Life insurance, for many people, is a necessity. There are millions of us out there who rely upon the income of another, and for husbands, wives, partners, fathers, mothers and guardians, leaving families with nothing behind once we die simply doesn’t bear thinking about. Whether you take out term life insurance no medical exam or full life cover, there are a number of ways in which you can effectively reduce the cost of what you pay out in premiums. It’s important to understand the factors that can affect how much your policy comes to, and also to consider what can drive costs down. Life insurance is perhaps not as expensive as you may think it to be month on month, but it all adds up – here’s our guide to taking a closer look at these costs and how to work them to your advantage.
Compare, Compare, Compare
While you may be tempted to leap straight into a tempting brand you’ve seen advertised on TV, you may do best comparing various life insurance carriers through sites such as MoneySupermarket and Compare the Market. These websites are extremely well-known and compare the vast majority of premiums and policies throughout the UK – meaning that you get the lion’s share of the best deals available with only a few details being needed from you. What’s more, you can pick and choose whether or not you search for medical required policies or otherwise – a great way to filter out needs and costs. Always compare before going with a carrier outright.
Consider the Types of Policy
There are two main types of life insurance policy available, and these will carry costs and premiums of their own. As well as considering whether or not you wish to pay for your policy on a monthly basis as opposed to in one lump sum, you should think about whether term cover – which pays out when you die – or whole-of-life cover – which covers you up to your death and offers guaranteed payouts – is more applicable to your circumstances and your family’s needs.
Is It Better to Buy Young?
Buying life insurance young makes perfect sense – premiums expected of you will be lower the younger you are when you apply, and will gradually increase as you get older. Premiums are likely to be at their absolute lowest if you are a young non-smoker – and you will be able to set up a plan with a carrier to pay out a lump sum regardless of how old you may be when you die.
Sums and Durations
As the policy holder, you can set the parameters you wish your family to benefit by once you pass away. This means that you can choose how much you’d like them to live on once you’re gone – but it’s a good idea to consider undershooting this wherever possible. There are various calculators and guides available which can help you to find the best policy parameters based upon your family’s financial needs. You’ll also need to think about how often you’d like your policy to pay out once you’re gone, and how long for. If you’re providing for young children, for example, you may wish to cover them until adulthood.
Consider the Main Factors
Life insurance is based around a number of factors which need to be assessed by carriers before you get started. This means that they can effectively set the cost of a monthly or flat rate for you based on your profile and needs. Factors that may be taken into account with regard to cost include your age, your health, your lifestyle choices (such as smoking) and where you live. These are all factors that can impact upon your quality of life, and therefore, can help your carrier to understand you a little better. You’ll also need to bear in mind, again, that the amount you elect to cover for and the duration of your policy will impact upon overall premium costs.
Don’t Add Extras Unless You Need Them
While it may be tempting to throw in a few extra bits here and there – such as critical illness cover – you may not benefit from them too much if you are considered less at risk. While these extras can be beneficial should the worst occur – they can drive the cost of your premiums up.
In conclusion, consider your life insurance policy carefully – whether you need one at all, for example – and don’t leap into a deal headfirst!