How can I reduce my life insurance premiums?

6 min Read Published: 06 Nov 2016

How can I reduce the premiums on my life insurance?

How can I reduce the premiums on my life insurance?

The premiums on a life insurance policy are set using a number of factors such as age, health and lifestyle. These factors may result in your life insurance premiums being expensive and outside of your budget.

But rather than just giving up there are certain things you can do to reduce your life insurance premiums, but do remember that the cheapest life insurance policy isn't always the best.

Compare life insurance quotes from different insurance companies

Each insurance company will have their own method of assessing the risk on a life insurance policy. This can result in different premiums for the same cover so it pays to shop around.

If you are arranging a mortgage, for instance, you do not have to take life insurance out with the same company that your mortgage is with. Either use an independent mortgage adviser or use this life insurance comparison site to find the cheapest life insurance policy.

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Select the right amount of life cover

If you can accurately calculate the amount of life cover you require then this can help to keep the cost to a minimum. Do you want to cover your outstanding mortgage, replace a lost income, cover a possible inheritance tax bill or just to cover funeral costs? Here is a handy life insurance calculator to calculate how much your family would need if you died. Also have a read of our article ‘How much life insurance do I need‘.

Reduce the term of the life insurance policy

The longer the term of the policy the more expensive the premium will be. Maybe just insure for the remainder of your mortgage term or while the children are young, as any reduction in term will keep your premiums down.

Consider taking out a policy where the sum assured reduces during the term of the policy. This type of policy is typically used to cover a repayment mortgage where the life cover reduces in line with the outstanding mortgage.

Consider single policies rather than a joint policy

If you are looking to get life insurance for both you and your partner often a joint life insurance policy is used, however, this might not always be the best option. A joint life insurance policy pays out on the first death if this occurs within the term of the policy. This means that both partners are insured for the same amount which may not always be the best option. If, for instance, one partner has a lower income than the other it might make sense, from a cost viewpoint, to cover that partner for a lower amount. With two single life insurance policies you will also have two separate policies that will both pay out in the event of both partners dying within the term of the policy, not just when the first person dies as with a joint life insurance policy.

When you obtain quotes for life insurance it always make sense to get quotes for both single and joint life insurance policies and compare the cost. Don't forget there is nothing stopping you and your partner having life insurance policies with different insurance companies as don't assume one insurer will offer the best value for both of you.

Improve your health

When you apply for life insurance you will be asked to complete a health and lifestyle questionnaire. If you smoke or are overweight your life insurance premiums are likely to be increased due to these factors. It follows therefore that if you quit smoking and lose weight your life insurance company may consider reducing your premiums.

These changes do not happen overnight as companies will require you to be a non-smoker for a period of time (usually a minimum of 12 months). But if you can make these lifestyle changes you could then approach your current insurer or get a quote from others to see if you can reduce your life insurance premiums.

Check your employee benefits

Many companies offer life insurance cover as part of their employee benefits so make sure you are aware what life insurance cover may be available. Typically the cover provided is a multiple of your annual salary and this can be a significant level of cover, this may reduce the need for additional life cover. One word of warning, however, if you leave your current employment then your life cover will cease unless of course you can negotiate replacement life cover with your new employer.

(image by dan /