Benjamin Franklin said, “Beware of little expenses. A small leak will sink a great ship”. Most of us underestimate the effect of saving a few thousand rupees regularly over a period of time. That’s right – we are talking about insurance premiums. When you buy a term policy or a health policy, it is usually for several years. Reducing the premium you pay on such policies can help you save a sizeable amount over the entire tenure of your policy. Here are some common and not-so-common ways of reducing your insurance costs:
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(1)  Compare before you buy:
As in the case of any other product purchase, it makes sense to compare different insurance plans and then make your decision. Shopping around not only helps in reducing premium, but also helps in comparing benefits offered. Use third party websites to understand features before buying. However, remember that the cheapest plan need not always be the best one. Always balance the cost of policy and the benefits offered.

(2)  Evaluate online policies:
With the popularity of the internet, almost all insurance products are available with the click of a button. Many a time, such online policies work out to be much cheaper than traditional offline policies taken through your agent.
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(3)  Premium payment frequency:
It is common practice to opt for monthly, quarterly or half yearly premium payment modes to ease cash flows. However, did you know that these payment modes result in a higher premium when compared to annual payment frequency? Opting for annual payment can reduce premiums.

(4)  Buy early:
Life and health insurance always come at a lower cost when you purchase them at a younger age. This is because the risk increases with age and therefore premiums also increase. Buy insurance at an early age to reduce premium costs.
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(5)  Insure the right amount:
It is not always possible to arrive at the correct amount of insurance required. However, you can broadly estimate how much life cover you require by considering your goals, dependents and liabilities. While you should definitely not purchase insufficient insurance, it also does not make financial sense to over – insure unnecessarily. Balance the coverage amount required and the cost of insurance.

(6)  Lead a healthy life:  
The existence of lifestyle diseases can increase your premium. Although not all lifestyle diseases lead to a higher cost, the existence of one implies that you are a high risk customer to the insurer. Further, if you are a tobacco consumer, the premium will definitely be higher than a non tobacco consuming customer. Eat healthy; avoid tobacco and exercise regularly to reduce the potential of a potential increase in premium.

(7)  Check features of the policy: 
It is important to check the benefits and features of the policy before choosing it. Features such as no claim bonus or a discount in next year’s premium if there are no claims in any year can lead to an overall reduction in insurance costs.

(8)  Family floater policy: 
In many insurance categories, especially health insurance, there is an option to purchase a family floater policy which covers all the members in your family. This is usually cheaper than individual policies taken for each family member. Remember to compare the cost of a family floater policy vis-à-vis individual policies for your family members.

(9)  Top up plans: Another way of reducing your premium cost for an increase in coverage amount is to buy top up health insurance plans. A top up policy is an additional health insurance cover, which gets triggered beyond a certain pre-determined limit. Such policies are usually cheaper than buying a new health policy for the same coverage amount. However, remember to check the features and conditions before buying a top up or super top up plan.

(10)  Choose riders wisely: 
Add on covers and riders are specific insurance covers which cost an additional premium, over and above the basic policy premium. These are usually offered as an extension to the base policy. For example, a health insurance policy can have a critical illness rider or a term insurance policy can have a personal accident rider. Many a time, it may make sense to buy standalone policies or opt for cheaper alternatives, rather than choose a rider. Analyse the actual need for a rider instead of blindly agreeing to purchase one.

(11)  Stay loyal: 
As far as possible, it is recommended not to switch insurers. Although health insurance has portability feature, porting a policy requires efforts on your parts. In some cases, you may lose out on No-Claim Bonuses or discounts in premiums. When you shift your term policy, you will have to shell out a higher premium due to an increase in age. Unless the reasons are very compelling or your product has poor features, try to stay with your insurer. 
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High insurance premium certainly does not make financial sense. While in some cases this cannot be avoided, in many cases financial prudence can help in reducing insurance costs. Check your policy today to evaluate if you are paying a high premium!