Loyalty tax is the tax you pay to either an insurance company or a service provider as a result of being a long-term customer.
Service providers attract new customers by providing them with super deals for their initial sign up but once these plans or policies renew, or after a certain amount of time, the premiums increase.
If you can avoid loyalty tax, you could save hundreds or thousands each year.
Loyalty tax increases over a certain amount of months or years per the duration of the subscription. Insurance companies mostly don’t reveal previous years premium to be compared with the current one. Also, the renewal package automatically kicks in without the customer doing anything.
Loyal clients pay more for services which may be free or less for new clients. It’s always lucrative for new clients to join.
Although most of us put in the hard yards of shopping around for the best deal before we choose an insurance policy, our apathetic approach to lasting diligence is costing many of us a small fortune in Loyalty Tax, year after year.
Only insurance companies?
Although insurance companies are fond of such acts, other service providers also have such acts ‘set and forget’
How to stop paying Loyalty Tax?
Insurance companies must state the previous years premium on all renewal notices. This is to provide clients with more info when their provider applies a big increase and know what that increase is.
Well publicised in the insurance sector, Loyalty Tax is widespread.
Most customers like to think our insurance companies are giving us their best deal, which apparently isn’t always the case. This strategy has become more publicised in recent years therefore calling for Governments to act.
What can you do about it?
The best thing to do is give your finances a health check up. Do a thorough check to see if all subscriptions are unchanged. Find out what they now offer to new clients then check out a few competitor deals for new clients.
Regularly contact providers and complain that you are paying too much. If it remains unchanged, go elsewhere.
How to reel in Loyalty Tax – Examples
Let’s say someone wanted to find out if he was on the best plan he subscribed to initially. He contacted his provider, and the news was really bad. He was not only on an expensive plan but also all his discounts were inactive. The result of the call was him getting back to a better plan which saved him 18% per quarter and hundreds refunded.
Or you can simply contact Syndeo Group and let them take care of all your tax matters in the best possible and professional way. Contact them today, and get the best partner for your business.