14 Tips for Purchasing Life Insurance

Insurance is an important part of financial planning — but understanding insurance and buying the right product can be tricky. From whole to term life, riders to convertibility clauses, how do you make sense of all the choices? Most people rely on the expertise of their insurance advisor, broker, or sales representative to help them make the right decision. Yet, for some people, insurance representatives have developed a bad reputation, and many people do not trust the “recommendations” they receive.
From my own experience in the insurance industry, and knowing how representatives are trained, I wouldn’t trust many insurance sales reps either. Here are some steps you can take to ensure you get the right product for the right price:

1. Understand your needs. No one understands your financial situation better than you. That means you should avoid letting someone else tell you how much protection you need. You can get a rough estimate of your insurance needs by adding together your debt, estimated funeral costs, and six months to a year of income replacement. [J.D.'s note: One common rule of thumb is to multiply your yearly income by between 5 and 10, using the lower level if you don't have many dependents and few debts, and the higher level if you have larger debts and multiple dependents. But Ray is right: understand your own needs.] Taking stock of your financial policy can allow you to select the right policy for your needs. As sales representative, we were trained to sell large policies. Remember, you may not need an exorbitant policy — you need the policy that’s right for you and your family’s financial situation.
2. Understand term insurance versus permanent insurance. Understanding the difference between term and permanent life insurance (such as whole life) can help you make an informed decision about your insurance needs. Today, a term insurance policy should be able to cover most of your debt and financial needs. In turn, you may not need to purchase a whole life policy. Try not to be sold by the “what if” scenario you might hear from an insurance sales rep. Insurance companies traditionally make more profit from whole life policies than term policies, so be prepared to hear a sales representative promote whole life as the best possible choice (even though it might not be the best fit for your needs). Remember, buy what you need and make adjustments as changes become necessary. Term insurance is typically renewable and should have a convertibility clause which allows you to make changes in the future. There are certain situations where a whole life policy maybe more advantageous than term; however, do not purchase it simply because your sales representative told you should.
3. Speak with an independent broker. These brokers will have access to many more products than just one firm can provide. When I worked as an independent broker, I was able to offer much more to my clients than just a company product.
4. Avoid one-meeting recommendations. If your broker makes a recommendation in the first meeting, you know that they have not really analyzed your situation and looked for best options. So just say, “No, thank you” and keep researching.
5. Understand how the adviser gets paid. Find out if they are compensated through commission, fee-plus-commission, or fee only. If there is any commission involved with the sale, make sure to look at all alternative products available. With commissions, the advisor may have a conflict of interest. Just because your adviser is commission-based doesn’t mean they are bad — just ask more questions with them. I always worked on 100% commission, but I would give my clients several options and disclose if I got paid differently.
6. Recognize that insurance is for protection — not investing. Term insurance provides protection only, without a savings component. Whole life and universal life policies have a savings component and are much more expensive. You are almost always better off just paying for term insurance, and using the cost savings to invest elsewhere.
7. Ask the tough questions. Don’t be afraid to ask the advisor questions. You should know the product inside out before buying it. Is the policy renewable and non-cancelable? How long are premiums guaranteed for? Is there an accidental death rider? What are the exclusions?
8. Watch out for “know-it-all” advisor. If the advisor answers all your questions without referring to anything, or pretends she “knows it all”, chances are that she does not. Insurance policies are complicated, and even the best advisors do not know every product 100 percent and may have to look things up. There is nothing wrong with that.
9. Compare similar products. When you price shop, make sure you compare similar products.
10. Don’t replace old whole-life policies. If you have had a whole-life policy for several years, try not to replace it. You may lose all the premiums you have paid. You may also have to pay new administration fees (if applicable), and reset some clauses (such as the suicide clause). If your situation has changed and you need more insurance, just buy more. (This warning does not apply to term life.)
11. Do not buy expensive riders. The advisor might ask you to add on all types of riders. Stay away from them unless you fully understand them and need them. Again, in training there was always an emphasis on selling riders. Often I didn’t see any benefits to the client.
12. Do your homework. Make sure you do your homework before purchasing an insurance product. Make sure it fits your needs and budget, and make sure you understand the contract. The advisor is obligated to explain it to you. Don’t sign until you understand the contract.
13. Take a 30-day free look. You have 30 days to look at the policy and understand it. If you are not satisfied with it during that time, cancel the policy and you will get your premium back.
14. Keep it simple. Do not make your insurance planning complicated. Because it is based on protecting your family, it should be based on your needs. Don’t fall for all the bells and whistles the company may try to sell to you.

