Lower Insurance Premiums Vs Your No-Claims Bonus |
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December 15 - Ask any actuary and he'll tell you the chances are high that a South African insurance company has phoned you and offered you lower monthly premiums so long as you forego your no claims bonus. But is it wise? We'll help you do the maths to work out whether it is financially advantageous for you to make this switch, but first it is helpful to define a no claims bonus: Most South African insurance companies that offer short-term policies will reward you if you do not make a claim over a period of four years. After the four year time period you generally receive 25% of the cost of your premiums for those 48 months. That's a fair whack of cash. Assume that you pay R425 a month for your premium. Over four years that amounts to R20,400. Your no-claim bonus entitles you to a payout of R5,100. Now imagine that you've been offered a R50 monthly discount on your premiums but only by getting rid of that no claims bonus. Over the same 48 months you will save R2,400. Of course there is a chance that you will not be eligible for a bonus as you may have to claim within that time frame. That's the unpredictable nature of the future, so obviously if you're willing to gamble on the fact that you'll maintain a clean no-claim record you should keep the bonus. Remember to do the matchs for yourself, and also to take into account the difference between a guaranteed lower premium regardless of future events versus a juicy bonus that you may or may not qualify for down the line. Related Insurance Articles: * Car Insurance Will Lapse If You Drive Drunk * Pay Lower Car Insurance Premiums In South Africa * Why Travel Insurance is so Important * Medical Insurance In South Africa And Why You Need It * South African Car And Home Sales Start To Slow Down * Liberty Life To Buy Out STANLIB * Blue Financial Services Maiden Earnings Up 225% * Lloyds Investors Lose Insurance Regulation Lawsuit 
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| 3/14/2010 7:04:57 AM | |||||||||||||||||||||
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