Why do my insurance premiums increase?

Here at Apex, a common question we are asked by our clients is "why did my premiums increase?" Typically, there are two main factors that determine an increase in insurance premiums; these are whether you have cover based on rate for age premiums and if you have selected to have your cover linked to the Consumer Price Index (CPI).

Rate for age premiums
A rate for age premium option means that your premium increases each year in line with your age i.e. the younger you are the cheaper your premium will be, as from the insurers point of view, the chances of you making an insurance claim is lower when you are younger. On the other hand, as you get older the risk to the insurer increases and this is reflected in your premium.

An alternative to a rate for age premium is a level premium where your premium remains the same for a specified duration. However, with level premiums you often pay a higher premium initially when compared to a rate for age premium.

To find out if a level premium option is right for you, please contact us.

CPI Linked
If your policy is CPI linked, your sum assured will increase every year to keep pace with inflation. For example, if you had cover of $100,000 and inflation was 3%, your sum assured would increase to $103,000. This option ensures that the purchasing power of your sum assured is not depleted. However, it is important to note that your premiums will increase to reflect the new sum assured.

So how do I manage my premiums?
For clients that are wanting to manage the cost of their premiums, there are various options which can help with costs in the short or long term. These options can be discussed with your adviser to ensure they are right for you.

If you would like to discuss your premiums with an adviser please send an email to advisers@apexgroup.co.nz or call us on 0800 500 510.


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