Lower your life insurance costs
First of all decide whether you actually need life insurance. If you’re single with no financial dependants, then you don’t really need a policy yet. But if you do, there are lots of ways you can reduce your life insurance premiums. Why not try some of these out:
1.Shop around – It almost goes without saying that shopping around for the cheapest life insurance quote is a great way of finding a competitive plan. You can do that quickly and easily using the lovemoney.com life insurance search engine.
2. Only pay for what you need - Your premiums will depend on the length of the term and the amount of cover you take out. As a rule of thumb, most recommend taking out cover until your youngest child reaches a certain age - say 18 or 21.
But the amount of cover required is tricky to gauge and depends on whether you have a mortgage, other debts and what you class as a decent standard of living for your dependents.
Some suggest that a figure of thirteen times your annual salary should do it. Others think around £150,000 cover per dependent child should suffice. But, of course, everyone is different - this calculator might help.
3. Don’t buy two separate policies - Be aware of a common false economy - while a joint policy may be cheaper, remember it will only pay out upon the first partner's death. It's usually better to pay a little more and take out individual policies which can each be claimed on separately effectively providing double the cover for a small extra premium.
4. Free cover - Before signing for anything, find out what you're already entitled to. Many employers offer life cover/death in service benefit worth three or four times your annual salary as part of your benefits package which is usually free. So don’t buy more cover than you need.
5. Change your lifestyle - There are plenty of ways to slash those costs here since premiums are calculated using your age, health, occupation and lifestyle.
If you can quit smoking the savings can be immense. Most insurers will insist on you having been free of nicotine-containing products for a year (or more). But once you can be classed as a non-smoker you could find your premiums as much as halve.
And if you can improve your health by losing weight you may be able to apply to your insurer for a re-evaluation for your premium payments.
6. Choose a cheaper alternative - You can save money by choosing a cheaper alternative. If you have a repayment mortgage, think about choosing a lower cost decreasing term assurance plan – where the cover reduces in line with your mortgage debt – rather than level term assurance where the amount of cover you stays the same throughout the term.
Alternatively, consider Family Income Benefit (FIB). Rather than receive a lump sum when you die, FIB provides a tax-free monthly income to your family instead. For each year when no claim is made the overall amount of cover reduces making the premiums cheaper than level term assurance.
7. Finally, don't forget that if you took out your policy a while ago, you could save by switching your insurance plan to a cheaper insurer.
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