Life insurance for a fiver!

It's great news that life cover is cheaper than ever. Find out where you can pick up the most competitive policies.

Most of us don’t really like to think about life insurance too much. But there’s no getting away from the fact that insuring your life is one of the most important financial steps you’ll ever take.

Thankfully getting a policy up and running is pretty easy. All you need to do is check out the lovemoney.com life insurance service to help you find the cheapest quote - and away you go!

• Watch our Why you need life insurance video

Even better, the life insurance market has become super competitive these days, which means policyholders can enjoy ever cheaper plans. In fact, if you’re relatively young, you don’t smoke and you’re in good health, you could buy cover for around a fiver a month! That’s an exceptionally small price to pay for the peace of mind life cover brings.

So let’s take a look at which insurers are currently offering the most competitive policies. I used the lovemoney.com life insurance search engine to find the cheapest quotes for £100,000 worth of life cover over 25 years for men and women age 25.

The table below shows the best premiums on offer for ‘level term assurance’. This type of policy provides the same amount of cover for the duration of the policy. You can use these plans to cover a non-reducing debt such as an interest-only mortgage, or to provide your family with a lump sum if the worst happens to you.

Top five cheapest life cover policies - level term assurance

Premium as at 15 March 2010.

As you can see insurer, Bright Grey is currently offering the cheapest £100,000 policy with a premium of £5.11 a month for men, and a rock bottom price of £5 a month for women. Bear in mind these rates assume that you’re a non-smoker and you have a clean bill of health.

The next table shows the best buy policies for ‘decreasing term assurance’. As the name suggests, these plans provide an amount of life cover which reduces over time. You might use a decreasing term assurance policy to cover the outstanding capital on a repayment mortgage, because as you pay off your mortgage, you need less cover to pay it off in full.

Top five cheapest life cover policies - decreasing term assurance

Premium as at 15 March 2010.

Again you can see £100,000 worth of decreasing term assurance is available for both men and women at a bargain premium of just £5 a month from several insurers including Bright Grey, LV=, Aegon and Aviva.

Hey! I’m not twenty five anymore!

Those in their twenties won’t be the only policyholders to enjoy ultra cheap life cover. The great news is policies for older people are fantastic value for money right now too. A man aged 35, for example, can pick up £100,000 worth of level cover over 25 years for less than £8 a month. Meanwhile, women of the same age will only have to pay £6.55 a month for their level term policy.

Don’t forget, when it comes to life insurance, the sooner you take out a plan the better. Younger policyholders always qualify for cheaper premiums as they are considered less likely to claim during the term. If you’ve been putting it off - don’t!

• Join our Slash your insurance costs goal

Related goal

Slash your insurance costs

If you’re feeling the pinch, these ways of saving money on your insurance will help.

Do this goal

Switch your policy

If you’ve already got a life insurance policy, don’t assume this article doesn’t apply to you. After all, there are great savings to be had simply by switching to a new policy, particularly if you’ve had the plan for several years when premiums were significantly higher than they are now. Switching will allow you to take advantage of today’s more competitive premiums. Even if you're quite a bit older now don't make the mistake of thinking a new life policy will always automatically trigger higher costs - you might just be surprised.

Once again all you need to do is compare the cost of a new life insurance policy with your existing plan. Remember to base your quote on the shorter policy term you require now. For example, if you took out life cover five years ago with a 25 year policy term, your new policy will only need to last for 20 years to give you protection over the same period. The shorter policy term will also help to keep the costs down.

There are two more things you should beware of before you switch. Firstly, don’t cancel your old plan until you know the new one is up and running. This will avoid any gaps in your protection. And secondly, a new plan could be considerably more expensive if your health has deteriorated since you set the original plan up, which means switching may not always be to your advantage.

Finally, if you need more help with getting the right life insurance policy, why not ask the lovemoney.com community what they think using our excellent Q&A tool?

Find the cheapest policy using the lovemmoney.com life insurance service

More: What happens to your money after you die? | Save £4,575 on your life insurance