Why do Insurance prices increase?

By Reza, Dec 2020

Insurance

Why do some insurance prices, like our health insurance, increase every year whilst others, like our phone insurance, stay the same?

To answer this question, you first need to understand that two main aspects impact your price.

  1. Your chances of claiming
  2. The cost of your claim

If any of these change over time, it will impact the price you pay. 

Generally speaking, if you are more likely to claim as you get older, your insurance price will increase. It won’t shock you to find out that you are more likely to have illnesses as you get older. This is the reason your health insurance price increases. 

When your age doesn’t impact the likelihood of claiming, the price remains the same. This is what happens with your phone insurance. 

What about Income Insurance?

Income Insurance pays you a monthly income when accidents or illnesses stop you from working. The likelihood of not being able to work because of an accident or illness increases as you get older. For this reason, the price of income insurance increases as you get older.

Can I get a policy with fixed prices?

It is possible to get policies that remain at the same price as you get older. These policies usually start with significantly higher prices but remain the same throughout. This means you will be paying higher prices for many years, to compensate for lower prices further in the future.