Every family should have some form of protection in case the worst happens. While some people prefer to rely on savings alone, life insurance is a tried and tested solution for protecting your loved ones. While you may be put off by the cost, life insurance doesn’t have to break the bank.
In this guide, we’ll explain some of the ways you may be able to secure cover without paying high premiums.
Choose the right type of protection
There are two main types of life insurance, each of which can fluctuate in price:
Whole of life insurance covers you for the rest of your life, with no expiry date. The policy pays out whenever you die, so long as you continue to pay your premium. Because this cover is essentially permanent, the premiums tend to be higher.
Term life insurance covers you for a set period of time instead (usually between 5-50 years). The policy only pays out so long as you die within the term, if it expires. It’s more suitable for covering specific costs, such as a mortgage. And because the cover can expire, the premiums tend to be cheaper.
If you’re looking to save money, you must have the right cover to reflect your situation. If you have to be covered indefinitely, then whole life insurance is your best bet. But if you only need cover for a certain time, it might make more sense to have a term policy instead.
Have an appropriate amount of cover
Two scenarios can be caused by having either too much or too little life insurance coverage, both of which can cause problems later down the line.
Having too much cover can mean paying higher premiums than needed. Whereas having less cover than needed could leave your family with less funds to manage financially after your death.
One of the best ways to work out how much cover you need is to weigh up any commitments you have, such as:
- Childcare
- Rent or mortgage payments
- Outstanding loans or debts
- Your family’s daily living expenses
- Education costs for your children
- Funeral costs
- Any other financial obligations specific to your family situation
Weighing up these costs should help you determine an appropriate amount of cover that can support your loved ones after you’re gone.
Reduce the length of your policy
If your goal is to keep premiums as low as possible, shortening the length of your term policy can sometimes help bring the cost down. For example, instead of choosing a 30-year policy, you might select a 20-year term that covers you only until your children become financially independent or until your mortgage is mostly paid off.
By matching the policy term to the period your family is most financially vulnerable, you avoid paying for protection you may no longer need later in life. Just be mindful that if your circumstances change, you may need to review your cover, and extending or replacing a policy later could cost more as you get older.
Buy cover at an early stage
The cost of life insurance often comes down to your age as well as your health. As there’s less chance of developing a medical condition when you’re young, insurers tend to charge lower premiums the younger you are.
In most cases, cover will be cheaper when you’re in your 20s compared to in your 40s or 50s. With this in mind, buying cover earlier on in life could save you money in the long run.
Look for fixed premiums
Certain policies offer fixed premiums, such as whole life insurance and level term life insurance. What this means is that the cost of your premiums will stay the same throughout the policy. Even as you get older or develop health problems, your cover will stay the same.
Consider a joint policy
If you’re in a couple and both want protection, joint life insurance can often work out cheaper than taking out two separate policies. With joint cover, the policy pays out once (usually after the first death), helping the surviving partner remain financially stable during a very difficult time.
It’s a popular option for families who share major responsibilities such as a mortgage or childcare, as the financial impact of losing either partner can be equally significant. However, because joint cover only pays out once, the surviving partner may need to take out a new policy afterwards if protection is still needed.
For many people, it’s an affordable way to make sure both partners are covered under one plan.
Remember to review your cover
As your life changes, so does your need for life insurance. Major life events such as having a child, moving home, getting married, or changes to your income can all affect the level of protection you need. Reviewing your cover every few years can help you make sure your policy still reflects your situation.
Equally, if your financial commitments reduce over time, for example, if you pay off a large portion of your mortgage or your children become financially independent, you may be able to adjust your cover and potentially reduce your monthly premiums.
Check if you already have cover
Some people have a basic level of life insurance included as part of their employee benefits. Known as death in service cover, it typically pays out a multiple of your annual salary if you die while still employed.
While this shouldn’t always replace a personal policy, it might allow you to take out less cover, helping you save money on premiums. Just be sure to check the details, especially whether the policy remains active if you leave the job.
Avoid unnecessary add-ons
Life insurance policies often come with optional extras, such as critical illness cover or income protection. While these can be valuable in the right circumstances, they do increase your premiums. Think carefully about whether you genuinely need the extra benefits.
Compare different insurers
Not all insurance providers charge the same amount for similar levels of cover. One insurer may specialise in offering lower premiums to younger families, while another may be more suitable for people with certain medical conditions.
This is where an independent adviser or life insurance broker can be useful, as they can search the market on your behalf and make sure you get the best deal based on your personal situation.
Make use of these tips to save money on life insurance. If you’re unsure about how much cover you need or which policy is best, there are plenty of online comparison tools or advisors who can help you make a decision.