10 Ways To Save Money On Life Insurance

Why life insurance matters

It is no overstatement that life insurance policy could be one of the most significant purchases that you ever make. This form of financial protection can determine a significant part of your families future and qulity of life after your death. If you have chosen the right insurance cover, you can rest assured that your family will be able to financially support themselves to maintain their lifestyle, meet household bills, and manage key expenses such as funeral costs, childcare costs, or mortgage payments, in the years to come after your death. Conversely, if you choose the wrong plan or do not get around to having one at all, you could leave your family struggling to pay off your debts in order to stay in your house even just to pay for your funeral. If you and your partner want shared protection, considering a joint life insurance policy could ensure your family is financially safeguarded if either of you passes away.

In This Guide:

• Why it’s important to act early
• How to Save Money on Life Insurance
• Is life insurance necessary for you?
• Conclusion: Secure Your Financial Future

Why it’s important to act early

Even for those people who have decided that they would like to take out a life insurance policy, it can still be a difficult decision to make. Due to the sensitive nature of death, many of us delay taking out life cover. However, this delay can lead to significantly higher premiums in the future. Life insurance premiums are typically cheaper when you are younger and in good health. Buying life insurance in your 20s or 30s means you’ll likely secure guaranteed premiums at a lower cost over time.

Your life expectancy plays a major role in determining your monthly premium, so it’s wise to act before health issues arise or your age becomes a cost-increasing factor. Most insurers reward a healthier lifestyle and may offer rate discounts for maintaining a healthy weight, losing weight, or being a non smoker.

How to Save Money on Life Insurance

Even for those people who have decided that they would like to take out a life insurance policy, it can still be a difficult decision to make. The main reason for this is the fact that there are so many life insurance policies out there. The different types of plans range from completely extensive life cover to cover that is just intended to pay off debts such as mortgages in the event of your death. Opting for a cheap life insurance policy doesn't mean compromising on quality, it means comparing the market to find the best value for your current needs.

1. Compare life insurance deals

The first thing that you should do when considering taking out a life insurance policy is shop around to see what deals are on offer. Just like making any purchase it is important that you try and establish whether or not you are going to get the best possible value on your deal.

Here on our website we offer a free and impartial life insurance quotes. It only takes a few seconds and you can quickly compare all the premiums that are suitable to you. This means that you can make an informed decision when taking out a life insurance plan.

2. Find a policy that suits your needs

The right term should reflect your expected monthly outgoings and how long your dependents might rely on your financial support. The two main types of life cover are term life insurance and whole life insurance.

• Term life insurance is usually the cheaper option, providing cover for a set number of years. It's ideal if you want to cover specific financial responsibilities such as a repayment mortgage or your children's upbringing. However, if you outlive the term length, the policy will not pay out.
• Whole life insurance (or whole of life insurance) is more expensive but guarantees a life insurance payout, regardless of when you die.

Some people opt for decreasing term life insurance, which is suited to those whose financial obligations (like a mortgage) reduce over time. This type of policy typically comes with lower premiums as the potential payout amount gradually decreases.

3. Insure the right amount

It is important to remember that the more that you want an insurer to payout on your life insurance, the higher you will have to pay on your premiums. If your dependents could do comfortably with £300,000, then don't take out a policy worth £500,000. The key is to determine how much life insurance your family really needs to maintain their lifestyle and cover essential costs. Take into account existing outstanding loans and financial commitments to determine an appropriate coverage amount.

4. Buy your life insurance earlier

Life insurance prices will go up as you get older. This is because the longer your insurance company expects you to live, the lower the chances of them paying out. For this reason it is wise to start thinking about life insurance whilst you are in your 20s and 30s, as opposed to taking out life insurance in your 50s.

5. Don't smoke

Insurance companies base your premiums on how healthy your general lifestyle is. This means that if you are a smoker you will be charged considerably more to take out a life insurance policy than someone who is not. If you want to save money on life insurance, then quitting smoking is an excellent place to start. Many insurers offer lower premiums or rate discounts to non-smokers or those who adopt a healthier lifestyle.

6. Match Your Cover to Your Lifestyle

Not everyone needs the same level of cover. Your personal circumstances, medical history, and even medical conditions can influence the type and cost of your policy. Life insurers consider your health condition, lifestyle, and age when setting your premium. If your goal is to simply provide enough to cover funeral costs and small debts, then a smaller sum assured may suffice. For others, especially those with dependents, a larger pay out amount may be necessary to provide financial protection for the long term.

7. Think about taking out a joint policy

Many couples take out joint life insurance policies because the rates are much cheaper. The reason for this is that these policies work on a first to die basis. This means that whichever partner dies first will be covered by the policy and the other will receive the payment.

It is important to remember when considering this type of policy that the remaining partner may want to take out a new policy once this one ends. If this is the case, then they will probably have to pay a lot more because of their increased age.

A joint cover policy may offer savings, but it's crucial to ensure it meets both partners’ financial expectations in the long run.

The surviving partner should also consider if they would need additional coverage once the joint policy has paid out.

8. Be aware of additional extras

Some life insurance companies offer add-ons such as critical illness cover, which can increase your premiums. While this may seem costly, it can be incredibly valuable if you are later diagnosed with a serious condition. It’s worth reviewing what extras are beneficial for your situation, and what may not be necessary.

If you’re covered by your employer, check if you receive a death benefit or service benefit through a group life insurance policy. This is often overlooked but can make a difference in whether or not you need to take out your own life insurance policy.

9. Reduce Tax Liabilities

While life insurance payouts are not subject to income tax, they may be subject to inheritance tax. To protect the full lump sum, consider placing your policy in trust. This allows the payout to go directly to your beneficiaries, bypassing probate and helping you save money in the long term.

There’s no additional cost for placing your policy in trust, and most insurers will assist with this as part of the application process.

10. Choosing the Right Amount of Cover for Your Situation

When determining how much cover you need, consider your income, debts, future childcare costs, and whether your dependents would struggle with household bills or rent or mortgage payments. Your life insurance should be enough to provide financial protection for those you leave behind.

Conclusion: Secure Your Financial Future

A life insurance policy isn’t just about protecting yourself—it’s about securing your loved ones’ financial future. With so many options available, it’s essential to take the time to find the right life insurance policy that suits your needs and budget. Whether you're considering critical illness cover, choosing the right sum assured, or comparing life insurers, acting early and making informed decisions will help you save money and provide peace of mind.