I hope these fourteen steps will help in your insurance planning. The basic idea is to educate yourself by doing your homework so that you can understand what you are buying.

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Common types of insurance in UK

Insurance can offer invaluable protection against unforseen events. The price you pay is called a premium.
Common types of insurance relate to:

• your home – if you own your home, you should have buildings insurance to cover damage to the building
• your belongings – contents insurance covers loss or damage to your household possessions
• driving – you are required to insure against damage or injury caused by your vehicle to other vehicles and people (you can also insure yourself against theft, damage to your vehicle and injuries caused while driving)
• travel – travel insurance covers you against the cost of delays, lost property and medical bills while abroad
• life insurance – your family will get a payment if you die unexpectedly. You should also check what payment is due from your pension scheme if you die
• pets - you can insure your pet against the cost of vets’ bills, costs incurred finding a lost pet, or if you are unable to care for a pet because of illness.

You may have heard stories in the news about people being wrongly sold Payment Protection Insurance (PPI) when they took out a loan or overdraft.

Where you can buy insurance

You can buy insurance from:

• an insurer directly
• banks and building societies
• insurance brokers and other financial advisers
• supermarkets and other retailers.

In each case, the firm selling insurance should be regulated by the Financial Conduct Authority (FCA).
You should always get quotes from several companies or use an online calculator before taking out insurance. Insurance brokers can act on your behalf to compare prices and find the best policy for your needs.
Remember: the cheapest policy may not be the best value if there are lots of restrictions on when you can make a claim and how much for.

7 tips for buying insurance

• Give full and truthful information when applying for insurance. If you don’t, your policy may be void and you will not be able to make a claim.
• Give a full account of any medical conditions when requested.
• Check for any age limits on the cover provided.
• Look out for excess charges on the policy? An excess is the amount you will have to pay towards any claim before the insurance company will contribute.
• If you pay by standing order and change insurer, remember to cancel the standing order so you don’t end up paying for two policies.
• Read the terms and conditions of your policy or ask the adviser to explain them, so that you don’t have any nasty surprises later on.
• If you’re buying an extended warranty for a product, check whether you’re covered elsewhere (for example, through contents insurance).

Should you trace old insurance policies?

Old savings, life or pensions policies may still have value and be worth tracing.
Most other types of insurance, such as household or motor policies, do not have any value after the period covered has finished.

Insurance complaints

If you’re unhappy with how a claim is handled or with any other aspect of the service, your insurer can let you know how to make a claim. This information should also be in your policy document.
If you're not happy with the response to your claim, ask the Financial Ombudsman to take up the case.

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How to waste £10,000 on life cover?

Buying a life insurance policy from a bank or building society could mean wasting tens of thousands of pounds.

That is because lenders – without telling the customer – add their own markup of as much as 50pc to the price available elsewhere. Even going direct to the insurer will, bizarrely, sometimes end up costing policyholders far more.

The difference between the best and worst prices for the same cover, if you add up the premiums over the term of the policy, can run to many thousands of pounds.

So where is the best place to buy your policy?

There are three main sellers of life insurance policies and other, similar cover, such as critical illness insurance. These are lenders such as a bank or building society, intermediaries such as an adviser or broker and direct from the insurance company. Not all insurers sell their products via all three channels, but many do.

