How to Save Money and Improve Your Cover: Eight Top Tips

Tip 1 Ensure you are covered

Many of our members undertake what they regard as recreational climbing or hill walking. Your insurance company may regard such activities as extreme sports – and your climbing, scrambling or winter hill-walking may not be covered in standard insurance policies. Hopefully you will never need insurance, but making a claim which could be delayed or refused at what would be a difficult time for the claimants is something which can easily be avoided by taking expert advice from Summit Financial Services.

Tip 2 Take Advantage of Special Rates for MCofS Members

Mention the MCofS when contacting Summit Financial Services to obtain the special rates we have negotiated on your behalf. The MCofS will receive a commission for every policy written by Summit Financial Services for an individual member of the MCofS, or a member of a MCofS Club.

Tip 3 Joint policy or two single policies?

The cost of two single life policies does not cost much more than a joint policy.

eg. A male and female aged 35, who are both non-smokers, require £200,000 if one of them dies during the next 20 years whilst their young family are financially dependent on them. Both climb all seasons in the UK, including Scottish Winter, and also enjoy sport climbing in the Alps when time permits.

A joint policy that pays out £200,000 if one of them dies, costs £20.79 per month.

But what if they were involved in a fatal RTA together? Would £200,000 still be enough for their children’s guardians to bring them up without struggling financially?

Two single life policies for £200,000 cover each would cost just £3.32pm extra for this couple to potentially provide £400,000 in this scenario.

If you already have a joint policy it may well be worthwhile converting this to two single policies.

Tip 4 Decreasing or Level Insurance?

If your life insurance is to protect your mortgage then you should consider what type of mortgage you have. Is it a capital repayment mortgage or interest only?

If you have a capital repayment mortgage where the capital is repaid monthly, then the mortgage liability will reduce during the term. A decreasing policy is designed to just clear any outstanding balance owed, as the cover will reduce in line with your liability. A level term policy is normally used to protect an interest only mortgage.

Check that you have the right policy. A decreasing term assurance is cheaper than a level term assurance.

Tip 5 Review your existing cover

Do you still climb at the same grade and locations you did when you took out the policy? Did you shop around when you took your cover out?

If your climbing activities have changed since you took out the policy then any loading an insurance company may have imposed may be removed if the perceived risk is not as great.

Or perhaps you felt obliged to go with the company your mortgage adviser recommended. Different companies have different stances on sporting risks, so you may even save money on the cost of your cover even if your climbing is similar.

Tip 6 Tax-efficiency for Directors of their own limited company

It is now possible for a limited company to take out a life insurance policy on its employees for the benefit to be placed in trust for a nominated beneficiary other than the company. Thus a director may arrange their own life insurance, paid through the company as a business expense, with any claim paid tax free to the director’s beneficiaries.

It is not treated as a benefit in kind, and as this is not paid out of an individual’s already taxed income it can save you money via your business.

Tip 7 Terminal Illness or Critical Illness

Terminal illness cover is normally included free of charge within a typical life insurance policy as this just pays the life insurance out early if you are diagnosed with a terminal illness and have a life expectancy of less than 12 months.

Critical Illness pays out the benefit upon the diagnosis of a critical illness such as a heart attack or cancer, or becoming permanently disabled.

Do not confuse these two. You may think that you have critical illness cover when you haven’t.

Critical illness can be added to a life policy and need not be for the same sum assured, so at least you could have some cover if your budget is tight!

Tip 8 See a specialist

Different insurance companies have varying views on the risks presented to them.

A local Financial Adviser or Mortgage Consultant is unlikely to understand your ‘extreme’ climbing activities, let alone know which insurer can offer you the best cover at the best price.

Your GP would refer you to a Consultant if they suspected you had a serious medical condition, so you could be recommended the best treatment currently available, and quickly.

Likewise, a specialist company that deals with ‘extreme’ sports on a daily basis should be knowledgeable enough to know which questions to ask you at your initial enquiry stage, and immediately know which insurance companies will impose a loading and which won’t.

This should ensure you get the best available cover, at the best price, without unnecessary delay.

This advice is provided by Summit Financial Services - published 13 October 2011