Life insurance is a simple and affordable way to make sure that your loved ones are financially secure in the event of your unexpected death. As well as taking care of large debts like the mortgage, it can also safeguard lifestyle costs like holidays, school fees and the food bill. This type of insurance is one of the most affordable, and here are some easy ways to lower the premiums even further.
If you are a smoker, it is worth trying to kick the habit before you start looking into life insurance. Life insurance premiums are more expensive for people who smoke, because smokers are more likely to develop a life threatening disease and have a lower life expectancy than non-smokers.
Life insurers classify you as a smoker if you have used any tobacco products in the 12 months prior to applying for life insurance. If you do smoke, do not try and lie on your application to get cheaper premiums. As part of the application process you may be asked to take a saliva test to confirm your smoker status, and your insurer could refuse to pay out if your smoking is discovered when assessing a claim.
If you have stopped smoking since buying life insurance, then you should definitely shop around for a cheaper deal once you have gone 12 months without a cigarette. It is likely that the best premium will be from a different policy than your current one.
There are three popular ways to buy life insurance: going direct to the insurer, using an independent financial adviser or using an online comparison website. Shopping around the whole market yourself can be a time consuming and difficult task, so it is often easier to outsource to an IFA or a comparison website. This way, you will be able to view the whole market in one easy step, ensuring that you get the best level of cover at the right price.
Not only is it a time consuming process to search the market yourself, but it can also cost you your hard earned cash. Online comparison websites often have exclusive deals with the life insurance companies that you just won’t get by going direct.
One of the main reasons people lose out with their life insurance policy is that they do not continue to shop around the market year after year. You have no obligation to stay with a particular insurance company, and you can change it easily without losing cover. If you have bought a policy in recent years and your circumstances have changed, it is likely that you will be able to find a better deal elsewhere. Life insurance pricing is driven by competition in the market, so different providers can offer very different premiums for the same cover.
Consider a term assurance policy
A term assurance policy will protect you until a key date in the future, like when your mortgage is due to be paid off or when your children leave home. If you die within the policy term then the insurer will pay out, but if you do not die during the policy term you will not be paid and your premiums will not be refunded.
There are two types of term assurance: level term and decreasing. With a level-term policy, the lump sum payable on death remains the same throughout the term. With a decreasing-term policy the lump sum payable on death reduces over time to cover a decreasing debt like a repayment mortgage.