How to Keep the Cost of Life Insurance Down
How much does life insurance cost?
How much is life insurance? It’s a question with an answer tailored to you, your personal circumstances and how much cover you are looking to get.
Most would argue that life is our most valuable asset - but when it comes to life insurance, many people are unsure of just how much it is going to cost. And while it’s true that there should be no expenses spared when looking to take out a life insurance premium, you by no means have to break the bank to give you the peace of mind that comes with it.
We are quick enough to secure insurance for our smartphones and our tablets, but life insurance is often overlooked. Available for low monthly premiums from as little as £5 a month*, life insurance is an affordable product that comes with many benefits.
How can I keep the cost of life insurance down?
While we don’t like to talk about it too often, the purpose of life insurance is to provide your loved ones with financial security when you die. Nobody – including your insurer – wants that to be anytime soon, so the lower risk you are to death, the more likely you are to be offered cheaper life insurance premiums.
The two best ways to save money on your life cover are to:
A) Ensure that you are able to prove your health and wellbeing to your insurer, and
B) Be flexible with the cover that you’re looking to receive.
If your insurer considers you to be a high-risk, due to being a heavy smoker for example, they will be forced to charge you more for your life insurance. However, if they deem you to be a low-risk, they will be far more likely to offer you a cheaper deal.
Age is also a significant factor, so generally, the younger you are, the cheaper life insurance will be. Ultimately, the sooner you take out a policy, the better!
As well as your age, health and wellbeing, insurers will take into consideration the size of the payout (sum assured) you wish to receive should the worst happen. The higher the value of your insurance policy, the higher the cost of your premiums. You’ll be surprised to know, however, that premiums can still work out very affordable if you have a significantly high sum assured with your policy.
Can you negotiate life insurance? – Getting the best insurance policy at the best price
If you’re wondering how to buy life insurance then your best bet is to do so through a trusted broker. Insurance brokers like Quick Quote Life Ltd. gather the best quotes for life insurance in the UK and can offer you expert advice on the best life insurance deals while also answering any questions you may have, such as: what is the best cover for me? How much is life insurance? And how can I keep the cost of life insurance down?
You can also find life insurance quotes on price comparison websites, however, they do not offer as much advice and support as you would receive if purchasing through a life insurance broker such as Quick Quote Life.
When considering taking out life insurance, it is worth considering exactly why you are looking to do so, as there are many types of policies from which you can choose.
A decreasing term assurance (DTA) policy, for example, reduces the amount of money that you would receive over time with the intention of covering you for a set period of time. For example, while paying off your mortgage, which also decreases the more you pay off.
Whole of life cover, on the other hand, guarantees that your insurer will pay a pre-determined lump sum to your loved ones after your death, whenever that is. Usually, it is used to help cover things like funeral costs or inheritance tax, but ultimately, it can cover whatever you and your beneficiaries wish.
How much life insurance cover do you need?
Deciding how much cover you need can be difficult. You don’t want to leave your loved ones short on cash, but if you’re looking to keep your premium to a minimum, you don’t want to ask for too much.
Quick Quote Life suggest that you should aim to attain cover that is worth at least ten times that of your annual salary (before tax), so to ensure that your lack of income will be covered for long enough to allow your family to get back on their feet. For example, if your annual salary is £28,000, you should aim to get cover of at least £280,000. If, however, you were getting a DTA policy to cover a mortgage, the payout would simply match the remaining value of the house, so that in the event of your death, it can be paid off in full.
To get a full understanding of how much cover you would need, and because it is very specific to you, we advise speaking to an experienced broker who can answer any questions you may have.
How long should your life insurance term be?
One of the most popular life insurance packages is level term life insurance, which pays out the pre-determined cover to your beneficiaries if you were to die at any time during the length of your insurance term.
You may decide to take out cover that ends when you expect to retire, at which point, you will no longer be earning, or perhaps when your children are old enough to fare for themselves, at the age of 21, for example.
How long your term lasts for is entirely down to you, but the longer it lasts, the more expensive it will be. This is down to both the law of averages – you’re more likely to die over, say, 30 years than you are over 20 – and the fact that your chance of encountering problems with your health increases as you get older.
Can you reduce your life insurance premiums at a later date?
Absolutely! But it might require some major lifestyle changes.