Most banks and building societies have agreements in place with insurance companies to sell their policies to customers. Many have "single-tie" deals – where they sell products from only one insurance company.
The Sunday Telegraph investigated the cost of Legal & General policies, which are sold under single-tie deals by Nationwide Building Society and Yorkshire Building Society, and Aviva policies, which are sold under a single-tie deal by Tesco Bank.
These companies were chosen because they all offer online quotes for life and critical illness products.
We obtained quotes for a 30-year-old and a 40-year-old man for £250,000 worth of life and critical illness insurance, lasting 25 years, from the lenders and direct from the insurers.
We also requested quotes from a financial adviser, Alan Lakey of Highclere Financial Services, for exactly the same policies.
The results show that in many cases the lenders and even the insurers themselves charge far more than intermediaries for exactly the same life and critical illness policies. For example, a "decreasing-term" (explained below) life insurance policy for £250,000 will cost a 30-year-old male smoker £15.65 a month through an adviser. Legal & General and Nationwide charge £18 a month, while Yorkshire charges £23.66 – a staggering 51pc more than an adviser for exactly the same cover.
That works out at an extra £2,403 over the 25-year term of the policy.
A "level-term" life and critical illness policy for £250,000 from Legal & General will cost a 30-year-old male smoker £90.36 a month when bought through an adviser. But if the policyholder was sold the same cover in a branch of Nationwide, he would pay around £95.
Yorkshire charges its customers £120.55 a month for the policy – 33pc more than an adviser. That's an extra £9,057 over the 25 years. Insurers and the lenders struggled to explain the extent of the markup.
When The Sunday Telegraph asked the Yorkshire why its members were being required to pay such a high price for the cover, a spokesman deflected the question, but said: "We continually strive to ensure that all our products, including those we offer through third parties, provide the best overall value for our customers."
Guy Simmonds, head of protection and investment products at Nationwide Building Society, said the extra cost was down to advice given to the customers by salesmen in branches. He said: "Nationwide offers high-quality protection, backed by face-to-face advice available nationally on the high street, at the same price as is available directly from the insurer. Seeking advice, particularly given the need for correct disclosure and completion of forms, is very important when it comes to ensuring customers gain the protection cover they require."
That raises the question of quite why the cover costs so much when bought directly from Legal & General, where no advice is automatically given. Again, there was no clear answer.
A Legal & General spokesman said: "We would encourage people to understand what they are buying, if they want advice or not and to shop around. As with any other industry, it makes sense to do this, both on the high street and online, to get the best price and level of cover that meets the customer's needs. The cheapest price does not always mean the best level of cover or service."
Other insurers' products are also priced in the same, confusing way.
Tesco sells Aviva life and critical illness policies rebranded as Tesco Bank policies. Tesco charges more than an intermediary such as a broker for an identical policy, but Aviva charges the most for its own products by a considerable margin.
For example, a level-term life assurance policy for £250,000 would cost a 40-year-old male non-smoker £23.08 through an adviser, £29.85 through Tesco Bank and £35.30 if bought directly from Aviva.
That is a difference of 53pc between the lowest and highest prices, which adds up to an extra £3,465 over the term.
Tom Allen, head of protection pricing at Aviva, said the insurer's prices reflected the cost of distributing the products to its customers. He said Aviva was comfortable selling its products at a higher price than other distributors because some customers valued convenience and direct access to the brand over price.
Customers who have bought expensive life and critical illness cover are not stuck with their existing policies. It is possible for many policyholders to switch to new cover that could offer better protection for less. But not everyone is able to do this: if your heath has deteriorated, you have taken up smoking or your circumstances have changed in some other way, you may no longer qualify for the same cover.
Mr Lakey said: "Your bank or building society, or even your insurer, will not necessarily give you the best deal. In many instances, people who have an existing policy will be able to switch to a better-quality policy for a lower premium. This is particularly true for people who bought their policy before 2010 because policies have improved significantly since then.
"It is important to check the premium you are paying to see whether there is a better deal available on the market."
Term cover - how it works
Life insurance is often sold alongside a mortgage, which is why banks and building societies are so well placed to offer it. "Whole-of-life" cover pays out whenever you die but is more costly. Term cover, which is more common and cheaper, pays a set sum on the death of the policyholder if it occurs within a fixed period, say 25 years.
The term is often linked to the length of the mortgage, typically 25 years.
A cheaper form of cover is called "decreasing-term" life assurance. The potential payout on death decreases over time, as the amount owed on the mortgage falls.
Borrowers can add critical illness cover to life insurance policies for an additional cost. Critical illness cover pays out if the policyholder suffers from a serious illness or death during the term of the policy. The tax-free lump sum received is often used to pay off a mortgage or other debts or to cover medical or household bills.

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10 Tips to Save Money on Life Insurance

Life insurance, also known as life assurance
or term assurance can be confusing and complicated, which is why we've put together 10 top money saving tips to help you find the right life insurance policy for your needs and save money in the process.
If you were to die, taking out life insurance can help make sure that your family can cope with any financial burden you might leave behind such as replacing your income, paying the rest of the mortgage, paying for childcare, etc.

