We all love to hunt for a good bargain and life insurance is no exception. Though planning for your death is an uneasy subject, nobody wants to risk leaving their loved ones with financial burdens. 

The cost of life insurance can depend on your circumstance – but we’ll get to that shortly! We’ll take you through how you can get cheap life insurance and protect your family for less.

Types of life insurance

Nobody can predict exactly what will happen in our lives, so it’s worth giving you and your loved one’s peace of mind by taking out life insurance. There are two main types of life insurance policies – Term life insurance & whole life insurance. So how do these policies work?

Term life insurance providers cover for a specific amount of time – also known as the policy term. Like any life insurance, when you die your policy pays out to your loved ones. This policy is typically cheaper than whole life, though if you survive the policy term, you’ll need to take out further coverage. Term life insurance usually works in three different ways:

1) Level term life cover – The pay-out amount remains the same throughout the policy term. The downside to this is that the policy is not protected from inflation, so it may be worth less than when you originally took out the policy.

2) Decreasing term life cover – As the name would suggest the policy pay-out decreases over time. This type of plan is typically taken out to cover repayments like a mortgage. It works out so that as you pay off your mortgage, the pay-out amount reduces and lasts until you’ve paid the full amount outstanding. It’s important to make sure your policy covers the same interest rate as your mortgage as it may not cover it in full.

3) Increasing term life cover – The pay-out value increases over time to be protected from inflation. Unlike level-term, your policy will likely be worth more than when you first took it out. The downside to this is that your insurer will review your premiums so even though your pay-out increases, your premiums will too.

Whole life insurance (also known as life assurance) provides covers for your entire life. When you apply for a policy, your insurer agrees to a guaranteed your family a pay-out when you die – just so long as you keep up with your premium payments. Whole life insurance typically costs more than term life as you are covered for your whole life as opposed to a specific length.

If you are aged 50 or over, it’s worth looking into over 50’s life insurance. These policies are for people aged 50+ who tend to struggle to get life insurance due to their age and health. This type is policy is adjusted to be more affordable, allowing you to still leave your family with something when you die.

The cost of life insurance

Before taking out a life insurance policy, your insurer will ask you some questions which can affect the cost of your premiums or whether you can be covered at all. This is standard for most types of life insurance – though some policies like over 50’s life insurance won’t.

The cost of your policy is usually determined by:

  • Your age – the older you are the more you are likely to pay
  • Your health
  • If you have pre-existing conditions – your insurer may also ask for your family’s medical history
  • Your lifestyle – how much you exercise, drink alcohol or if you smoke
  • Your occupation – expect to pay more if you are employed in a high-risk job

How much cover you need comes down to your circumstances. Life insurance can be used to help your loved ones cover many things such as:

  • A mortgage or rent
  • Any outstanding payments like debts and loans
  • Your family’s living and childcare costs
  • Funeral costs
  • Education costs like university fees

In some cases, you may already have some form of cover – such as a death in service benefit. This type of cover is issued by an employer and will normally pay out 2-4 times your annual salary when you die. This has some drawbacks, for example, if you leave your job to join another company, you forfeit your death in service benefit.

Finding cheap life insurance quotes

With so many sites for life insurance, it can be hard where to look. You’ll often find providers offering cheap quotes, however, depending on your circumstances, prices can alter. Most of the time the cheapest option isn’t always the right option, so make sure you understand what you need.

Get cover when you are young

The cost of your policy is based on the likelihood of you making a claim. Such as life, the younger you are the less likely you are to die and so a claim won’t be made. Whereas when you are older your risk of dying increases as does the likelihood of a claim.

With that being said, it’s cheaper to get life insurance coverage when you are young, rather than later on in your life.

Live a healthy lifestyle

Even if you aren’t as fit as a flea, it’s never too late to turn things around. Cutting down on fatty foods, smoking and drinking not only has a positive impact on your health but also can lower your premium costs.

Just like age, your health and lifestyle factor in as to how much you pay for life insurance. Being overweight, a heavy smoker or drinker may indicate to your insurance provider that you aren’t taking care of your health. The sooner you look after your body, the more chance you have of reducing the cost of your premiums.

Smoking alone raises the cost of life insurance, however, some insurers may reduce your premiums as an incentive for you to quit.

Consider a joint policy

If you have a spouse or partner, it may be cheaper to take out a joint life insurance policy. This can work out costing less instead of you both buying single policies. It’s important to note that joint policies work differently from single policies.

The policy will usually payout on the first death, however, there is also a second-death option. If the policy pays out after the first death, the term ends and the surviving member will need to seek further cover should they want it. If it is a second death policy, it won’t pay out until both partners have died.

If you’re still unsure about finding the right insurance policy for you and your loved ones, it’s best to speak to an insurance adviser. They can advise you on the right life insurance policy for your circumstances.

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