People use life insurance to make sure their families or dependents will receive cash benefits if they are no longer there. However, some people are having to pay more than others for the same amount of coverage. Below are some practical steps and actions that help reduce life insurance payments.
1. Quit smoking and vaping – 20% of people in the UK smoke. Quitting smoking is a great way of reducing your premiums as they can go down by up to 50%. However, be aware these changes won't happen overnight. That's because insurance companies will require you to not smoke for a minimum of 12 months to qualify as a non-smoker for lowering your premiums.
If you do quit smoking, don't forget to tell your insurer about it - 51% of smokers who quit forget to do so thus missing out on lower premiums available!
2. Get life insurance at a young age - insurers love statistics and statistics suggests the younger you are the less risky you are for them. This translates into lower insurance premiums for you!
3. Stay fit and healthy - not only this is good for you, it is also good for your wallet. Insurers ask much lower premiums if you are healthy. So make sure to eat healthily, exercise often, get enough sleep, and enjoy wholesome relationships.
4. Lead less dangerous lifestyle – hazardous activities and pursuits such as sky diving or working with explosives inevitably mean higher life insurance premiums.
Have a think if this is what you want to do for the rest of your life? It might help you in lowering your premiums.
5. Use a professional life insurance expert - such experts are just a quick form away and available via WeCovr. They will do all the paperwork for you and search the market for the best plans matching your needs.
6. Watch your BMI (Body Mass Index) - as an indicator of a person's health, insurers look at their BMI. It is a simple formula which requires your height and weight.
The formula is BMI = kg/m2 where kg is a person's weight in kilograms and m2 is their height in metres squared. A BMI reading of 25.0 or more means overweight, while the healthy range is 18.5 to 24.9.
7. Let experts shop around for you - fill in a quick form on the button below to get our insurance experts do the legwork for you and compare multiple life insurance policies that fit you best.
8. Honesty is the best policy - it might be tempting to claim you don’t smoke when you do or lie about your medical condition, as you think it will reduce your premiums.
However, this could be a false economy in the long run because your insurer might not payout in the end if they find out you were less than honest when getting the cover.
9. Do checkups if you have medical conditions - this may help you get better premiums in case your medical situation improves thanks to a healthier lifestyle or diet for example.
Should your health parameters become healthier, you may request a more competitive quote either from your existing or other insurers. Again, WeCovr's experts would be happy to shop around for best available plans for you at no cost.
10. Consider having multiple policies - your choice of life insurers gets more restricted and premiums rise as you age and/or get any health issues. So if you took a policy when you were younger or healthier, don't cancel it. If you'd like to top it up, you could keep your existing cover and take out a new policy in addition. This will mean lower overall premiums.
11. Write your policy in trust - even though life insurance payouts aren’t subject to income or capital gains taxes, they might be liable for inheritance tax if your net assets including life cover payout exceed a certain threshold.
By putting your life insurance policy into a trust, you take it outside of your assets and thus make it tax-free. This can help you lower your premiums should you wish so or you might want to keep them at the same level, but leave your loved ones a larger tax-free sum of money.
12. Make a plan or a will - having a plan or a will in place helps you understand how much you have in assets and what you intend to do with them. As a result, you can plan for inheritance tax payments your loved ones might have to pay and adjust your sum assured accordingly.
13. See which extras you require - there are various extra features in many, including a waiver of premium, bereavement counselling or some others. If they come for free, that's great, keep them. If they cost extra, you may want to consider whether you really need to keep them.
14. Reviewable vs guaranteed premiums - watch out if you're offered cheaper reviewable premiums. Those tend to be
cheaper initially, but can go up later to account for your age and state of health. Guaranteed premiums stay the same over the entire length of the policy so could be cheaper for you in the long run.
15. Choose a policy that better fits your needs - whole of life insurance covers you for your whole life which makes it more expensive because it is guaranteed to pay out at some point. At the same time, term insurance can be a cheaper and the most common type of life cover.
Term policies cover you for just the duration of your policy – for example, 20 years that you have left on your mortgage.
16. Consider single policies rather than a joint policy - a joint life insurance policy pays out on the first death if this occurs within the term of the policy. This can be seen by insurers as likelier than two single life insurance policies and therefore more expensive on the same value basis.
Separate policies are also easier to deal with, should a couple separate at some point.
17. Reduce the term of the life insurance policy - policies get more expensive with longer terms. If you only need life cover for your mortgage, you might want to consider just insuring for the remainder of its term or just while your children are young. This will help lower your premiums down.
18. Check your employee benefits - if your company offers life insurance cover as part of your benefits package, it may be for a significant amount of a multiple of your annual salary. As a result, your additional life cover requirement might be less and therefore premiums you pay for the balance.
Be careful though - should you leave your current employment, your life cover available from them will stop and your overall coverage may shrink significantly.
19. If self-employed, explore tax deductibility – life insurance can be structured in different ways for business people, often taking advantage of tax deductibility for business purposes.
Check with professional insurance experts at WeCovr. They will assist you with what might be a more tax-effective option for you to help reduce premiums.
20. NEVER reduce cover just for the sake of lower premiums - living life without or with little life insurance is like betting your loved ones won't need any help should you pass away. Make sure your policy provides enough cover for your loved ones, so they have the financial security and confidence when you're not around.
As covid has shown, life events can quickly change for the worse. Don't be penny wise, pound foolish - let a life insurance company take that bet for your loved ones in exchange for an affordable premium.
Before purchasing your or your family member's life insurance, it is always recommended to consult with life insurance experts. Our FCA-authorised and award-winning insurance partners can help guide you in a friendly and free phone consultation.
Why not let experts do the hard work and analysis for you? At no cost, they can find you those life insurance plans that can be most suitable to your particular circumstances as well as help deal with all the necessary paperwork!
It takes less than 30 seconds to set up a free phone consultation with them to check how different plans from various insurance companies compare against each other and fit you best. Just fill in a quick quote form on the button below and get a free, no-obligation quote from FCA-authorised life insurance experts!