(Last updated April 2025)
The irony is palpable. Insurance is meant to protect us, yet in 2025 it sometimes feels like a luxury. Premiums are climbing at double or triple the rate of general inflation, and household budgets are straining. It’s a dangerous game – cut cover to save money (risking under-insurance), or pay through the nose for comprehensive cover (risking over-insurance). Let’s break down what’s happening and how everyday people like you and me can strike the right balance.
The Premium Squeeze in 2025
Sticker shock is real. In the past year, the average home insurance premium jumped 16% – roughly an extra $359 annually out of your pocket. Some insurers hiked rates by 30% or more. Car insurance hasn’t been spared either, with comprehensive policies overall costing about 42% more than five years ago. Even private health insurance, usually a steady climber, saw its biggest increase in years – up 3.73% on average in 2025. In short, if it feels like every type of insurance is getting pricier, you’re not imagining it.
These rising premiums aren’t abstract percentages; they hit real people. 1.6 million Australian households are in “extreme insurance stress,” spending over a month’s income just on insurance each year. In some high-risk areas, home insurance quotes are coming in absurdly high – A family in Queensland got a renewal notice for nearly $7,500 on their house. No, that’s not a typo. Little wonder over one in four Aussies now have no home or contents insurance at all– they’ve been priced out, effectively self-insuring and hoping for the best.
Meanwhile, others grit their teeth and pay up to stay covered. It’s absurd but it’s become a (new) ‘classic’ Aussie dilemma: too little insurance could ruin you, but too much insurance might break you. So how do we audit our policies to find that sweet spot? Let’s go category by category, with an eye on both the numbers and the human stories behind them.
Home Insurance: Between Skyrocketing Costs and Risky Gaps
If you own a home (or even just rent), insurance is your safety net – and lately, that net has gotten expensive. Last year’s wild weather and inflation have driven home insurance premiums through the roof (sometimes literally through the roof). Insurers cite extreme weather, costly building materials and higher reinsurance costs as reasons for the hikes. The data backs it up: the cost to rebuild a house in Australia has jumped nearly 30% since 2019. That means if you haven’t updated your sum insured in a few years, you might be under-insured by a mile. A policy covering a $500,000 rebuild in 2019 might need to be ~$650,000 today to fully protect the same home. Sobering, isn’t it?
Under-insured? Many Australians are, often without realising. Under-insurance in home coverage basically means your insurance wouldn’t pay out enough to get you back on your feet after a disaster. It could be the Brisbane family with a $600,000 mortgage on their home who assume that amount is enough coverage – when in reality, rebuilding from scratch after a total loss might cost $750,000+ in 2025 dollars, leaving a huge shortfall. It could also be a matter of contents insurance: maybe you’ve insured $20,000 worth of belongings but actually own $50,000 worth of stuff. Or perhaps you’re a renter in Melbourne’s inner north, like Jess, age 27. Jess thought she didn’t have much to lose, so she skipped contents insurance. Then her Brunswick sharehouse got burglarized – laptop, bike, and musical equipment all gone. Suddenly she’s staring at several thousands in losses and no cover. That’s the brutal lesson of being under-insured.
Over-insured? Yes, it happens too. Being over-insured on your home means you’re paying for cover you don’t actually need. For instance, if you’re diligently insuring your home for $1.5 million when it would realistically cost $1 million to rebuild, you’re overspending – the insurer will never pay more than the rebuild cost, so those extra premiums are money down the drain. Some folks also pile on optional extras (accidental damage, high-end jewelry cover, etc.) that inflate costs, when perhaps they could do without. Are you paying extra to cover a diamond ring you no longer own? It’s more common than you’d think.