1. Whole of life insurance. Whole life insurance is designed to provide cover for the policyholder's life and pay out a lump sum whenever you die. With whole life insurance your beneficiaries are guaranteed a cash sum when you die. Whole life insurance is generally more expensive because the insurer will definitely need to pay a cash sum when you die and premiums normally need to be paid up to a certain age e.g. 70 years. Term assurance tends to be cheaper as it provides life insurance cover for a fixed term only. Depending on the type of policy taken there may be a cash-in value of the policy if it is stopped for any reason.
2. Level term life insurance. This type of term assurance pays out a fixed lump sum if the policyholder dies during the policy's term, but doesn't pay out if you die after the term has ended. The amount is guaranteed and doesn't change during the term of the policy. This type of life insurance policy is typically used by people with an interest-only mortgage, where the amount owed on the mortgage remains unchanged throughout the term.
3. Decreasing term insurance. This type of term assurance pays out a lump sum if the policyholder dies during the policy term. The actual lump sum decreases during the lifetime of the policy and with term assurance there is no cash-in value at any time. This type of life insurance policy is typically used by people with a repayment mortgage where the outstanding mortgage balance reduces during the life of the mortgage. It's cheaper to take out decreasing term life insurance if you have a repayment mortgage as you're only paying for life insurance cover you actually need to pay off the mortgage.
4. Single or joint life insurance? Life insurance policies can cover a single life or be on a joint life basis. Single life policies can be cheaper, however, you need to consider your individual needs, for example joint life cover is important if you need to cover both you and your partner's income or pay for child care in the event your non-working partner dies. Even if a joint policy does look suitable, it's worth getting quotes for standalone policies anyway, as it might be cheaper and you will get two pots of cover.
5. Critical illness. Critical illness cover is an additional benefit that can be added to your life insurance policy. A lump sum is paid on the conclusive diagnosis of a critical illness such as cancer, a heart attack, multiple sclerosis or a stroke. Adding critical illness cover to your life insurance policy will cost you more; however, you need to weigh up the extra cost against the benefit of getting a lump sum payment in the event you or your partner is unable to work. You can also save money by combining your life insurance and critical illness rather than taking out separate policies. It's important to check the level of critical illness cover, as most critical illness policies only cover a limited range of cancers, not all. The FSA's Money Made Clear website has a good section about critical illness.
6. Go smoke free. Your life insurance will be cheaper if you don't smoke. A non-smoker is usually defined as someone who hasn't smoked cigarettes in the last 12-months. The NHS Smoke Free website contains detailed information about the free NHS support services to help you quit smoking. Insurers may also increase premiums if you are using nicotine replacement products such as patches.
7. How much cover do you need? Ideally the amount of life insurance cover you need should cover any outstanding debts (mortgage repayments, outstanding loans, credit cards, etc) and provide your family with a reasonable level of income. As a general rule of thumb the amount of life insurance cover should be 10 times the highest earner's income. One way to save money is to check to see if your employer offers you 'death in service' benefits (typically 4 times salary) and deduct this amount from the amount of life insurance cover you need.
8. It is also worth checking if you already have some life insurance with savings or investments plans you hold (i.e. an endowment usually has some kind of cover attached). These can be deducted from the total amount of life cover required.
9. Life policy in trust. If you die the life assurance forms part of your estate, meaning your estate could be liable for inheritance tax. You can avoid this by writing the policy in trust so that it pays out directly to your dependents and never becomes part of your estate, avoiding inheritance tax and speeding up the payout. Most life insurance policies include the option about writing in trust directly at no extra cost. But, think carefully about who the policy is designed to go to, as it can be difficult to remove someone who you have nominated in a trust if you change your mind, and seek independent legal advice if necessary.
10. Waiver of premium. If illness prevents you from working your monthly life insurance premiums are paid on your behalf for set period. This will add to the cost of your life insurance policy and it's important to weigh up this cost against any income protection policy that you may also have.

Shop around for the best life insurance deal

The cost of life insurance can vary considerably so it's important to shop around for the best life insurance deal to suit your individual needs. Life insurance generally costs more the older you get, but as life insurers compete for business and reduce rates, you can still get cheap life cover if you shop around.

Using a Life Insurance Broker to get a Quote

Compare brokers as you would direct insurance policies. Get quotes from a couple of brokers to compare prices and policies.

