Seven steps to cheap life insurance

Robert Powell reveals seven ways to cut your monthly life insurance premiums...

I’m convinced my socks are breeding.

I only say this because I can’t recall buying any new socks recently yet my top drawer still seem to be overflowing. Come to think of it, my entire wardrobe seems to be expanding with a variety of jumpers I’ve outgrown, shirts I’ve managed to stain and shoes with holes worn into them.

Luckily I’m not a terribly sentimental person so I dispensed with these unneeded items by instigating what I’d term a ‘clothes cull’.

After all, if something doesn’t fit anymore you usually get rid of it and purchase a more suitable version...right?

Well, while most people wouldn’t think twice about replacing a worn out pair of socks or battered jumper, when it comes to life insurance policies, many are reluctant to ditch or switch an unsuitable policy. What’s more, by sticking with an inappropriate level of cover you could be throwing away hundreds of pounds ever year.

So here’s seven ways you can slash your life insurance premiums while still staying fully covered...

#1 Smoking

Recent stats from Sainsbury’s show that around 3.3 million ex-smokers in the UK are collectively paying £316 million more a year on life insurance than they need to, just because they haven’t informed their provider that they’ve quit.

If you haven’t smoked or used a nicotine replacement product in the last 12 months then life insurance providers will classify you as a non-smoker, and you’ll eligible for cheaper premiums. Sainsbury’s estimate that the average annual life insurance premium for a smoker is £209.76, compared with £113.88 for a non-smoker – that’s a whopping difference of £95.88.

So if you’ve ditched the cigs and have stayed strong for over a year, make sure you tell your life insurance provider!

#2 Update your policy

Your life insurance premium will also be pushed if you have a particularly dangerous job or hobby.

So if you’ve recently decided to call it a day at the bomb squad or have given up diving with sharks, then it’s worth telling your life insurance provider – as you’ll almost certainly be moved onto a cheaper rate!

#3 Joint cover

Most life insurance providers will now offer joint cover for couples as well as single individual policies. So if you and your partner currently have two separate life insurance policies you could shave around 25% off your monthly premiums by switching to joint cover.

But while joint cover is cheaper it may not be suitable for everyone as it only pays out on the death of the first policy holder. This means that the surviving partner will be left uninsured and in all likelihood will have to pay higher premiums for another policy due to their increased age.

#4 Change your term

Ensuring you take out a suitable term on your life insurance is vital to ensure you’re both fully covered and not paying over the odds. If your cover is to protect your children then you should take out a policy that lasts until they will be no longer financially dependent on you. If your policy is aimed at protecting your partner then the cover should last until they’re entitled to a pension or your whole mortgage is paid off.

Checking if your policy is renewable may also be a good idea. Renewable cover allows you to carry on with your policy at the end of fixed term with no increase in premiums or a further health check.

#5 Change the size of cover

Higher policy payouts will also bump up your premiums so you should regularly check the size of your cover and ensure that it’s still suitable for your current situation. The best way to do this is to tot up all of your debts, add on the amount needed to provide for your family and then take out an appropriate sized policy.

If you’ve already got mortgage assurance cover and are now looking for level term cover then make sure you don’t include your mortgage debt when figuring out what size of policy you need. In fact, instead of taking out two policies it may be cheaper to cancel your mortgage assurance policy and take out a larger level term policy that will cover the mortgage as well.

You can check all of the rates and figure out how much cover you need using out life insurance calculator.

It’s also worth checking what exactly your current policy provides. As I reported in Don’t miss out on these secret perks many life insurance providers now offer many extra services to policy holders such as financial help lines, counselling services and even fitness advice.

#6 Family Income Benefit

Family Income Benefit is a type of life insurance that pays out in tax-free instalments, rather than in one lump sum. This cover obviously means your family won’t have to worry about investing and managing one large payout, but it could also cut your monthly premiums by as much as 35%.

However much like joint cover, Family Income Benefit is not suitable for everyone – head over to Save 35% on your life insurance to find out why.

#7 Not checking rates

Life insurance rates constantly change so even if you’re completely happy with your current policy it’s still worth checking the current rates, as you could be missing out on cheaper deals.

The best way to re-asses the amount of cover you need and check up on the latest market leading deals is to use the free life insurance calculator right here at lovemoney.com.

More: Get a great deal on life insurance | 6.5 things you didn’t know about this essential cover | The most important reason to take out life insurance