Then there’s the loyalty trap. Australians have a habit of “setting and forgetting” their home insurance – staying with the same insurer year after year. Insurers count on this, often rewarding new customers with lower rates while quietly hiking renewals for the loyal ones. That so-called “loyalty tax” can leave you overpaying significantly. One long-time customer from ACT discovered she was paying $500 more than she’d need to with another insurer for the same coverage. Her insured value had even been creeping down while premiums went up – essentially paying more for less cover! Over-insurance can sometimes simply mean over-paying.
Finding the balance: Start by checking your sum insured on your home/building policy. Is it enough to completely rebuild at today’s prices? Factor in not just materials and labour (which are pricier due to supply chain issues and trade shortages), but also debris removal and maybe temporary accommodation. If not, bump it up – being under-insured for a total loss could be financially catastrophic. At the same time, make sure you’re not insuring “air” – don’t include your land value, for example, just the house. If premiums have become unmanageable, consider increasing your excess (the amount you pay if you claim). Raising the excess by, say, $500 can lower premiums by around 10% on average– just be sure you could actually afford that higher excess in an emergency.
Also, shop around. In this market, it’s almost foolish not to. More than half of insurers raised prices for 90% of their customers last year, but a few bucked the trend – e.g. RACQ barely increased premiums at all, and one insurer (Guild) even cut prices on average. The spread is huge. Get quotes from a few competitors or use comparison sites; if you find a better deal, you can try asking your current insurer to match it like Henri in Queensland did – he saved $2,250 off his $7.5k premium by showing a competitor quote. And if they won’t come to the party, don’t be afraid to switch. Loyalty won’t pay your rebuild.
For renters, the advice is slightly different but just as critical. Contents insurance for tenants is relatively affordable – often just a few hundred a year for $25,000 of cover – and it can be a lifesaver. Even if you’re young and rent a small flat in Carlton or Newtown, think about the cost to replace your clothes, phone, laptop, furniture, appliances if a fire or theft hit. It easily runs into the tens of thousands. If you truly own very little, you might be over-insuring by buying too much cover, so don’t overstate your contents value. But at least consider a basic policy. It’s a myth that the landlord’s insurance will cover a tenant’s belongings – it won’t. Under-insurance for renters usually means no insurance at all, which is a risk to your financial stability.
Finally, keep an eye on deductions and discounts. In NSW, for example, a big chunk of your premium is actually fire and emergency services levies and stamp duty (taxes can add 20–40% to the cost). We can’t avoid those, but we can make sure we claim any allowable tax deductions (such as landlord insurance being deductible for an investment property, or contents insurance if you have a home office portion). Every bit helps.
Car Insurance: Finding the Right Cover for Your Ride
That old saying “keep the wheels turning” now applies as much to your finances as your car. Car insurance premiums are surging, and motorists are feeling it. The average car insurance policy (across all types) runs about $929 a year now, but that figure includes lots of bare-bones third party policies. If you’re a typical driver wanting comprehensive cover, you’re likely paying much more – the Australian Automobile Association pegs the average annual car insurance cost in capital cities at about $2,736, with Sydney drivers coughing up a whopping $3,691 a year on average (no, that’s not all rego – that’s insurance!). Even Hobart, the cheapest capital, is over $2,150 on average. In short, insuring a car can easily rival a couple months’ worth of rent or mortgage payments. No wonder a recent survey found 15% of Australians rank car insurance as their “most dreaded” bill, right behind electricity bills.
Given these costs, it’s critical to assess if your car cover makes sense for you. Over-insured drivers are out there. How can that be? Consider this: you’re paying top dollar for comprehensive insurance on a clunker – say a 15-year-old Corolla worth $1,500. If your premium is $800 and your excess is $1,000, a total loss payout would net you basically nothing. In that scenario, a cheaper third party property policy (which covers damage you do to others but not your own car) might have been more sensible. Over-insurance with car cover often means paying for coverage that exceeds the value or usage of the vehicle. Another example is stacking on expensive add-ons: did you tick the option for a free rental car after an accident, roadside assistance, windshield cover, and the no-excess windscreen option? Those can be useful, but each one costs extra. If you have access to a second car or could do without for a bit, maybe you don’t need the rental car add-on. If you already have NRMA/RACV roadside membership, you don’t need to pay the insurer for roadside too. Check you’re not double-dipping.
