Top tips: How to keep down the cost of life insurance

If you want to find the right life insurance policy at the right price, follow our simple money-saving tips.

Updated 19 May 2020  | 4 min read

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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...

1. Don’t over-insure yourself

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[1] for free, impartial advice on 0800 808 6907.

2. Pick a suitable policy

The kind of policy you choose impacts the price you pay.

  • Whole of life insurance: The most expensive cover to take out because it is guaranteed to pay out at some point.
  • Term insurance: A cheaper option (and the most common type of life insurance). It covers you for just the duration of the policy – for example, until you’ve paid off your mortgage.

3. Look for guaranteed premiums

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.

4. Let your cover level fall year by year

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.

5. Consider joint cover

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.

6. Buy life insurance when you’re young

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.

7. Switch to a healthier lifestyle

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.

8. Consider switching life insurers and/or multiple policies

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:

  • As you get older and/or you have health issues, your choice of life insurers will be more restricted and premiums will rise. Think carefully before cancelling a policy you took out when you were younger and/or healthier.
  • If you’ve adopted a healthier lifestyle ask your insurer about lowering your premium
  • You could keep your existing cover and take out a new, additional policy. Find out more about multiple life insurance policies

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.

9. Beware costly extras

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. 

10. Think about additional and existing cover

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.

11. Consider writing your policy 'in trust'

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.

12. Make a will

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.

13. Shop around for the right life insurance quote

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.

  • Phone individual companies if there’s something you don’t understand

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.

  • Look at insurance companies' own internet sites

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.

  • Get professional advice

Getting professional advice can be useful for finding cover for unusual circumstances. 

Your options include:

  • Execution-only brokers - can help cut costs by offering a one-off fee
  • Advisory brokers - take a commission
  • Independent financial advisers - offer a full (often expensive) service

Read more about finding and choosing financial advice.

14. How NOT to cut the cost of cover

It can be tempting to look for quick fixes to reduce the cost of cover. Don’t fall into these traps:

  1. Taking out less insurance than your family needs to keep the price down
    But if your policy doesn't provide enough cover they won’t have the financial security they need.
  2. Lowering premiums by playing down your risk
    Saying you don’t smoke when you do, or down-playing the amount of alcohol you consume, could reduce your premiums. But it also means your insurer might not payout in the end. They may ask for your medical history, or find out later down the line. Honest is the best policy. 

[1]For comparing quotes online, introduces customers to For help, guidance and advice,, introduces customers to Assured Futures Limited. Assured Futures Limited is authorised and regulated by the Financial Conduct Authority no. 176392