9 ways to help cut the cost of life insurance

As well as shopping around for cheaper life insurance, there are other ways that can help cut the cost of your life cover.

As well as shopping around for cheaper life insurance, there are other ways that can help cut the cost of your life cover.

Mubina Pirmohamed
Insurance expert
minute read
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Posted 12 AUGUST 2021

1. Get the right cover for your needs 

Life insurance is there to cover a financial need – the pay-out is to provide financial support for your family. To get the right amount of cover, you need to work out how much they’ll need if you aren’t there to support them.

Think about how much it would cost to cover the mortgage, bills, your children’s education and other outgoings. And how long would your family need this financial support? Think carefully, because while you don’t want your nearest and dearest to be struggling on their own, nor do you want to be paying huge life insurance premiums that offer more of a pay-out than your dependants need.

 2. Consider term insurance vs whole of life insurance

Term insurance is a policy that pays out if you die within a specific time frame – whether that’s five, 10, 20 or 30 years. During this time, you’ll be paying monthly or annual premiums. So long as you die within the term, your dependants will receive a substantial pay-out.

With whole of life insurance, like over-50s policies, you agree to pay premiums for your whole life. While some insurance providers might not pay out if you live beyond 90, others will pay out whatever age you die.

Term insurance is often cheaper than whole of life.

3. Consider joint vs single cover 

If you have a partner, it can be worth comparing separate and joint quotes for life insurance, as you may find that joint policies work out cheaper.
Joint life insurance covers two people and pays out once. Generally, this is when the first person dies, but you can also get joint life insurance set up on a ‘second death’ basis, which will pay out when both partners die.

Before deciding on a joint policy, you’ll need to make sure it offers the cover you really need. And bear in mind that if one of you has a pre-existing medical condition, this will affect the cost of your premium.

4. Get fitter

The healthier you are – if you’re a non-smoker, don’t drink too much and get plenty of exercise – you’re less likely to die young. Some insurance providers are using data to help manage their risk, and issue policy holders with fitness trackers so they can prove they’re taking steps to maintain a healthy lifestyle.

If you’ve overhauled your lifestyle and already have life insurance in place, it might be worth contacting your insurance provider and asking if they’ll lower your premium.

5. Start younger

Combined with getting fitter, taking out life insurance when you’re young gives you a better chance of reducing your premiums. Simply put, the younger you are, the less likely you are to die, so your premiums will probably be cheaper.

6. Don’t double up on cover

Some employers offer death in service benefit that pays out if you die while employed. If your company offers you this benefit, check exactly what it covers so you don’t double up when you take out a life insurance policy.

It’s worth considering, though, that if you leave your employer’s death in service scheme, you’ll no longer be covered.

7. Lower your level of cover over time

If you have a young family and a big mortgage, you’ll need a high level of cover. But over time, as your children grow up and your mortgage is paid off, you may find you need less cover and can get away with paying a lower premium.

In these circumstances, you might want to think about decreasing term life insurance. This type of policy pays out less over time and is often used to cover the balance of a repayment mortgage, which also decreases over time. It’s also often cheaper to buy.

8. Cut back on the extras

Many insurance providers will offer you add-ons like accidental death benefit or terminal illness cover. Think about whether you really need these – or whether no-frills cover is a better fit for you.

9. Compare policies

Don’t feel you have to go with the first life insurance policy you come across. Once you’ve decided what type of policy you need, it’s worth comparing what’s out there to find a great deal for you.

Frequently asked questions

How much does life insurance cost?

That depends. The cost of life insurance varies dramatically, depending on how old you are and what kind of cover you want. It goes without saying that the younger and healthier you are, the lower your premium will be.

What factors do insurance providers take into account?

When deciding the cost of your premium, insurance providers take lots of factors into account. These include (but aren’t limited to):

  • your age
  • your BMI
  • whether or not you smoke
  • your medical history (except for over-50s policies)
  • your lifestyle.

I have pre-existing conditions. Can I still get life insurance?

Some pre-existing conditions won’t affect your ability to get life insurance. But others, such as cancer and heart conditions, will raise a red flag with your insurance provider.

It can be tempting to simply not tell your insurance provider about any medical issues you might have, but you really must. If you omit any important details, your family may end up finding out the hard way that your policy doesn’t pay out.

If you’re over 50, an alternative option is over-50s life insurance. You’re guaranteed to be accepted and won’t have to take a medical. This type of policy will pay out a lump sum up to the age of 90 or longer. Check the qualifying period on the policy – you’ll need to have paid into it for a minimum period (usually between one and two years) to get a pay-out.

Can my insurance provider cancel my policy if I get sick?

If you get ill after you’ve taken out the policy, then it shouldn’t affect your cover – as long as you’ve been honest about your medical history.

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