How about under-insured drivers? The clearest case is folks driving around with no insurance beyond the compulsory third-party (CTP) that comes with registration. CTP covers injuries to people – it won’t pay a cent for damage to cars or property. Yet plenty of people roll the dice, figuring their old bomb isn’t worth insuring. I get it – if your car is a junker, it might not merit full comp cover. But at minimum, every driver should have third party property insurance. If you accidentally rear-end a Mercedes, you could be liable for tens of thousands in repairs. Without at least third-party property cover, that financial hit could ruin you. So not having that is being dangerously under-insured.
Even with comprehensive policies, under-insurance can lurk. For instance, if you use your car for rideshare or business purposes and haven’t told your insurer, you might find out at claim time that you’re not covered during those activities. Take Dan, a rideshare driver in Adelaide. He assumed his personal car insurance had him covered because he selected “private use”. Wrong – carrying paying passengers is a different risk profile. Had he crashed while ridesharing, the insurer could have refused the claim entirely. Dan was unknowingly under-insured. The fix? He added a rideshare endorsement to his policy (bumping his premium a bit) and made sure his coverage matches his actual car use. Under-insurance can also mean skimping on coverage type. If you only have third party property insurance, remember it won’t cover your car if you’re at fault. Could you absorb the loss of your vehicle or finance owing on it? If not, that minimal cover might be leaving you under-protected.
Smart adjustments: Car insurance isn’t all or nothing. It should flex with your situation. If you have a newer or valuable car that you need for daily life, comprehensive cover is usually worth it – but you can dial the cost down. Increase your excess, opt out of unnecessary extras, and shop around because premiums vary wildly between insurers for the same driver. If your car is older and not worth much, consider dropping down to third party property, but only if you’re financially prepared to walk away from the car or repair it yourself after an at-fault accident. Many Aussies save money with usage-based policies now – some insurers offer pay-per-kilometre plans or discounts if you drive under a certain amount. If you’re now hybrid working from home and only drive on weekends, why pay the same as a daily commuter?
Also, bundle and save can apply here: some companies will give, say, a 10% discount on your car insurance if you also insure your home with them. Just make sure the bundled price truly is lower than separate policies elsewhere – sometimes the math can surprise you.
And remember, as with home insurance, loyalty can hurt. Car insurers often reserve the best rates for new customers. Run a quote for yourself on your insurer’s website as if you’re a new customer (try an incognito browser) – you might find a lower price for the exact same cover. If so, ring them and ask for that price. If they say no, well, switching car insurance is pretty straightforward too.
One more thing: review your agreed value vs market value. If you chose an agreed value policy a few years back and haven’t adjusted it, you might be insuring the car for more than it’s worth now (over-insurance) and paying higher premiums as a result. On the flip side, if you set an agreed value too low to save on premium, you’d short-change yourself if the car is written off. It’s about finding that Goldilocks spot: not too high, not too low.
Health Insurance: Peace of Mind or Pain in the Hip Pocket?
Private health insurance in Australia occupies a weird space. We have a great public healthcare system (Medicare) for emergencies and essential care, but it won’t cover everything. Extras like dental, physio, glasses – Medicare doesn’t cover those at all. And if you need elective surgery (say a knee reconstruction) you might wait many months or even years in the public queue. Private health cover can fill those gaps, giving you more control – but at a steep price. The question is, how do you decide if you’re over-insured or under-insured on health?
