Five ways to save money on life insurance cover
It’s never easy to think about a world where you may no longer be around. But it is one of the smartest things you can do to protect your loved ones financially if something were to happen to you.
Like any protection, you may be unsure whether it’s necessary or expensive, but the good news is that premiums can be cheaper than you think. Whether you’re taking out cover for the first time or reviewing an existing policy, there are several ways to reduce the cost without compromising on peace of mind.
In this article, we’ll walk you through five simple, sensible ways to find cheap life insurance, without leaving your family short of the support they might need.
1) Take out cover while you’re young and healthy
When it comes to life insurance, your age and health are two of the biggest factors that influence premiums. In most cases, the younger and healthier you are, the cheaper your monthly payments are likely to be.
This is because insurers see you as a lower risk; you’re deemed less likely to make a claim early in the policy, so they reward you with lower rates. By taking out life insurance in your 20s or 30s, you can lock in a low premium for the full length of the term, even if your health changes in future.
Even if you feel like you don’t need cover yet (for example, you don’t have children or a mortgage), securing a basic policy early can be a cost-effective safety net.
2) Choose the right type of policy
Not all life insurance policies are created equal. Paying for the wrong type of cover could mean you’re spending more than necessary on features you don’t need.
The two most common types of life insurance in the UK are:
- Term Life Insurance – This covers you for a fixed period (e.g. 20 years). The policy only pays out for deaths within the policy term. It’s usually the cheapest option.
- Whole Life Insurance (also known as life assurance) – This covers you for your entire life but tends to be more expensive.
Unless you specifically want lifelong cover (for example, to help with funeral costs or inheritance tax), a term policy is usually sufficient and far more affordable. You can also choose a decreasing term policy, where the payout reduces over time (in line with a repayment mortgage, for instance), which often comes with lower premiums.
Don’t be upsold on extras like income protection or critical illness cover unless they truly suit your needs. Paying more doesn’t always mean better value.
3) Compare providers before you buy
One of the easiest ways to save money is simply by shopping around. Different insurers use different methods to calculate risk, and premiums can vary significantly between providers, even for the same level of cover.
Using a reputable comparison site or working with an independent broker could help you quickly find the best deal for your situation. They can also help you navigate the small print, so you’re not caught out by exclusions or conditions later on.
Always compare like-for-like cover amounts and term lengths. A cheaper policy isn’t always better if it doesn’t pay out when you need it most.
4) Be honest and accurate on your application
It might seem counterintuitive, but being completely truthful on your application could actually save you money in the long run.
Life insurance providers assess your risk based on the information you provide, things like your smoking status, medical history, lifestyle, and occupation. If you lie or leave things out to try and get cheaper premiums, your policy could be voided later, leaving your family without the cover you thought you had.
That said, if you’re classed as a non-smoker (meaning you haven’t used tobacco or nicotine products, including vapes, for at least 12 months), you’ll generally pay less. So if you’ve recently quit or are planning to, your efforts could lead to real savings.
If your health or lifestyle improves over time (for example, you lose weight, give up smoking, or change jobs), it may be worth reviewing your policy or reapplying for a better rate.
5) Don’t overestimate how much cover you need
While it’s natural to want to protect your loved ones as much as possible, taking out more cover than you realistically need can lead to higher monthly premiums.
Before applying, take a moment to work out how much life insurance you need. Consider things like:
- Your outstanding mortgage or rent
- Household bills and living costs
- Any debts you’d want paid off
- Childcare or education expenses
- Funeral costs
Once you have a rough figure, you can tailor your cover amount and policy length accordingly. You may find that a smaller payout over a shorter term still provides the right level of protection, at a more affordable price.
Some employers offer a death in service benefit as part of your employment package, which can reduce the amount of additional cover you need.
Getting covered
Getting a life insurance policy doesn’t have to break the bank. By taking the time to plan your cover, compare providers, and understand what really affects your premiums, you can save money while making sure your loved ones are looked after.
Need help finding affordable life insurance? Speak to a financial adviser or use a trusted online comparison site to explore your options and find the right cover for your needs and budget.
