Thursday, 2 December 2010

Top tips for buying insurance

If you’re thinking of buying an insurance policy, and you don’t have millions of pounds to play with, here are some tips to ensure you get the best value policy for your money:

1)     Shop around. 

While renewing your existing policy may seem like the easy option it’s rarely the cheapest. New customers very often get the best deals and discounted rates. So don’t automatically renew with your current insurer when your policy comes to an end.

2)     Pay in full, upfront. 

When choosing options for your renewal quote - or a brand new quote - an insurer may give you the option of paying in monthly instalments. However, if at all possible, pay the full amount upfront. That's because you may be charged a hefty interest rate on monthly repayments (sometimes 30% APR or even more). If you don't have the cash to hand, consider paying on 0% purchases credit card. Just make sure you clear the balance before the interest-free period comes to an end.

3)     Don't under/over-insure.

Sounds obvious but make sure you’re paying for the right level of cover. Under-insure and you risk some of your possessions not being covered, should the worst happen. Conversely, many people over-insure by using the market value of their home as the rebuild value – they are not the same and you could end up paying for far more cover than you need.).

4)     Don't double up. 

Don't make the mistake of doubling up on cover and spending more than you need. For example, many of us buy extra insurance in-store to cover the loss, damage or theft of valuable items, like jewellery. Millions of us already have personal possessions cover as part of our home insurance policies - meaning that these sort of items are already covered. 

5)     Only opt for insurance you need.

While insurance is essential for financial security and all round peace of mind, it is important you only opt for a level of cover relevant to your needs -- and at the best available price. Remember, not everyone needs everything: the key to buying insurance is only to insure against risk you cannot afford to take. Make sure you can  tell insurance from the rip-offs.

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