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Where you stand with your travel insurance

Booked to go skiing soon? Hoping for the best conditions is a natural part of the experience. There’s no guarantee of snow and certainly no promise of perfect conditions. Last month the press was awash with talk of snowless resorts in Europe yet this week it’s all about huge dumps stranding motorists and holiday makers and making travel very difficult in some areas of France. You simply never know what you’re going to get!
So we thought it might be a good time to let you know where you stand with snow and your World First travel insurance policy.
What happens if you get there and you can’t ski because there’s no snow?
With Winter Sports cover from World First you will be covered if there’s no snow on your skiing holiday – as long as it’s within certain limits. If you booked a skiing holiday in a resort that’s above 1600 metres between 1st January and 30th April then you’ll be covered for £20 per day up to a maximum of £400 with our Superior policy if you can’t ski. Maximum limits on our Economy and Standard policies are £200.
What happens if you can’t travel because of too much snow?
It might seem like the deepest of ironies to get stranded at home, in the UK, in a snowdrift, but it does happen.
This week we’ve already heard of a few problems with snow in the North of England and in previous winters we’ve seen snow disrupt thousands of flights. So what if it happens to you? While your airline is only obliged to get you from A to B and will either offer a refund or later flight, the good news is that you can claim on your World First travel insurance policy, as long as you booked it before any problems were forecast.
If you are delayed at the airport for 12 hours or more because of bad weather, we will compensate you providing you checked-in on time. You just need to get a representative of your airline to confirm the length and nature of your delay in writing.
If you are delayed for more than 12 hours at the airport you will be entitled to claim Trip Abandonment on certain policies, with a maximum payout of up to £5,000 on our single and multi trip Superior policies. So if you decide a major delay is no way to start the holiday of a lifetime, you’ll be able to recover your holiday expenses. Additionally, if bad weather causes an accident you’re involved in or your vehicle suffers mechanical breakdown en route to your departure point and you subsequently miss your flight, we will provide compensation up to the amount covered for trip cancellation. We will also pay-out if you are travelling to the airport on public transport that becomes delayed as a result of the adverse weather.
If snow delays you on the return leg of your journey, there’s no need to worry about extending your cover as your policy duration will automatically extend until you’re back in the UK.
What if there’s so much snow that you can’t get to your resort?
This did happen this week! Ski resorts are used to snow so it’s much more likely that you’ll be delayed by snow in the UK than in Europe or the USA. However, if you were to be delayed leaving or arriving in your resort due to avalanche your World First policy will cover the cost of additional transport and/or accommodation if you are unable to reach or leave your pre-booked resort because of access problems due to an avalanche.
What happens if you hit the wrong type of snow?
We aren’t talking about snow that stops trains. We are talking about snow that causes you to slip, trip or fall when you are away. Frankly it’s any type of snow, because, as all rational people know, there is an inherent risk of injury on winter sports holidays. So, whatever excuse you give for slipping and hurting yourself, no matter how seriously, we’ll be there to cover you.
Our policies will cover you for up to £10 million (with a Superior policy) worth of medical expenses, including the cost of medical emergencies and repatriation if you hurt yourself on your winter sports holiday. If you need to be airlifted off the mountain or even airlifted home after a serious injury it will more than cover it. And if someone else gets seriously injured on the slopes and it’s your fault, we’ll cover you for £2 million worth of personal liability cover too.

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Tricks and tactics to cut the cost or How to get cheap car insurance?

It's possible to swiftly secure the cheapest car insurance in minutes, as you’ll see in the main Cheapest Car Insurance guide. However if you’re getting the wrong type of cover, the fact it’s the cheapest is irrelevant, this special additional article will help you work out exactly what you need.

Even we can't make this dirt cheap

Comprehensive or Third party? What to choose There are three types of insurance to choose from and you should consider all the options to get the right type. Also, once you've chosen make sure you check your policy carefully, so you know exactly what you are and aren't covered for in the event of a claim.

