When you’re skint, skipping on insurance can seem like one of the easiest ways to save some money.
After all, you’re paying out for an eventuality that may never happen.
And whilst it’s great to cut costs wherever possible, when it comes to things like holiday and life insurance, it’s better to be safe than sorry. Here’s some handy ways to save money on life insurance, so that you get the cover you need for the lowest possible price.
Tip #1: Go commission free
Commission essentially inflates the price of a product, so it makes sense to try and avoid it wherever possible and buy via a discount broker. While you’re normally asked to pay a small, initial fee, this will be a one-off and in the long run will still be cheaper than a commission-based premium. By doing this, you’ll know that your money is going directly towards the quality of the product, rather than the money-lined wallets of the insurer.
Tip #2: Only buy what you need
Do your research, decide what level of cover you need and stick to your guns! Don’t get schmoozed by the fancy website advertising. Yes, the idea of a £150,000 lump-sum pay out looks appealing but if you know your family won’t need that much, don’t get it. The higher level of cover will only be reflected in higher monthly premiums. The same goes for critical illness cover: only buy what you think you’ll need.
Tip #3: Quit smoking
If you haven’t already, quit the cigs! According to ASH (2014) every year, over 100,000 smokers in the UK die from smoking-related causes, and this is on the rise. Life insurers aren’t stupid. If you’re a smoker, you’re statistically more likely to claim on your policy and higher risk = higher premiums (Almost double the price in fact!) So quit smoking, become less statistically ‘risky’ and your efforts will be rewarded with significantly lower premiums. Plus, you might just find you have little extra spare change in your pockets too.
Tip #4: Buy sooner rather than later
Policies become more expensive as you get older as your likelihood of health-related issues increases. So, if you intend on getting cover, don’t delay: as time goes on it’s only going to get more expensive. If want to ensure that your premiums stay the same too, choose a policy which offers a fixed and guaranteed rate throughout its term.
Tip #5: Consider joint cover life policy
If you have a long term partner or spouse consider taking out joint cover. Buying one rather than two policies is a much cheaper way to insure oneself but, be careful as these policies will only pay out once, after which the policy is null and void.
Tip #6: Be a cynical shopper
To convince you to buy their product, insurers will try to bribe you with every possible reward imaginable. Cuddly toy? Of course. Cashback rewards? You name it. Reduced gym membership? You get the picture.
Generally speaking if it sounds too good to be true it usually is. Although it looks great, chances are you’re paying for these rewards in some way or another, usually through higher premiums. Indeed, some of the perks are great and it’s far better than paying a high premium with no freebies. But make sure you shop around to see if any companies offer the same cover for a cheaper price in the long run.
Tip #7: Don’t be lazy, do your research
It’s true, nothing worth having comes easy. Yes it’s time consuming, but if you compare life insurance quotes from as many providers as possible, statistically you’ll increase your prospects of finding the best deal. To maximise your chances of saving more money, consider comparing through a discount broker like Best Price FS.
Tip #8: Buy term rather than whole of life insurance
In the insurance world you pay for certainty, and whole of life insurance is no exception to the rule. Because of its guaranteed pay out, premiums are typically a lot higher. So if you’re looking to save some money, opt for a term-based policy which are on average, far cheaper.
Tip #9: Set the right term
If you confident that your financial situation will be more stable in 25 years’ time, it’s pointless paying for cover for 30. Most people take out life insurance which lasts either until they’ve paid off their mortgage or until their children have left the nest. And so working out just how long you need it for can be an easy way to keep down the costs.
Tip #10: Stay on the ball
If your circumstances change, in that you stop smoking, lose weight or even give up sky-diving, it’s worth letting your insurer know. It all relates back to being statistically less ‘risky’, so asking for a reconsideration could be a really easy way of cutting monthly costs. They’ll expect you to provide evidence of these changes though, so make sure you’re able to do so.
While it’s morbid to dwell on what may or may not happen in the future, following these simple tips will bring you peace of mind. Not only will you be saving money, but you’ll also be safe in the knowledge that your family will be financially protected and stable, whatever the eventuality.