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Top 5 tips to save on life insurance in 2021

6th Jan 2021

Events during 2020 may have you thinking more about looking after the financial future of your loved ones.

As a result, I have collaborated with award-winning broker Reassured, to put together our top 6 tips to help source the best life insurance policy for you, while keeping costs down.

1.  Compare multiple quotes

Just like any type of insurance policy, you’re more likely to save money if you shop around and compare multiple quotes.

It can be highly time-consuming researching individual insurers and requesting quotes. This is where an insurance broker comes in. Input your details just once to receive quotes from a range of the UK’s top insurers.

A reputable broker will be able to help you compare quotes and talk through the best options, saving you stress and time. Always ensure that the life insurance broker you use is FCA registered, you can find these details on their website.

Many life insurance brokers offer free, no-obligation quotes from the UK’s top insurers. Whilst you can use a comparison website which is more convenient as available 24/7, generally speaking, they provide quotes from a smaller panel of insurers.

2.  Improve your wellbeing

We all know that the lifestyle choices we make can have a huge impact on our mental and physical wellbeing.

Life insurance providers take into account factors including whether you’re a smoker, overweight, or a regular excessive drinker. These impact your premium, increasing or decreasing it depending on your level of risk you pose.

Small changes to your lifestyle could help reduce your insurance premiums.

Most insurers will qualify you as a non-smoker if you have not been smoking, or using a nicotine replacement, for a minimum of 12 months prior to applying.

All the more reason to stick to those New Year Resolutions in 2021!

3.  Decide which policy is right for your needs

What is your purpose for taking out life insurance? Do you have children or a mortgage to pay? Will you need to leave an inheritance or cover funeral expenses?

Whilst difficult subjects to consider, the above should be taken into account when searching for life insurance. Costs such as a mortgage, will reduce over time so consider whether you need a fixed amount for the duration, or a decreasing level of cover. This will help keep payments down.

Level term, decreasing or whole of life cover? All these terms can be confusing, take a look at the jargon buster below for an explanation of the options.

4.  Consider a joint policy

Joint policies can be cheaper and more convenient for couples who do not want to arrange two individual policies. With this policy you would only pay one fee per month to both be covered.

Keep in mind that joint policies only pay out once, leaving the remaining partner without cover or needing to begin a new policy, which is likely to be at a higher premium than the original. This may not be the right choice for you if you have dependents.

5.  Take a medical exam

You might think, do I really need a medical to take out life insurance? And the answer is, it could save you money! Not all insurers require a medical but sharing your history can help your quote and cover to be more accurate.

This also allows a health insurance broker to filter through and select providers who will be able to offer the best level of cover for you at the cheapest rate.

It means there’s also less likelihood of there being any disputes when the time comes to claim on the policy.

If you’re certain you wouldn’t like to undertake a medical exam, your broker can go through your options and find a policy with an insurance provider that doesn’t require medical information, such as an over 50s policy.

Don’t unnecessarily over-insure

Life insurance could be a make-or-break saviour for your loved ones if you pass away. It’s important you take the time to work out the level of cover you need.

Plucking a number out of thin air may seem an easy option but you could end up overpaying for cover you don’t need. The best route is to take a bit of time to calculate realistically how much your family would need. Consider rising funeral costs, mortgage payments, personal debt and other living costs.

Does your company offer death in service benefit? This could also reduce the amount of cover needed on your life insurance policy, decreasing your monthly payments.

Secure life insurance sooner rather than later

Insurers price policies on how likely you are to claim so most of the time, the younger you are when you purchase a life insurance policy, the less you’ll pay per month.

Health risks for those in their 20s to early 30s are considered lower so these policies generally offer more cover, at a smaller price.

Cost cutting tactics to avoid when buying for life insurance

  • Lowering cover to less than your family would need

 Keeping your cover low will ensure cheaper monthly payments however, you risk your loved falling short when it comes to essential costs. Take the time to work out an amount that would pay for the basics and see how much you can afford as a monthly premium.

Downplaying your risk

  • This is a dicey game to play. Not disclosing medical conditions or health issues e.g. being a smoker but saying you’re not, could lead to your policy being invalidated if this issue relates to a cause of death. Meaning your loved ones would receive no pay out from your policy. It’s not worth it! Speaking to an insurance broker will allow you to find the most cost-effective policy based on your situation.

I hope this article has been helpful. Here’s to a happy and healthy 2021, (and good riddance to 2020).

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