Third Party

The minimum level of cover you need to legally be able to drive on the roads is called 'Third Party'. It used to be the cheapest type of insurance but now bizarrely fully comprehensive policies can often be cheaper. Never assuem one costs less than the other; quote both.
Third Party covers you for any damage you cause to another person's vehicle and protection for any passengers in your car.
Therefore, if you are in an accident and it is your fault, you will have to pay for any repairs to your own car yourself, as your insurance won't cover it. It's more expensive because it's assumed you care less about your car and are therefore more likely to have an accident.
It’s generally the most suitable for those…

• With cars worth less than £1000
• Aged under 25
• Without a no-claims bonus
• Or living in a high risk area

Third Party Fire and Theft

Third party fire and theft has the same level of cover as third party insurance. However, self evidently, it also has the additional cover of assistance if your car is stolen or is set on fire.

Fully Comprehensive

This is the widest level of cover but can be the cheapest. The big advantage is if you have an accident and it was your fault you will be able to claim the cost of repairing your own car, and cover personal injury costs, as well as those of the other drivers.
The cover also includes accidental damage and vandalism, for example if somebody causes damage to your car when it is parked in the street and they then drive off. Plus you'll usually (though not always, so do check your policy details carefully) be able to drive other people's cars if you have their permission, although this is likely to be only be Third Party. Sometimes you'll be covered for driving hire cars too.
Fully Comp is a good idea if your car is worth more than £1,500 and gets more important the more valuable you car is. Many insurers will only offer fully comprehensive cover for higher value cars anyway.
There are a few ways of cutting the cost of fully-comprehensive cover, Tesco Value insurance offers a comprehensive policy but limits the repairs to garages it has relationships with, which lowers the cost. However this doesn’t automatically make it cheapest, ensure you first use the comparison sites in the Cheapest Car Insurance article to check.

Don’t think third party’s cheaper than comprehensive

Counter logically lesser third-party policies often cost more than fully-comp.
Why? Car insurance rates are set by actuaries, whose job is to calculate risk. And it’s likely third-party buyers are on average a higher-risk group, perhaps as overall they care less about their cars, and so prices are pushed up. To illustrate this in one low risk driver quote, we found £290 for fully-comp compared to £406 third-party.
Yet this isn’t a hard rule, third-party can win, but for price’s sake always check comprehensive out too, use the main Cheap Car Insurance guide to compare.

Reduce your risk, reduce your cost

Every application for car insurance is different. Each insurer’s price depend on two things, first the underwriters assessment of your particular risk focus and then the pricing model which dictates what type of customers the insurer wants to attract.
Therefore by reducing an insurer’s perception of your risk you can reduce the price you’ll pay. There are of course many factors you either can’t change or can’t change easily … age, gender, where you live and driving history. Yet there are things you can have control over:

• Park and drive carefully
  
  Theft and accidental damage add a bulk to insurance costs. If you leave your car in a garage or driveway it’s a big deterrent to theft and means accidental damage is less likely, resulting in a 3% - 7% drop in insurance costs.
  
  And of course the more points on your licence the higher the cost. While speeding points remain on your licence for four years insurers check for convictions during the last five before they are removed from your record.
  
  One speeding conviction may only affect the price of cover by around 5% but any more’ll bump up the price, with two offences costing around 20% more. Being caught with a mobile phone is more serious and can double your quote!



• Add a second person to an under-25s / high risk drivers insurance
  
  Insuring someone aged under 25 can cost a fortune. Yet by adding a second driver with a good record to the insurance, even if they won't use the car often, it can smooth out the average risk and sometimes reduce the premium. It won't always work, but it’s worth playing with quotes to check.
  
  However at no point should you add your name as the main driver on a younger driver’s policy instead of them. This is known in the industry as fronting and is fraud. When you come to claim, this will often be checked out and your insurance will be invalidated.
  
• Pick a car
  
  The combination of car, engine size and value all impact car insurance cost. It’s worth considering this when you buy; a big super-powerful 4 by 4 for a 17 year old would cost enough to make Bill Gates balk.
  
• Fit a security device
  
  Any extra security will help, fitting an alarm or immobilizer (especially one approved by Thatcham) will reduce the bill substantially.
  
• Don’t modify your car
  
  The more changes you make to your car, barring security ones, the more you’ll be charged. Always make sure you inform your insurer of any modifications to your car, whether you made them or not, or it may invalidate your policy. A modification is anything that is not part of the standard vehicle specification including factory fitted optional extras, such as alloy wheels.
  
• Reduce your mileage
  
  The less you drive, the cheaper your insurance will be. Where possible try and reduce your mileage. This may sound trite, but actually the real key is incorporating the extra insurance cost when you make long journeys not just the cost of petrol compared to taking the bus or train (also read Cheap Trains article). If you drive your vehicle on business, always declare this rather than just include the business miles as personal, or the policy may be void.
  
