Ways to Lower Your Life Insurance Premiums

Insurance premiums are like a bet you hope you lose. While everybody who has financial dependents (including themselves) who rely on the income they generate should take out insurance, we sincerely hope that you never have to make a claim. Hopefully, you will get to the end of your life and think ‘I never really needed those insurance policies.’

Nevertheless, life insurances are one of the most important things for you to consider. An appropriate life insurance policy makes an enormous difference to you or your loved ones if an ‘insured event’ ever  occurs. Put simply, it would be irresponsible not to give serious consideration to the various types of life insurance.

That said, resources are always limited. So, it also makes sense for you to do everything you can to make your premiums as affordable as possible. Not only does this help you maximise the cover you take out, it also leaves as much as possible left over for you to meet all the other claims on your income – you know, like housing and food!

Here are a few things you can do to make your premiums as affordable as possible.

Superannuation

Sometimes, life insurance premiums can be payable through super. This usually means life cover, some TPD (total and permanent disability) and a limited amount of income protection. Paying these amounts out of superannuation does not necessarily make them cheaper. But because you are using money that is not accessible to you anyway, it reduces the effect of insurance on your day-to-day cash flow.

Of course, if you use super to pay for your insurances, you will have less super. You can’t spend money and keep it too. However, many people accept that they will have fewer super benefits available upon retirement if it means they have more cash available for immediate expenses such as paying off a mortgage or raising children. Many people decide that they will simply retire a few years later – giving them more time to boost their super back up again – so that they can enjoy their money a little bit more today.

There are also be other factors to consider when purchasing insurances through superannuation such as definitions and the impact on drawing the benefits out from super. We wrote an article about this particular issue in relation to income protection insurance a few weeks ago. You can view it here: An important catch of having income protection insurance in your superfund

Maximising Tax Treatment

Premiums for some life insurances, in particular income protection, are typically tax deductible. Some life cover and TPD can also be effectively made tax deductible. This is because the superannuation contribution that you make to finance the insurance premium may be able to reduce your taxable income.

Getting a tax deduction for anything makes that thing less expensive. So, it generally pays to at least consider whether life insurance premiums can be rendered more tax effective. That said, not all premiums are tax deductible at all times. So, we recommend you talk to us about your particular situation to see if we can help you use the tax system to make your premiums as affordable as possible.

Commission Rebate Service

When a financial planner or an insurance broker recommends a life insurance product to you they receive commissions from the product provider. These commissions include an upfront component up to 60% of your first year premium, and a trailing component up to 20% of every subsequent year’s premiums. More often than not, these commissions add to the costs you pay without providing you any additional benefits. If you’ve purchased your life insurances through a financial adviser, an insurance broker or an online comparison service, a component of the premiums that you pay has likely gone to these intermediary service providers.

The good news is you can claim back these commissions very quickly and easily by using a commissions rebate service provider. The trick here is to find a provider that charges a low fee so your rebate doesn’t get eaten up by their fees. A provider that presents a clear and simple fee structure is usually the best because you can be more confident that the amount you will be receiving is the maximum possible.

It’s worth noting that these providers generally provide a no-advice service. They simply ask for your insurance details and require you to authorise the transfer of your insurance policies to their account. Once the authorisation is processed by the product provider, the trailing commissions will then be paid to the provider which is in turn rebated back to you.

Easy Refunds is one such provider. Instead of a percentage, we charge a simple flat fee per rebate. You can view our fees here. We rely on technology to keep our process as efficient as possible while making sure our staff is always available to assist when required. This allows us to keep our costs and fees down so you receive more of the commissions that are rightfully yours.

Sign up with Easy Refunds today and put the commissions on life insurances back into your pocket.