Policy Value

The best way to ensure that you save money on your life insurance policy is to shop around for a good deal by comparing the offers of a range of insurance companies. There are many insurance providers competing for customers, so you should be able to find a good level of cover without having to pay an extortionate amount of money. However, you will have to do your research and read the terms and conditions of the individual policies carefully to check that you are not sacrificing the cover your survivors need in favour of paying lower premiums. There are a number of other opportunities to drive down the cost of your premiums:


Smokers
Although you cannot improve the state of your health overnight, you can aim to give up smoking. Smoking is a big influence on the cost of your premiums: it is not uncommon for premiums to be between fifty and one hundred percent higher for smokers. If you have given up smoking for at least twelve months prior to your application, you will generally be considered as a non-smoker, although some insurers will demand five smoke-free years before treating you as a non-smoker. You may be treated differently if you smoke cigars or pipes exclusively: some insurance providers even treat cigar and pipe smokers as non-smokers. However, every insurance company operates under different rules and regulations, and so you will need to shop around for the best deal. Nevertheless, giving smoking up is key to reducing your insurance premiums.

Term Insurance
It is often unwise to change your insurance provider later on in life: you will usually be required to pay high premiums because older people present a greater risk of pay-out to the insurance company. If you choose to take out term life insurance for a short period you will usually pay relatively inexpensive premiums because you will not age a great amount, nor is it likely that your health will suddenly deteriorate. For this reason you may wish to consider term insurance if you do not have very much to invest, perhaps with the option of renewing the insurance at a later date. If your insurance provider offers renewable term insurance, you may find this to be a cost-effective policy. Unlike other life insurance varieties which take your state of health into account when calculating any increase in your premiums, many renewable term policies will calculate your new premiums based on your state of health when you first purchased the life insurance: they will ignore any subsequent adverse health conditions at the time of renewal.


Pension Term Assurance
There is a special type of term insurance which uses tax relief to reduce the cost of your premiums. The government entitles you to tax relief on your pension contributions, which essentially allows you to save £100 for your retirement having only contributed £78: the remaining £22 is tax relief at the basic rate of twenty-two percent. In much the same way, tax relief can reduce the cost of your term insurance premiums. You may find it more difficult to find pension term insurance than regular life insurance but it is worth asking your insurance provider if they offer this variety of life insurance, especially if you have only a limited income and need premiums to be as inexpensive as possible. However, pension term assurance may offer you less cover than regular life insurance and so you should check the value of the sum assured (the money paid to your survivors in the event of your death or diagnosis with a terminal illness) to ensure that your survivors will receive adequate financial support.


Whole-of-Life vs. Term Insurance
It is often cheaper to purchase term insurance than to purchase whole-of-life insurance. Term insurance presents a lower risk to the insurance complany, who are only required to pay-out if you die or are diagnosed with a terminal illness during the agreed insurance period. Whole-of-life insurance will pay out whenever you die or are diagnosed with a terminal illness, and so the insurance company knows that they will have to pay out at some point: this makes whole-of-life insurance the securer but more expensive option. If you feel that term insurance would provide sufficient cover for your survivors, do not feel obligated to purchase a whole-of-life insurance policy at extra cost.