First, the lay of the land: about 45% of Australians have hospital cover in 2025, and a bit more than half have some form of “extras” cover. Premiums reliably go up each year, usually around inflation or a bit above. This year it’s +3.7% on averageasiainsurancereview.com, which doesn’t sound too bad, but consider that wages aren’t growing that fast. And that’s an average – some funds hiked more. Over the past five years, out-of-pocket costs (the gap you pay even with insurance) have ballooned 71% for people with hospital cover, according to industry reports. So we’re paying more and arguably getting less value in returns.
Under-insured when it comes to health can mean a few things. The obvious: having no private cover at all. Plenty of people choose to rely entirely on Medicare, which is perfectly fine for many situations – you will get treated in public hospitals for emergencies or serious illness. But if you’re on the public system only, you might be under-insured for certain scenarios. For example, major dental work can cost thousands and Medicare won’t help; without extras insurance or a healthy savings account, you’re on your own. A young, healthy person may choose to go without private cover (saving money now) but is taking a chance that they won’t need expensive elective procedures or allied health services. It’s a risk decision.
Another form of under-insurance: having a basic hospital policy that doesn’t actually cover the treatments you’d want. The government tiers (Basic, Bronze, Silver, Gold) give a clue: a Basic policy might only cover a handful of things (like accidents requiring hospitalisation) and exclude, say, knee surgeries, birth, heart procedures, etc. I’ve seen cases where someone thought they were covered because “I have private insurance,” only to discover their cheap policy didn’t cover their needed surgery – leaving them to either upgrade (and wait out waiting periods) or join the public queue. If your health cover is cheap, read the fine print to ensure you’re not under-insured for your stage of life. A 25-year-old can probably live without hip replacement cover; a 60-year-old perhaps cannot. Tailor accordingly.
Over-insured in health insurance is also common. It usually means paying for coverage you don’t use or need. Classic example: a young couple paying for a Gold-tier policy that covers pregnancy and birth, even though they’re not planning to have kids. Or an older couple long past child-rearing years still paying for pregnancy cover. Another one: expensive extras cover with big annual limits, even though you hardly ever claim on those services. If you’re paying $800 a year for extras but only claiming $300 worth of remedial massages and new glasses, you might be better off downgrading your extras plan or dropping it and paying out of pocket as needed. Insurance should ideally save you money or protect from catastrophes – paying more in than you get out (especially for predictable, budgetable expenses) is a form of over-insurance or at least inefficient spending.
So what’s the right call? For many working Australians, private hospital insurance becomes relevant as income rises because of the Medicare Levy Surcharge (MLS) – earn above ~$90k (singles) or $180k (families) and you’ll pay a tax surcharge if you don’t have hospital cover. Note this isn’t tax advice and you need to check with your accountant for the benefits here.
If you’re younger or really cash-strapped as a healthy youth, one strategy could be to hold off on health insurance (since under-30s statistically claim less) but start budgeting for it as you approach 30. By age 31, the government’s Lifetime Health Cover kicks in – a penalty loading on premiums if you join hospital cover later in life. Join by 31 and you avoid that forever. Join at 40 and you’ll pay 20% higher premiums for 10 years as a penalty. Something to chew on if you’re currently 29 with no cover – you have a decision to make soon.
For those who decide private health is worth it: to avoid over-insurance, pick a plan that fits your needs, not one that boasts every bell and whistle. A fit 35-year-old might choose a Silver-tier hospital policy that covers heart and joint surgeries (just in case) but excludes pregnancy and some age-related services – that could save significant dollars compared to Gold. And if you rarely use extras, consider a cheaper extras plan or none at all; you can put the money you would’ve paid in premiums into a savings account earmarked for out-of-pocket health costs.
Another tip: increase your excess on hospital cover. Most funds allow $500 or even $750 excess per hospital admission. Opting for a higher excess usually nets you lower premiums. If you’re not a frequent hospital visitor, it’s often worth it – you’d pay that only if admitted.
