Life insurance cover is an easy way to ensure your loved ones have financial support if you die. Fortunately, there are several ways to get cheap life insurance, so you can use the money saved on the things that matter.
How does life insurance work?
A life insurance policy is a type of insurance agreement that covers you in the event of death. When you die, your insurance provider pays out a fixed amount to your family, supporting them through this difficult time.
With any type of life insurance, once you take out cover you start paying monthly premiums to your insurer. You must keep making these monthly payments, otherwise, your insurer will end your cover early. In this case, you won’t receive any money back on the premiums paid previously.
Types of life insurance
The cost of life insurance depends on the type of cover you choose. There are two main types of life cover:
- Whole life insurance – (Also known as life assurance) This type of policy covers you for the remainder of your life, no matter when you eventually die. Once you die, your insurer pays out a lump sum to your family.
The cost of your premiums and pay-out amount is fixed throughout your cover. This means you still pay the same for cover even as you get older or develop health conditions.
- Term life insurance – Unlike whole life cover, term life policies only cover you for a set period (i.e 20 years). Your policy only pays out if you die within this time, if not your cover simply expires.
There are 3 types of term life cover:
- Level term – Your policy premiums and payout amount are fixed throughout your cover.
- Decreasing term – Typically taken out alongside large payments like a mortgage. The payout amount decreases over time as you make repayments.
- Increasing term – The payout amount increases overtime to protect its value from inflation. Because of this your premiums also increase.
Term life insurance is typically cheaper than whole life but only offers temporary cover as opposed to permanent.
There is also joint life insurance, which provides cover for two people under a single policy. Joint cover is a popular choice for couples as it can work out easier to manage and cheaper than having separate policies.
How much does life insurance cost?
The cost of a life insurance policy depends on several factors such as:
- Lifestyle (If you smoke/drink alcohol)
- Type of cover needed
- Length of cover
Here are several ways you can get cheap life insurance…
Get cover when you are young
As you get older the cost of life insurance rises, therefore for the cheapest quotes, it’s best to apply for cover at the earliest stage. The benefit of life insurance (Whole life or level term) is that once you take out cover
Shop around for the best rates
Much like buying a car, you want to shop around to find the best prices. There are thousands of comparison sites that can find you the cheapest life insurance quotes in a matter of minutes.
You can also use an online life insurance broker, they can offer expert advice to help you choose the best policy for you and your family. With most sites, you simply answer a few details and receive an estimate of what you can expect to pay for cover.
Opt for a term life policy
As already mentioned, term life insurance is one of the cheapest types of life insurance. So if you’re looking for a cheap policy, term life cover will be your preferred option.
However, term life cover only protects you for a limited period of time, meaning you may need to get further cover if you survive the policy term.
Live a healthy lifestyle
Health is an important factor when it comes to the cost of life insurance. Smoking, in particular, can affect the cost of your premiums due to the negative impact on your health and life expectancy. So if you are a smoker you can expect to pay significantly more for premiums than a non-smoker.
Get joint life cover
If you and your partner share an income you may want to consider a joint life insurance policy. Joint policies can work out cheaper and easier to manage than having single policies.
Joint cover works in two forms:
- First death – The policy pays out after the first death in the couple, the policy then ends.
- Second death – The policy pays out after both policyholders have died.
One of the mistakes people tend to make with life insurance is buying more cover than they need. The payout from life insurance can be used to help your family with finances such as:
- Living costs
- Household bills
- Funeral expenses
- Mortgage repayments
- Childcare support
Before you apply for cover, it’s best to assess how much cover your family is likely to need if you die. If you share an income with your spouse, your family will likely need less cover than if you are the sole provider of the household’s income.
Now you know how you can save money on cover, it’s time to get a quote today and give your loved ones peace of mind.