The only way that you will be able to make changes to your life insurance premium is to cancel your insurance and get a new quote. This may seem like a tempting idea, but it is crucial that you understand exactly what you’re changing – and why you’re changing it – before you sign on the dotted line.
The life insurance which you took out previously will have been geared towards a younger version of yourself, meaning that your insurer will have probably seen you as a lower risk. Now that you’re that much older, you may no longer have your youth as a bargaining chip.
If you feel that your health, or some of your life choices, have changed for the worse since taking out your original life insurance cover then you are probably better off sticking with your current premium. However, if you have…
- Given up smoking
- Given up drinking alcohol
- Started exercising regularly
- Started eating a healthier diet
…then it might just be worth you trying to renegotiate your premium.
Remember, though, that your insurance could be at risk of being void if you lie or exaggerate about how healthy you actually are – whether or not you are a smoker, for example. If you have recently started hitting the gym, make sure you stick to it before thinking about renewing!
REMEMBER: Your insurer could also take your occupation into consideration when offering you a quote, so a change in career could also be a factor in cutting costs on your life insurance. If you go from competing in extreme sports for a living to working in an office, you’re a far lower risk than you used to be!
Take care – don’t be tricked into renegotiating into a worse policy
If you are looking to reduce your life insurance premiums by renegotiating, you will probably be told that you could save hundreds of pounds by making a few slight adjustments to your cover. This sounds great, but in the grand scheme of things, it could end up costing you – and your loved ones – a lot more by removing some crucial benefits.
If you are in any way suspicious of the price of your new quote, make sure you read the full terms of it before agreeing anything. It might be that they have changed to a different provider who does not offer cover as comprehensive as your previous cover was, or they may have removed your additional critical illness cover policy – which, according to the specific terms of your policy, provides you with a payout if you find yourself having a specified illness that deems you too ill to work.
As well as reading and understanding the full terms of your policy, it is also worth speaking to friends and family about their experience with particular insurers, or looking online for ratings and reviews left by other customers.
It may take an hour of your time to conduct some research, but it’s a small price to pay for what could potentially cost you thousands.
Expert tips to save money on life insurance
Here are a few things to consider if you’re looking to reduce your life insurance premiums:
1 – Don’t wait around
Life insurance is almost always cheaper when you are younger. The potential savings you can make on taking out life insurance when you’re young could far outweigh the monthly premiums that you’ll need to pay. This is by far the best way to ensure that you keep the cost of life insurance down.
2 – Consider how long you need it for
If you’re taking out life insurance to make sure that your children won’t struggle should the worst happen, it is worth considering at what age they will no longer be dependent on you – usually between the ages of 18 and 23, depending on their journey through education. If the purpose of insurance is to provide cover for a partner, consider setting the cut-off date for when you’ll receive your pension.
3 – Avoid smoking
If you’ve smoked a cigarette or cigar – or even used a nicotine patch – in the last 12 months then your insurer will class you as a smoker. If you’ve been smoke-free for 6 months, hold tight for another 6 so you can tell your insurer that you don’t smoke anymore!
Remember, it’s important that you don’t lie about smoking on your application just to make the premiums cheaper. If you were to die due to a smoking-related condition, but you’d lied on your application, your insurer would not pay out. Always be truthful! They are not there to judge – they are there to simply ensure that your family will be financially protected should you no longer be around.
4 – Make room for exceptions
There are some things in life which are, by their very nature, dangerous and expensive to insure against. If you’re involved in a dangerous sport or hobby then your insurer may tell you that you will not be covered against an accident while partaking in that activity. Consider taking out specialised insurance alongside your life insurance policy to avoid having to pay high premium prices.
5 – Shop around
Whether you’re buying a new car, toilet paper or life insurance, the best way to get a good deal is to shop around. A life insurance broker will save you time by doing this on your behalf, but look around and don’t sign up to the first offer that you’re given – it will probably be waiting for you if you need to go back to it!
What life insurance cover should you get?
The best way to get value for money when buying life insurance is to make sure that you understand the different policies on offer to you.
There’s a big difference between a whole of life policy and a decreasing term policy, and there are also a lot of additional extras – such as income protection and critical illness cover – which are important to understand.
If you’re looking for an expert opinion on what insurance is best for you then get a free quote with us at Bobatoo today! We are legally permitted to provide you with advice and understanding on your life insurance needs. Simply complete the form below to receive a bespoke quote tailored to your needs and budget.