Life Insurance on a budget - Top 10 money saving tips
Article published on 22nd April 2009
In these tough economic times everybody's pockets are pushed to breaking point and life insurance takes a step down the list of priorities.
This need not be the case though and your life insurance should still be a high priority whilst not costing you the earth! You don't need to be told how important it is to ensure your families financial security if you were to die and what could happen if your family were left with all the bills and mortgage to pay by themselves.
Using our top ten tops we'll show you how to protect yourself with Life insurance, without it stretching your budget.
- Always shop around the whole of the market! - Never accept a policy when you haven't been shown the whole of the market. Many advisors and websites will only show you a single insurance company and how can you then be sure you are getting the best price? Use a comparison website that looks across the market to find you the best life insurance quote.
- Don't pay a fee to an advisor - You don't need to! A lot of advisors and comparison websites are paid on a commission basis by the insurance company if you decide to take a policy. Doing things this way means that they don't need to charge you a fee and makes your hunting for an insurance policy free.
- Avoid life insurance from Banks and Building Societies - These types of organisations usually only offer a single product or at the very best a very small selection. On top of this, they usually add a large overhead making their insurance products sometimes double or triple the cost of the same policy elsewhere. This is true for life insurance and unemployment insurance (mortgage payment protection insurance) amongst others.
- If you have doubts or have suffered from medical conditions, get free advice - Choosing the policy that's right for you can be a confusing decision and one you really need to get right. If you are any questions or doubts, speak to a independent advisor from a comparison website that doesn't charge a fee. These advisors will be able to explain the life insurance policies, help you decide what you need and then find the best price on the market.
This is especially important if you have suffered from medical conditions in the past. Some insurers will want to increase you premiums because of your medical background but an advisor will be able to tell you which companies are likely to apply the lowest loadings.
- Take only the cover you need - It might be tempting to take a million pounds of cover for your family but in reality you should only take what you need to adequately protect them. The more your take, the more you pay and whilst its great to think our families could be living in the lap of luxury if you die, do you really want to stretch your pockets with protection you don't really need?
- Have you life insurance written into a trust and don't pay for it! - Without a trust, the payout from your policy could be subject to inheritance tax and the lengthy delays caused by probate. Writing your policy into trust is quick and easy and should be free (shop around if someone wants to charge you!). For the sake of a few signatures you could ensure your family receives a full payout without a chunk taken by the tax man.
- Consider Single Life policies instead of Joint - Taking a joint policy may sound like a cheaper option but when compared to two single policies the price difference is usually very minimal. The bonus is that each person is then covered for the same amount (combining to give you twice as much cover) for almost the same price! It also means that in a worse case scenario where both lives die, the family would receive two payouts instead of just one.
- Smokers beware, your paying twice as much - Smoking is considered highly hazardous to your health by both the medical profession and in turn by insurance companies. Because of this increased risk, insurance companies generally increase premiums for smokers to twice that of a none smoker! You could half your premiums if you are a smoker and give up for 12 months (and remain a non-smoker). Simply speak to your advisor or insurance company after 12 months of been smoke free and they will be happy to adjust your cover and premium! Instant saving!
- Review your cover regularly - As time goes by, your circumstances change and as these change your protection insurance should change with you. You may change your mortgage, your family may grow or you may change job. Whatever the change you need to review your life insurance on a regular basis to make sure firstly that it is adequately covering you and your family and secondly that you still have the most competitive price available. You may be surprised to learn that premiums do regularly come down!
- Over 50 Plans - Don't be tempted into an over 50s plan by tv advertising and the promise of no medicals and a free gift. Over 50 plans can often work out more expensive than a normal Over 50 plansover 50 life insurance policy. For more information see our Over 50 Plan guide.
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