Cut Your Life Insurance Costs By 50%....But Hurry!

How you can benefit from the life insurance price war.

For years, insurance companies have been battling against each other to offer you the most competitive, cut-price life insurance policy.

Hot competition, together with longer life expectancy, has driven the cost of life insurance down over the last decade. And it's time for you to take advantage of it while you still can, because low-cost cover almost certainly won't last forever.

If you need life insurance but you haven't yet arranged a policy, all you need to do is compare quotes at The Motley Fool Life Insurance Service. If you have a clean bill of health, you may be surprised how cheap a policy can be these days.

But even if you already have a policy, don't think you have necessarily missed the boat. In the same way that you might switch your car insurance, home insurance or gas and electricity tariff to make big savings, you can give your life insurer exactly the same treatment.

In fact, for some policyholders, life insurance is now more than 50% cheaper than it was ten years ago. The table below shows just how much average premiums have dropped in the last decade:

Life insurance rates: July 1998 - July 2008

	Average Non Smoker Rates		Average Smoker Rates
	Male	Female	Male	Female
July 1998	£18.85	£15.31	£26.00	£19.84
July 2008	£8.79	£7.87	£13.40	£10.76
10 year Change	-53.3%	-48.5%	-48.4%	-45.7%
Cost saving	£3,018	£2,232	£3,780	£2,724

Source: Moneyfacts.co.uk. Premiums taken as at 23.07.1998 and 23.07.2008. Premiums provide £100,000 of life cover for healthy policyholders aged 30 next birthday, over a 25-year term. Both guaranteed and reviewable rates have been included. The actual premiums you pay may differ from those shown depending on your individual circumstances.

As you can see, rates for men -- who don't smoke -- have fallen dramatically from £18.85 a month to just £8.79. That's a whopping saving of over 53%. And it's a similar picture for women and smokers too.

That means, if you took out a life insurance policy several years ago, there's absolutely nothing stopping you from trying to switch to a cheaper plan now.

Don't forget, the new policy should be based on a shorter term. By this I mean a 25-year policy taken out five years ago will now only need to last 20 years to provide the same length of cover as the original.

I can't guarantee switching will automatically cut your premiums. For one thing you'll be a little older now and life insurance rates usually increase with age. For another thing, if your health has deteriorated in the mean time or there has been any other change in your circumstances which means you now pose a greater risk to an insurer, then you may find a new plan will actually be more expensive.

But you should -- at least -- check it out. If if the quotes that come back are more expensive than your current policy, you'll know you already have a good value plan.

And just a final word of caution on switching policies: Don't cancel the old policy until the new one is up and running. And make sure the new plan offers the same level of cover, at least. In other words, be careful you don't lose any valuable benefits when you switch.

Act quickly!

If you think you may now be paying over the odds for your policy, I would urge you to act quickly. Although premiums are clearly cheaper, on average, than they were ten years ago, it appears they may already be as low as they can go.

The table below reveals the short-term trend over the last twelve months:

Life insurance rates: July 2007 - July 2008

	Average Non Smoker Rates		Average Smoker Rates
	Male	Female	Male	Female
July 2007	£8.71	£7.34	£13.71	£10.94
July 2008	£8.79	£7.87	£13.40	£10.76
1 year Change	0.9%	7.2%	-2.2%	-1.6%

Source: Moneyfacts.co.uk as at 23.07.07 and 23.07.08. Premiums provide £100,000 of life cover for healthy policyholders aged 30 next birthday, over a 25-year term.

Premiums for male, non-smokers are now marginally higher than they were this time last year. However, for women, average rates have already stepped up by more than 7%. While it's true that rates are still falling for smokers, these savings could disappear soon too.

Remember all life insurance companies assess risk in a different way. The same policy may be many times more expensive with one insurer than another. So shopping around now really is the key to finding a competitive policy at a rock bottom price.

More: Life Insurance: How Much Do You Really Need | Avoid This Big Financial Mistake | See you if you can make a saving at The Motley Fool Life Insurance Service

The comments above are the opinions of the author only and do not represent advice specific to your circumstances

This article has been approved and issued by Direct Life & Pension Ltd who are authorised and regulated by the Financial Services Authority.

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