Instead of a lump sum, think about an income policy.
Most people know that if you die, life insurance pays out a lump sum. But far fewer people know that you can buy insurance that gives you a regular income that isn't taxed. Its official name is Family Income Benefit, and it is often cheaper than the more common Level Term lump sum payout option. So why would a regular payment be better than a one-time payment?
Many people who buy life insurance just want to make sure that their family will have enough money to live on if they die too soon. But many policies are bought with a lump sum benefit, so the family left behind has to find a way to save or invest the money to make it last. Also, the interest from a lump sum is taxed, but the money from a family income benefit policy is paid to you without tax.
For people who aren't used to handling large amounts of money, having to find the right savings account or investment can add stress to a situation that is already hard. Family Income Benefit can give you the best of both worlds in this situation.
Think about getting a decreasing policy for mortgage life insurance
A mortgage loan is one of the most common reasons why people need life insurance. What kind of life insurance you need will depend on your mortgage, but it's usually one of two types of term life insurance.
If you only pay the interest on your mortgage, you'll need level coverage because your mortgage debt will stay the same unless you increase or decrease the loan. But people with a "capital and interest" mortgage can choose a "decreasing term" policy, in which the coverage goes down as the mortgage loan goes down. This type of life insurance is cheaper than level term because the risk to the insurance company goes down as the coverage goes down.
So, if you have a capital and interest mortgage and a level term life insurance policy but only need to cover the mortgage amount, you could save money by switching to a reducing policy. The bad thing about this is that if your mortgage loan goes down but your insurance benefit stays the same, you will lose any extra coverage from a level policy.
Stop smoking
All insurance is based on risk, so if you want to lower the price, you need to lower the risk. The risk in life insurance is based on how likely it is that you will die while the policy is in effect. Insurers figure out how much of a risk you are by looking at your health and medical history.
Your insurance rates will go up if something makes you more likely to die early. Some of these risk factors are your current health, your family history, and having a dangerous job or dangerous hobbies. However, the most common risk factor is being a smoker.
I know you won't quit smoking just to save money on your life insurance, but it's just one more reason to do so. You will not only save money on cigarettes, but you can also save about 40% on your life insurance premiums.
Compare prices
The market for life insurance is very competitive, and prices can vary a lot depending on where you look. Use one of the many free online comparison sites to compare a lot of insurance companies and plans at once. The only thing to keep in mind is that these sites only compare premiums, not coverage, so make sure you know what kind of coverage you need before you start looking. This will help you compare items that are the same and find the best deals.
You could also hire an insurance broker to do the shopping for you. If you use a certain type of insurance broker, this could save you a lot of money.
Use a broker who sells cheap life insurance
A discount online insurance broker can save you hundreds of pounds in lower premiums if you know what kind of coverage you need and don't need advice.
Because the internet is cheap and has a large audience, many life insurance brokers have started websites that offer life insurance quotes from major insurers at lower premium rates. By giving back a lot of the commission they get from big insurers to lower your premiums, these brokers can get discounts on coverage from big insurers.
The amount of money you can save varies, but it can be anywhere from 10% to 40% less than the insurance company's standard premiums. There are a lot of sites that offer instant online quotes that let you compare policies from top insurance companies.
Most brokers can be found by doing a simple Google search for "discount life insurance." You can also use an insurance directory like UK Insurance Index, which also has customer reviews.
