By far, the question I am most commonly asked by our existing clients is "why have my premiums gone up?". More frequently these days is the extended version: "why have my premiums gone up by 16% when CPI is less than 2%?".
Nothing is more certain than your annual insurance premium increase (unless of course, you have level cover in place), and the percentage of your increase will most likely fluctuate each year. Part of the increase is due to CPI, but there are more factors to consider:
Your benefit amounts increase (usually only attributes for around 1% of the increase in premium)
You are a year older (you can hide it from your friends, but not your insurance provider)
The insurance company rates change (usually driven by claims etc)
Unlike car insurance, you don't get a "no claims bonus" for life insurance or trauma cover. Your increasing age means (in the insurer's eyes) that the risk of you claiming is higher, so it makes sense that they will want to charge a higher premium.
When clients have a huge increase in premiums, we always investigate. It can sometimes be due to an error in the insurer's calculations, but more often than not a market comparison will show that it is just a case of the rates going up.
Of course you always have options:
You can decline the CPI increase (either year by year, or permanently), but as mentioned, this is usually only about 1% of the premium increase.
You can reduce your benefit amount, or extend the wait period on your income protection.
If you are still fit and healthy, you can look to an alternative more cost effective provider (if there is one).
For medical insurance you can increase the excess you pay.
You do have the option of removing the CPI increase for your benefits if you wish (either permanently, or year by year), but as I have mentioned above this only attributes to around 1% of the overall premium increase.
If you think your premiums are raging out of control please let us know - we are always here to help.
