In last month’s Autumn Statement the Chancellor announced that insurance premium tax (IPT) is to rise again.
From next June it will increase to 12 per cent. It’s the third hike in the tax in the past 18 months – back in 2010 IPT was just 5 per cent. As a result it has been branded the “fastest growing stealth tax”.
IPT is levied on all insurance premiums so you can expect all your policies to rise this year. But, this is a great time to assess all your insurance policies and see if there are any you should dump.
Many of us are over-insured with multiple policies providing overlapping cover, or we’re paying for insurance we couldn’t claim on or don’t need. Here are four policies you may be able to ditch.
1. Mobile Phone Insurance
Are you paying for a special insurance policy to protect your beloved smartphone? The chances are you don’t need to. Firstly, check if your bank account provides mobile phone cover – the rise of paid-for current accounts mean many include perks like phone insurance. If not, check your home contents insurance as you can usually add mobile phone cover to this for a lot less than a separate specialist policy.
2. Travel Insurance
As with mobile phone insurance many of us are paying for travel insurance that is already provided by our bank. Double-check if you are already covered. If you aren’t be sure to look into annual multi-trip policies rather than buying a policy every time you travel, as they tend to be a lot cheaper if you do so regularly.
3. Life Insurance
For some people life insurance is an essential, but many people are paying for a policy they do not need. The point of life insurance is to provide a lump sum or regular payments to help family members who rely on your income in the event of your death. If you have no dependents, or a spouse who would be unable to cope with the mortgage if you die, there is little point having life insurance.
Also, if you have death in service benefits through work (a payout of a multiple of your annual salary made to loved ones if you die) you may not need life insurance either.
4. Pet Insurance
Being able to pay for medical treatment for your pets is an essential. Veterinary science has made huge leaps forward in the past 20 years and there are now a range of treatments and operations available to keep your pets healthy, but they are not cheap with some treatments costing thousands of pounds.
However, that doesn’t automatically mean you need pet insurance. It is one of the most expensive policies with many people paying more than £500 a year. If you have enough savings to be able to cover any treatment your pet may need you may want to dump your pet insurance policy and have an ‘insurance savings account’ instead.
That way, if your pet falls ill you have the money to pay for treatment, but if your pet leads a healthy life you haven’t handed over thousands in wasted insurance premiums.