Article published by : ActiveQuote on Friday, July 13, 2012 - Viewed 952 times

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Category : Insurance

Easy Ways to Save Money on Your Life Insurance



Life insurance is a simple and affordable way to make sure that your loved ones are financially secure in the event of your unexpected death. As well as taking care of large debts like the mortgage, it can also safeguard lifestyle costs like holidays, school fees and the food bill. This type of insurance is one of the most affordable, and here are some easy ways to lower the premiums even further.

Quit smoking

If you are a smoker, it is worth trying to kick the habit before you start looking into life insurance. Life insurance premiums are more expensive for people who smoke, because smokers are more likely to develop a life threatening disease and have a lower life expectancy than non-smokers.

Life insurers classify you as a smoker if you have used any tobacco products in the 12 months prior to applying for life insurance. If you do smoke, do not try and lie on your application to get cheaper premiums. As part of the application process you may be asked to take a saliva test to confirm your smoker status, and your insurer could refuse to pay out if your smoking is discovered when assessing a claim.

If you have stopped smoking since buying life insurance, then you should definitely shop around for a cheaper deal once you have gone 12 months without a cigarette. It is likely that the best premium will be from a different policy than your current one.

Buy online

There are three popular ways to buy life insurance: going direct to the insurer, using an independent financial adviser or using an online comparison website. Shopping around the whole market yourself can be a time consuming and difficult task, so it is often easier to outsource to an IFA or a comparison website. This way, you will be able to view the whole market in one easy step, ensuring that you get the best level of cover at the right price.

Not only is it a time consuming process to search the market yourself, but it can also cost you your hard earned cash. Online comparison websites often have exclusive deals with the life insurance companies that you just won't get by going direct.

Switch insurer

One of the main reasons people lose out with their life insurance policy is that they do not continue to shop around the market year after year. You have no obligation to stay with a particular insurance company, and you can change it easily without losing cover. If you have bought a policy in recent years and your circumstances have changed, it is likely that you will be able to find a better deal elsewhere. Life insurance pricing is driven by competition in the market, so different providers can offer very different premiums for the same cover.

Consider a term assurance policy

A term assurance policy will protect you until a key date in the future, like when your mortgage is due to be paid off or when your children leave home. If you die within the policy term then the insurer will pay out, but if you do not die during the policy term you will not be paid and your premiums will not be refunded.

There are two types of term assurance: level term and decreasing. With a level-term policy, the lump sum payable on death remains the same throughout the term. With a decreasing-term policy the lump sum payable on death reduces over time to cover a decreasing debt like a repayment mortgage.

A whole-of-life policy will cover you for your entire lifetime rather than until a fixed date. Because it is certain that the insurer will eventually have to pay out, whole of life policies are more expensive than term assurance policies. If you are looking to save money, then consider a term assurance policy.

Only cover what you need

Life insurance is designed to protect your loved ones in the event of your unexpected death. If you are only worried about paying off a specific debt like a mortgage or loan, then look for a decreasing term policy. As what you owe reduces over time, so does the amount of cover. This type of policy helps keep costs down. Do not get persuaded into buying more cover than you actually need- your premiums will suffer.

If you are single with no dependents, then life insurance may not actually be a wise investment at this time in your life. You can always purchase cover in the future if your circumstances change.

Combine life insurance with critical illness cover

Critical illness cover is designed to pay you a lump sum on the diagnosis of a pre-defined critical illness such as cancer, a heart attack or a stroke. It is often the case that if you combine life insurance and critical illness cover into one policy it will be cheaper than buying critical illness just by itself. By combining the two, you will be ensured a lump sum either on death OR on the diagnosis of a predefined critical illness. Save money on your premiums by reducing the size of the lump sum payable, or reduce the range of critical conditions covered by the policy.

With these simple steps you will gain peace of mind at a price that suits your circumstances and your budget.
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