When it comes to the cheapest term life insurance, making the right decision could save you thousands of pounds.
Therefore, in our blog today we are going to run through some of the things you can do to save money on life insurance and what you may need to know.
What kind of life insurance to buy
There are a range of life insurance policies that will pay some kind of sum if you are diagnosed with a critical illness or if you die.
Usually life insurance pays a specified sum when you die and usually there are no criteria to be met as such, but it is ultimately the insurer who will underwrite the policy and thus, any exclusions will be included in any documentation.
What you could say is that most policies are the same in that they pay something in the event of your death, but each type of life insurance has it’s own benefits and it’s important to consider what those are before buying.
For example, if you need to plan your inheritance tax you may choose to use a specific type of life insurance policy to assist with your plans. If you’re going down this road then it is definitely best to make sure you consultant an independent financial adviser as to the best options.
What sort of value of insurance should you buy?
This is always a big question for people and the onus really lies with you.
A good way to decide what kind of insurance you need is to start with how much you may need to clear things like debts, which includes your mortgage and maybe how much money you would like to leave your loved ones. A good rule of thumb here is usually based on three times your current annual salary, but of course you may want to leave more or less.
If you know that your mortgage and certain debts such as loan are likely to decrease over time, then you could reduce the cost of life insurance by opting for decreasing term insurance. This basically is cover that as the name suggests, ‘decreases over time’.
You may want to consider things like funeral expenses too and for this, it’s a good idea to see what benefits (if any) you might already have in place with your employer for example. If you don’t need it, then you can obviously save money on life insurance cover.
If you are already covered for mortgage protection and are happy with that, then you can deduct the value of your mortgage from your calculations which will also help make your life insurance premiums lower.
Getting the best value for your money
There are very simple things you can do to help improve the overall value of your life insurance cover, while keeping the premiums low or at least more beneficial to you.
For example, if you are married you may have a joint life insurance policy. This essentially is a policy that pays out a sum if you or your partner dies. If you need the same level of cover this obviously means you can save money, as usually joint policies work out cheaper.
However, do note that while this can be a useful way to save money, many people benefit from having individual policies in that there is a double pay out should you both die. This is particularly useful to those with children and dependents.
Getting your policy written into trust
A good idea for life insurance is to get your policy put into trust. This basically means that over time whatever sums of money are applicable to the policy, these would not be subject to inheritance tax should you die.
Life Insurance that is put into trust does require a little bit of form filling and it’s worth mentioning this to any insurance broker should you wish to do this, just to make sure you get what you want.
Can you get the cheaper life insurance with a few lifestyle changes?
The answer is actually yes!
When insurance companies calculate your payable premiums for life insurance they tend to do this based on your health, your age, what you do for a living and of course the way in which you live. Therefore, if you are an extreme sports lover you should expect to pay more than the librarian.
For many people, they do not want to adversely change their lifestyles just for the sake of saving a few pounds, but there are things you can do that are not only going to reduce your premiums but that are good for your health.
For example, if you’re a smoker you can quit. Usually insurers only consider you a non-smoker if you have not smoked (or used nicotine patches) within the 12 months prior to application.
You could also lose weight of course, which again is going to help reduce your premiums as you will technically be at lower risk of things like heart attacks.
Getting the cheapest life insurance
Life insurance is surprisingly easy to find online and even in the supermarket! Usually an insurance broker will get you the very best deals as they deal direct with the insurer on your behalf and can help you compare quotes more easily.
So if you’re willing to make a few minor amendments to your life and you are able to use a broker or comparison service, getting the cheapest life insurance won’t be as difficult as you’d imagine!
We recommend you always seek independent financial advice if you are in any way unsure of buying an insurance policy.