Finally, review it yearly. Health insurance has so many options and annual changes – your policy might drop a provider or change rebates, competitors might offer a new deal, or your needs might change. It’s not set-and-forget. Many Australians set one up in their 20s or 30s and decades later they’re in a totally different life stage but still on the old policy. That’s a textbook case of over-insurance (or sometimes under, if life changed in ways the policy doesn’t cover).
Income Protection: Safeguarding Your Paycheque (Without Overdoing It)
Income protection insurance is often the forgotten hero (or orphan) of the insurance world. We readily insure our cars and homes, but what about the paycheck that pays for those things? Your ability to earn an income is your biggest asset over your lifetime. Lose that, and the domino effect can be brutal. That’s where income protection (IP) comes in – it pays you a percentage of your wage if you can’t work due to illness or injury. Sounds like a no-brainer, especially for those of us without big financial buffers, right?
Yet many Aussies are under-insured here by default, simply because they don’t have a policy or the one they have is inadequate. If you’re employed full-time, check your superannuation fund – most industry super funds automatically include a default income protection cover (unless you opted out, or if you’re under 25 or have a low balance, in which case they might not start it until you opt in). But these default covers vary: a common setup is it might replace around 75% of your income for up to 2 years if you can’t work, with maybe a 30 or 90-day waiting period. That’s a good start, but ask yourself: would a 2-year payout be enough? What if you’re permanently unable to return to your previous work due to, say, a serious back injury? After 2 years of payouts, you’d be on your own (possibly on disability support pension, which is not much). This is a scenario where you’d be under-insured – you had some cover, but not enough for a long-term disability.
Others have no cover at all. Consider gig workers like our friend Dan in Adelaide, the rideshare driver. No sick leave, no employer super contributions – if he’s out of action, the money stops. Dan doesn’t have income protection (many gig workers don’t even know they can get it). He’s one accident or illness away from zero income until he recovers. That’s a classic under-insurance risk.
On the flip side, can you be over-insured with income protection? Technically, insurers usually cap benefits (typically 70-75% of income is the max you can insure, to encourage you to return to work eventually), so you can’t insure 100% of your wage or make a profit from being unable to work. But you can end up overpaying for features you might not need. For example, you might have two separate income protection policies – one through super and one you bought directly – and think they’ll double-pay if something happens. They won’t (at least not beyond that 70-75% of income in total), so you could be wasting premiums on the extra policy unless it’s structured for a specific purpose (like one kicks in after the other ends, which some people do). Another form of potential over-insurance: expensive riders like automatic yearly benefit increases, or choosing a very short waiting period (14 days instead of 60 or 90) which can jack up the premium. If you have plenty of sick leave or an emergency fund to cover a few months, you don’t need to pay more for a short waiting period on the policy. You’d be over-insuring your cash flow needs.
Cost check: Income protection is not cheap, and it’s gotten more expensive in recent years (industry shake-ups to make policies sustainable have seen premiums rise about 12% since 2023 on average). An average policy might cost around $70-80 a month for a middle-income earner– that’s $840-$960 a year. If you’re younger and in a low-risk white-collar job, it could be less; older or more high-risk occupation (say tradie or nurse), could be a lot more. Because of the cost, many rely on the basic cover in super (which still costs you via your super balance) or skip it entirely.
So, how to strike the right balance here? Audit your existing protection: if you have a policy in super, find out the key terms – benefit amount (% of income), benefit period (2 years? 5 years? To age 65?), waiting period, and any specific exclusions. Does it cover illness as well as injury? Most do, but check. Then consider your life: do you have dependants or a mortgage depending on your income? If yes, lean towards more cover. If no, you might accept a bit more risk.
One affordable strategy if you want income protection without the hefty price is to extend the waiting period to 90 days (or even 180 days) and rely on sick leave, annual leave, or savings for short-term events. Also, you can shorten the benefit period (e.g., cover for 5 years of disability instead of all the way to age 65) to cut costs – though that’s a trade-off in protection. Some cover is usually better than none, but too much cover that you can’t comfortably afford could lead you to drop it entirely later, which we want to avoid.
