How to save money on your life insurance policy
Last Modified 16th of February 2021
There are a large number of life insurance products for sale in the UK and the types of policy can vary between suppliers. Furthermore, just as there are a number of different types of policy, there are also several ways to reduce the costs of your policy. Carrying out comparisons can often save you hundreds or even thousands of pounds over the life of the policy so this is one financial product that it is certainly worth reassessing to see if your current deal is still the best offer available. Here are five possible ways you could save money on your life insurance:
Consider level term life insurance
Level term life insurance pays out a fixed sum if the policy holder should die during the life of the policy. These are considerably cheaper than ‘whole of life’ policies because there is a defined period in which the policy may pay out. These policies are particularly suited to people who have an interest-only mortgage who wish to ensure that this will be covered in the event of their death. If, however, you have a repayment mortgage, you may wish to opt for a decreasing term insurance which will pay out a decreasing amount each year. Again, these are much cheaper than whole life policies.
Opting for single or joint policies
The first thing to consider is whether a joint policy is required, or if you just need to cover the income of the partner who is actually working. Even if you do need a joint policy to cover the earnings of both partners, then it is still worth looking at the cost for two single policies as surprisingly this can often be much cheaper than choosing a joint policy. Also, if you do find a cheaper policy, your existing insurance provider may offer to match it for you.
Online price comparisons
Comparison sites have increased in sophistication and are now able to compare a vast range of life insurance policies online; allowing you to find what is the best value deal for your particular circumstances. Alternatively, if you have specialist requirements, you may wish to use the services of an insurance broker who will have a thorough understanding of the market and again may well be able to get you a significant saving – even after you include the cost of their fees. If you are comparing prices, it is important to keep any existing cover in place until a new arrangement is made.
Only pay for cover you need
Carefully checking your policy may reveal you are paying for additional extras which you don’t need. For example, many policies may also include critical illness cover which pushes up the cost. Even if you do think you would like to include critical illness cover on your policy, check the wording of this cover carefully as some policies have restrictive cover which may, for instance, only include certain cancers and not all. This may mean you are paying for cover which doesn’t cover everything you want.
Also check the amount of cover you are insured for. Typically, this is set at ten times the policy holder’s salary. You may find your employment offers some death in service benefit which may reduce the amount of cover you actually need to pay for to six or eight times your salary. Some savings polices also offer some level of life insurance which may reduce the cover you need to pay for. Once you have decided exactly what your cover should include, online research will help you get the best price available.
Changes in lifestyle
If you have made a noteworthy change to your lifestyle such as giving up smoking for over twelve months, or losing a significant amount of weight, this can make a real change to the cost of policies available to you. Research by Sainsbury’s Finance shows that ex-smokers in the UK are paying over £316 million each year in excess life insurance premiums, as if you have ceased smoking, the cost reductions can typically be in the region of 40-50%. This can result in a saving of around £95 per month on typical policy.
Obesity has a similar effect of doubling premiums for applicants who have a body mass index of over thirty. If it is a while since you took out your policy then your increased age might put up the cost so this must be taken into consideration when taking out any new policy.