If you want to find the right life insurance policy at the right price, follow our simple money-saving tips.
When it comes to life insurance, you don’t want a ‘cheap’ policy, you want the best cover at the best price. And that means shopping around, checking everything from features to price.
Want to keep down the cost of life insurance? Follow these tips...
Insufficient cover will leave your loved ones short if they have to claim, but over-insuring yourself is also a mistake.
Work out exactly how much cover you need to give your family financial security and take out a policy for that amount. Use our life insurance calculator to help you decide, or speak to our partners Assured Futures for free, impartial advice on 0800 808 6907.
The kind of policy you choose impacts the price you pay.
Premium payments for life insurance are either reviewable or guaranteed.
Reviewable premiums tend to be cheaper initially, but they can vary over the length of the policy and may take into account things such as your age and state of health.
The cost of guaranteed premiums remains the same over the entire length of the policy, so could work out cheaper in the long-term.
Why do you want life insurance? If you have young children, a large mortgage or debts, you’ll need a policy that covers those costs if you’re not around.
But as time goes on, you may need less cover.
A mortgage life insurance policy (where the payout falls slightly each year of the term) helps keep the cost of your premium low.
A joint life insurance policy is an option for couples, but there are pros and cons.
It should be cheaper and more convenient to arrange than two individual ones
However it will only pay out once – a consideration if you have dependants. There may also be problems if a couple separates at a later date.
Speak to an impartial adviser if you’re unsure.
Your premium is based on how likely the insurer thinks you are to claim.
If you take out your policy as early as possible, it will usually be cheaper than taking out a policy when you’re older.
Adopting healthier habits can make you lower risk for an insurer – which means lower premiums.
So, give up smoking, cut down on the booze, shift any excess weight and get fit.
If you can prove you’ve led a healthier lifestyle for a year or more, your insurer may agree to cut your premiums.
Technology could also play a role, such as free fitness trackers for customers and lower premiums for meeting daily exercise goals.
Read more about how being healthy affects your premiums.
There are lots of reasons you may want to switch: a change in your circumstances, positive lifestyle changes or you've found a better policy.
Before you make up your mind, consider the following:
Other things to think about before switching include: exit fees, keeping your existing cover until the new policy is in place and checking the terms and conditions of the new policy.
Many policies offer features such as waiver of premium, bereavement counselling for beneficiaries and terminal illness cover.
Check whether these come as standard or as optional extras that cost more. If they mean an additional cost, decide whether you really need them.
Only buy what you need. Think about other protection policies you may have before paying for extras.
For example, an income protection policy can offer similar cover to critical illness insurance or a death benefit. But remember, any policies you have through your employer rest on you staying in that job.
Self-insuring is another consideration (you save the money you would have paid in premiums to build up your own funds). While everybody needs rainy-day savings, you may struggle to match the payouts offered by some life insurance, critical illness and income protection policies.
Life insurance payouts aren’t subject to income or capital gains tax, but are liable for inheritance tax.
Having your life insurance policy written in trust avoids this. It also means you could reduce your premiums – if your dependants get a larger, tax-free slice of a payout, you can reduce its overall size.
Making a will could save you money on life insurance. A will clearly defines your intentions and helps minimise inheritance tax payments, so you can arrange a smaller payout and pay less in premiums.
Here are four ways you can shop around:
Compare life insurance prices and policy details with one quick and easy search. Get access to products from many of the UK’s leading insurers.
This can be time consuming, but, you can make sure you’re getting the right policy. You’ll get answers straight away, can haggle , and could find cover for unusual circumstances.
Another time-consuming option with limited comparison, going direct to an insurer can also be more expensive. A third-party site or adviser might be cheaper, but remember: not all insurers feature on comparison sites.
Getting professional advice can be useful for finding cover for unusual circumstances.
Your options include:
Read more about finding and choosing financial advice.
It can be tempting to look for quick fixes to reduce the cost of cover. Don’t fall into these traps:
For comparing quotes online, Gocompare.com introduces customers to theidol.com. For help, guidance and advice, Gocompare.com, introduces customers to Assured Futures Limited. Assured Futures Limited is authorised and regulated by the Financial Conduct Authority no. 176392