And remember, if you pay for income protection outside super from your own pocket, the premiums may bey tax-deductible (because any payout would be taxable income). That softens the cost by effectively giving you a third back at tax time if you’re in the ~30% tax bracket. Through super, you don’t get that deduction personally (the fund does, but you don’t see it). So for some, it makes sense to hold the policy outside of super for the tax benefit and possibly more tailored cover – just budget for the premiums.
In short, under-insured in income protection means you and your loved ones couldn’t cope financially if you were out of work for an extended period. Over-insured means you’re paying for more bells and whistles than you truly need. The right policy should be as generous as necessary, but no more.
Cutting Insurance Costs Without Cutting Protection
By now it’s clear: 2025’s insurance landscape is a minefield, but there are ways to navigate it. Whether you fear you’re over-insured, under-insured, or just paying too much, here are some actionable strategies to get your cover in order:
- Perform an annual insurance audit: Set aside a day to review all your policies. Life changes (new job, move house, have a baby, buy a new car, pay down debt) should trigger a cover check. Make sure your sums insured and cover types still match your needs. Cancel anything redundant. Adjust anything insufficient.
- Shop around and leverage competition: As discussed, never accept a huge renewal increase without question. Get alternative quotes – even if you prefer your current insurer, you can use competitors’ prices as bargaining chips. The insurance market in Australia is competitive; use that. Also, check if there are group discounts you can tap – some employers or professional associations negotiate cheaper insurance for members.
- Beware the “set and forget” direct debits: Many Australians put their insurance on auto-renewal direct debit and forget about it. Insurers can and will hike the premium annually. Don’t be complacent – read those renewal notices. I know it’s tedious, but it could save you hundreds.
- Increase your excess (deductible): We’ve mentioned this for each category because it’s one of the simplest ways to cut premiums. Home and car policies, especially, often let you choose higher excesses for lower premiums. Just keep an emergency fund equal to your highest excess, so you’re prepared. Essentially, you self-insure the small stuff and let insurance cover the big stuff.
- Bundle policies: If you have multiple insurance needs (home, contents, car, maybe even health via some health funds that do general insurance partnerships), see if one provider will give a multi-policy discount. Commonly 5-15% off. But always cross-verify that the bundled price truly beats separate specialist insurers – sometimes jack of all trades is master of none (e.g., a dedicated health insurer and a separate car insurer might, even without bundle, total to less).
- Safety and loyalty discounts: Check your policies for discounts you might be missing. Car insurance often has no-claim bonuses – if you’ve a good driving record, make sure you’re getting that lower rate. Some home insurers give discounts for things like having an alarm, window locks, or living in a gated community. Even living near a fire station can count. It might involve a call to let them know about a security upgrade you did, for instance. As for loyalty, ironically the best “loyalty discount” is often asking for a new customer discount as an existing customer (by threatening to leave). Insurers won’t reward you just for sticking around – you have to ask.
- Trim the fat: Go through each policy’s features. Are you paying for optional benefits you don’t absolutely need? This is where a bit of tough love comes in. Do you really need that $20,000 specified cover on jewelry when you sold the watch it was meant for? Do you need unlimited car hire or could you manage with 14 days? Customise and cut out extras that aren’t worth the cost to you personally. This fine-tuning can save a surprising amount.
- Avoid overlapping covers: Over-insurance often happens by overlap. A classic one – travel insurance. Your credit card might include travel insurance, yet you bought a standalone policy as well. Oops. Or you have roadside assist via your car manufacturer but also via your insurer. Consolidate and eliminate duplicates. Another overlap: health insurance extras vs. what you can get from, say, NDIS or other programs if applicable – don’t pay twice.
