Life insurance will pay out a lump sum of money in the event of your death. Life insurance is a great form of protection, because it gives you reassurance that your family are financially secure in the event of your death. However, some people can be worried about the cost of the premiums. Luckily there are ways you can lower the cost of your life insurance policy without sacrificing on cover. Here we give you our top 5 ways of saving money on your life insurance cover.
1) Take life insurance out as early as possible
Life insurance is cheaper the younger you are, because there is less of a risk to your insurer. If you take out a policy while you are young your premiums will be lower, and you may find a whole of life policy at a very reasonable price.
2) Give up smoking
Life insurance premiums are more expensive for smokers because they are a great risk to the provider. But if you stop smoking for a minimum of 12 months then most insurers will consider you a non-smoker, and you will have the same premiums as though you had never smoked. If you kick the habit today you will save considerable money in the future, both on your premiums and on cigarettes. But remember, you should never lie about your smoker status, because if you get caught then you insurer may not pay out and you will not get a refund of premiums.
3) Consider a decreasing policy
Decreasing-term life insurance is designed to cover a repayment mortgage. Over time, the amount of money offered by the insurer will decrease in line with your mortgage costs, until eventually reaching a pay-out of zero. Whilst the lump sum reduces with time, this is a very affordable type of life insurance because the premiums generally start out lower than level-term insurance. So if you are taking out a policy to protect the family home, this could be a sensible investment.
4) Combine it with critical illness insurance
Critical illness cover will pay out a lump sum of money on the diagnosis of a critical condition which has been pre-defined in the policy documents. Whilst critical illness insurance can be bought as a standalone policy it is actually much more affordable combined with your life insurance. If you buy the two together then you will receive a lump sum of money either on the diagnosis of a critical condition or on death.
5) Only cover what you need
If you are considering life insurance it is more than likely to cover a particular thing, whether that is to leave an income for your family or to pay off the mortgage. The more money you wish to be paid out the higher the costs of the policy, so one way of making your life insurance plan cheaper is to only cover what you need. You can also choose how long you want to be covered for, and this will have a bearing on price. A policy that covers you for the whole of your life will be more expensive than a term policy, which will cover you for a specified period of time.
So there we have it, 5 ways to make your life insurance premiums cheaper!