of mind we’ve had. Now that he is 19, the need for high value term life insurance is gone…and we mostly have income protection cover now.
Insurance can add up to thousands, especially for families who want to keep their health insurance costs, so where can you make savings and is there such a thing as ‘bad’ insurance, policies that are nothing but a drain on your finances?
Lets start with the ‘good’ policies first:
Home/Motor Insurance isn’t just essential cover, but a legal requirement if you own a car or a mortgage (if don’t qualify for an age exemption).
One of the best ways to reduce your costs is to increase the excess you agree to pay on every claim, and, in the case of motor insurance, to always consider spending a modest extra amount to protect your no-claims bonus.
The recent EU gender directive has pushed up motor premiums for women and reduced them slightly for young men, but one way for young women drivers to mitigate this is to consider a new offer from www.NoNonsense.ie , FBD Insurance’s on-line company, to install ‘SmartDriver’, an in-car telematics device to measure driver behaviour. If it proves you are a safe driver, NoNonsense.ie will refund up to 30% of the cash premium. Other motor/home price websites include the likes of chill.ie, the National Consumer Agency, nca.ie and the AAIreland.ie website.
Nearly all buildings policies, meanwhile, come with a proportion of contents cover, but you need to ensure that you don’t underestimating the value of your contents as this can, and often does lead to refused or reduced claims. Always make sure you ensure the building based on its replacement cost, not its market value.
Rescue policies: Car and now home ‘rescue’ policies may not be ‘essential’ insurance contracts, but they are in our household where neither drivers know anything about cars other than how to drive them and we’re nearly as useless in dealing with house-related emergencies. I’ve used AA Ireland too often (in some tight fixes) to ever be without their cover and the new AA Home Rescue service offers the same emergency help for your home, 24/7, 365 days of the year.
A burst pipe will be repaired on the spot; a broken window secured until the glazier arrives. If you’ve lost your house keys in the middle of the night, they’ll get you back inside (without breaking the locks or a window) This €6.99 a month premium is not particularly expensive, but it does more than double if you include dodgy boiler events.
Private Health Insurance: Two million people still believe that private health insurance is an ‘essential’ purchase, and for good reason: it ensures that you can jump huge public service queues for diagnostic medical consultants and treatment.
The price of health insurance (HI) keeps rising – my family’s bill has doubled since 2008 and the addition of the now-€285 (€95 per child) annual health levy certainly hasn’t helped. This payment is subsidy for the government-owned VHI, which has a legacy of older, more expensive members and it will go up from March €350 per adult and €120 per child.
The only way to cut HI costs is to shift to a better value provider, though there are only four to choose from - Laya, Aviva, GloHealth plus the state owned VHI – or to a lower cost plan. Everyone should review their HI cover with an experienced health insurance adviser or by using the regulator’s improved website, www.hia.ie . Put aside lots of time for the latter and accept that it is nearly impossible to find a cheaper (near) equivalent corporate health plan on the site, unless you know the actual name of that plan.
Health insurance cover can now be tailor-made for each family member’s needs, reminds Dermot Goode of www.healthinsurancesavings.ie . Children, teens, mums and dads can all go onto different policies. The family breadwinner should be prioritised, but I know parents who can no longer afford private cover for themselves, still wanting their children to be covered. Insuring children independently of an adult is no longer permitted but there is nothing stopping another adult with cover to include your child; you then pay them the child’s premium.
If private health insurance is too expensive, why not at least consider a health cash plan in which one premium (from €9.50 to €55 per month) covers the entire family and pays tax-free cash benefits for treatment and hospital visits. See www.hsf.ie .
Some insurance contracts are positively bad for your wealth and health. Avoid at all costs ‘whole of life’ policies with investment values: they bomb out after a number of years and become a huge loss. Stand-alone death by accident policies are also hugely expensive compared to a straightforward term life contract and don’t ever sign up for expensive theft and loss insurance policies at the phone shop for your new mobile or tablet device before you check your home content policy.
Finally, Payment Protection Insurance, which only covers up to 12 months of mortgage, personal loan, credit card payments is expensive, opaque, oversold and missold – the PPI scandal in Britain is expected to cost banks and insurers a whopping £13 billion in compensation.
The six month long investigation by our Central Bank into the misselling of these policies to unsuitable buyers continues but my meeting with the junior finance minister Brian Hayes regarding whether a ministerial order could change the six year statute of limitations rule for PPI complaints, has come to nothing.
Hayes never replied to me, but I am still compiling a dossier of reader’s experience as part of a wider campaign to get the six year limit from date of purchase replaced with the UK version – a three year complaints time limit that kicks in only after you discover that you may have been missold. Please keep sending me your stories.