- Consider higher-level strategies: If premiums, especially home premiums, are killing your budget, think about mitigation. For example, if you live in a flood-prone area and your premium is astronomical, investing in some flood resilience measures (raising the house, improved drainage) might eventually reflect in premiums or at least reduce the risk of an uninsured loss. Some communities are lobbying for government intervention in disaster-prone regions – there’s talk of everything from reinsurance pools to stamp duty removal to ease the burden. But those are long-term fixes; in the here and now, you have to take charge of your own policies.
- When crisis hits, don’t go it alone: If despite all this, you find yourself with an insurance bill or an excess payment you genuinely can’t afford at the moment, address it before you let your policy lapse or delay a crucial repair. Many insurers offer hardship payment plans if you ask. Additionally, new services have emerged to help cover surprise bills. For instance, PressPay Advance can give you an early access to part of your paycheck to cover a premium or excess in a pinch (deposited as cash, for a flat 5% fee). Or if you’d rather avoid fees, PressPay Shop lets you tap your earned wages via a digital gift card (for essentials like fuel or groceries) from 0% interest or fees– indirectly freeing up money to pay your insurance. These tools are essentially modern twists on bridging a short-term cash shortfall without resorting to high-interest loans or letting your insurance lapse. The key is to keep your coverage in place; an uninsured day is the day Murphy’s Law likes to strike.
- Use windfalls to insure less: This one sounds counterintuitive but hear me out. If you come into a bit of money (tax refund, bonus, etc.), consider using it to reduce the value of what you need to insure. Pay off part of your mortgage (smaller sum insured on mortgage protection or life insurance, if you have that). Buy a safer car or install security features (could lower car and home premiums). Or set it aside as a self-insurance fund, allowing you to take a higher excess. It’s not as fun as a splurge, but it directly tackles the under/over insurance puzzle by either lowering future premiums or making you less reliant on insurance payouts.
At the end of the day, insurance is about resilience – financial resilience. In 2025, that resilience is being challenged by higher costs, but also by greater needs (think climate disasters, expensive cars, medical advancements – all the things that drive claims). The goal of this “insurance audit” isn’t to encourage anyone to drop important cover just to save a buck. It’s to make sure you’re protected where it counts, and not paying more than you have to.
Final Thoughts: Your 2025 Insurance Check-Up
Performing an insurance audit on yourself might not be the most thrilling task, but it’s empowering. You might discover you’re paying for two policies when one would do, or that you’ve left yourself exposed to a huge risk unwittingly. Either discovery is good, because now you can act – cancel the unnecessary cover, or beef up the inadequate one.
Ask yourself the big questions for each category of insurance: If disaster struck tomorrow, would I be okay financially? If the answer is no, you’re under-insured – figure out how to close that gap, even if gradually. Am I paying for coverage or extras that don’t meaningfully reduce my financial risk? If yes, you might be over-insured – time to cut back to essentials.
Remember, the right amount of insurance is highly personal. It depends on your savings, risk tolerance, life stage, family situation, and even philosophy. A well-off person with no dependants might choose to self-insure a lot more (take high excesses, minimal income protection, etc.) whereas a single parent with little backup should likely insure to the hilt in critical areas. There’s no one-size-fits-all, but there is a common goal: avoid ruin, and avoid waste.
Some closing thoughts: insurance companies aren’t charities, but insurance itself is still a darn important thing. It’s easy to resent the premiums (and we should absolutely fight to keep them fair), but when life goes pear-shaped – and it does, more often than we think – having the right insurance can be the difference between a setback and a tragedy. We’ve seen families rebuild homes after bushfires thanks to a well-structured policy payout, and we’ve seen others in tears on the TV news saying they’ll never financially recover because they let their cover lapse or had insufficient insurance.
So do your audit, make the tough calls on what to keep or tweak, and ensure you’re neither over-insured nor under-insured, but properly insured for the life you live. That’s one of the smartest financial moves you might make this month.
Stay safe, stay savvy, and may your premiums be ever in your favour.
Sources
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