• Inform your insurer of any changes in circumstances
  
  This is crucial as it reduces potential problems in the event of a claim; even if it’s just your address. Trying to get insurance after you've had a policy cancelled due to a fraudulent claim is very difficult, very expensive and will follow you for the rest of your life.
  
  A change in circumstances includes moving jobs, as insurers beleive this can affect your risk. Scandalously, the unemployed often (though not always) pay higher rates for their car insurance, so do inform your provider if you're out of work but also check to see if it’s worth cancelling and moving elsewhere, as you don’t need to be at renewal to change insurer.

If you’ve read these tips and thought, “it’s be quite easy to lie about this”, then of course you’re right. Yet lying on your insurance form is fraud. It can lead to your insurance being invalidated and in the worst case a criminal prosecution for driving without insurance. Don’t do it.

Tips and tricks for lowering car insurance costs

If you’re trying to finesse the lowest price, there are a few more things to watch out for. Car insurance marketing is clever. Its aim is to make you feel you’re getting the best deal but to maximise the insurer’s profit at the same time.

• Get a ‘new’ quote from your existing insurer
  
  Often applying to your existing insurer as a new customer produces a cheaper price than its renewal quote. Insurers put out more competitive prices to attract new customers so simply start again and you could be better off.
  
• Consider how much you’d really claim for?
  
  It's worth considering going for a policy with a higher excess (the amount of any claim you need to pay yourself). Many people will find that claiming for less than £500 worth of damage both increases the future cost of insurance and can invalidate no-claims bonuses, meaning it’s not always worth making a claim.
  
  So why pay extra for a lower excess? A few policies will substantially reduce premiums for a £1,000 excess, so try this when getting quotes. Of course the one downside with this is if you have a bigger claim you’ll have to shell out more, but often it’s a good balance of the risks.
  
• Drive someone else’s car on your insurance
  
  If you have fully comprehensive insurance then often, although not always, it includes what’s called ‘driving other cars’ cover. This provides you with Third Party cover whilst reducing your mileage and therefore the cost of your own policy.
  
• New car, free insurance
  
  Buy a new car and it may include free insurance for a few years. While this is only worth a few hundred a year to an experienced driver, to a young car owner it could be worth thousands and is well worth taking into account when you add up overall costs.
  
  
• New Driver? Take an additional driving course
  
  PassPlus is a Driving Standards Agency course aimed at helping new drivers (within 12 months of passing their test) become more confident on the road. There are six modules; town driving, all-weather driving, driving out of town, night driving, driving on dual carriageways and driving on motorways.
  
  The cost of the course is around £200 but varies depending on where you live and the instructor or driving school you choose. Yet many local councils offer discounts of up to 50%, usually for those under 25, and in Wales it only costs £20 (check if your council is taking part). Once you have the certificate some insurers then discount the price of your insurance but but as there are not many there’s a high chance you can get cheaper cover elsewhere.

Extra tips for no claimers

• No-claims discounts don't necessarily reduce the premium
  
  For every year you don't claim on the insurance policy you get a discount. This makes a substantial difference to the overall cost. If you do claim it's usually two years off this discount. This is deliberate to encourage people not to claim. You can also get a protected no-claims discount so that claims don't impact it.
  
  Remember though, if you do have an accident, even if you don't claim to keep your no claims discount, the price of the policy can rise simply because you may be assessed as a higher risk in the future.
  
• Try to keep your no-claims if switching from a company car to a private car
  
  If you have a no-claims bonus from driving a company car and try to find private insurance online, you'll find neither insurer nor broker will allow your previous no-claims bonus to count.
  
  Yet if you phone up most companies will give some form of ‘introductory or special bonus' to those switching to a private car. This is because these discounts are often applied manually as the online systems don't automatically allow a discount. There are also discounts available with brokers and some insurers where second cars for existing policyholders can attract introductory bonuses, but again these are call-centre not internet-based. See the Mulit Car Discount section in the main Car Insurance guide.
  
  The overall tactic I would suggest is first of all use the Cheapest Car Insurance four-step plan to establish your risk factor – then call the top three (or possibly five) providers listed and discuss this no-claims company issue.

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