The best way to cut the cost of your life insurance is to make sure you select a policy which provides cover specific to your needs. The following will aid you in getting the best cover at the most competitive price.
What should I consider?
Before investigating life insurance policies pinpoint what your needs are. Decide:
When should I apply for life insurance?
The earlier you apply, the cheaper your premiums will be. In fact policies can be taken out from as young as 18 years of age, but that doesnâ€™t necessarily mean itâ€™s a good thing to do.
The most important consideration is whether you need it. For example, having children or taking out a mortgage are usually good times to look at policies available to you.
I have a partner, can we get a joint policy?
Joint life insurance policies are available and are usually cheaper than two individual policies. However, the saving on a joint versus two can be small and payouts are only made after the first person dies.
Again, think about your need for a life insurance policy. If it is to pay off the mortgage, then a joint policy could be a good option.
How much cover do I need?
The more cover you have the higher your monthly payments will be, so it is good practice to consider what that payout needs to do. Think about:
What policy term should I choose?
Now you know how much you need as a payout, you can consider your policy terms:
How do I get a competitive price?
Once youâ€™ve done your research and you know exactly what you need from your life insurance you can shop around. Itâ€™s prudent to gather in as many life insurance quotes as possible in order to find the one which provides the best cover at the cheapest premiums.
There are a number of considerations when selecting the right life insurance policy for you. Factors include:
Length of cover
There are a number of timescale options to choose from
Cover for the life of your mortgage
A decreasing term life insurance policy is a renewable term policy with the coverage amount decreasing at a predetermined rate. This reduction can occur on a monthly or yearly basis.
This type of insurance cover also allows you choose if youâ€™d prefer to keep the payout amount the same throughout the term ensuring your mortgage is paid off in the event of your death and money is left for your chosen recipients.
Lifetime cover until your death
A whole of life insurance policy will payout regardless of your age when you die. Itâ€™s designed to last as long as you do and requires you to pay a monthly premium so that the policy pays out to your chosen recipients when you pass.
An alternative option is a term life insurance policy which provides cover at a fixed rate of payments for limited period of time. If you die outside of the term then there will be no payment to your beneficiaries.
Finding cover when you are older
Life insurance policies can increase in price as you get older. This is because you are getting closer to your life expectancy age and you are likely to have some health issues.
However there are options:
Selecting your pay out
Dependant on the policy you select, there are two types of pay outs available.
A lump sum: This type of payout is often used to pay off a mortgage or provide loved ones with money to support them after your death
An income: Some people choose this type of payout option as a way of helping loved ones with monthly bills and commitments. However, the payments will stop at the end of the terms policy.This type of payout is only usually available with term life insurance policies.
How do I select the right payout?
Want to know more? Here is a brief synopsis of some of the pros and cons of each policy type.
Whole of life insurance
Term life insurance
Over 50s life insurance
Life insurance can offer peace of mind that loved ones will be cared for financially after you die.
There are a variety of policies available to suit varying circumstances and requirements with the insurance policy paying out a cash lump sum or monthly income when you pass away.
Most policies can be taken out once you turn 18, but some will have different age restrictions applied to them.
Consider how much a policy will pay out, how long it lasts and who the payment will go to in the evet of your death.
Whatâ€™s the best way to get a policy?
As with most insurance policies, itâ€™s best practice to shop around and get quotes from insurers.
There are a number of influencing factors when choosing a policy. Most insurers will allow you to select a policy based on the total payout you want or the amount you can afford to contribute monthly.
How much you pay in on a monthly basis will ultimately determine the payout amount, so the higher your monthly premium the higher the cash sum will be for your beneficiaries.
What are the different types of life insurance policies?
Term Life Insurance
Whole Life Insurance
Over 50s Life Insurance
Do I need it?
This is a question you need to weigh up for yourself as it depends entirely on your priorities and personal circumstances.
For example, if you own your own home and have a mortgage to pay a life insurance policy could offer a lump sum of money in the event of your death, which could clear the mortgage and remove some financial stress for your loved ones.
Alternatively you may wish to leave money for your children in order to help support them with their finances.
There is lots to consider when selecting a life insurance policy, you will also need to think about the following implications: