6 Ways To Save On Life Cover
Life insurance can seem like a hefty cost for families who are on a budget. Still, what would happen if one of the primary breadwinners were to suffer an untimely diagnosis, disability, or death?
There are ways you can make cheap life insurance a reality. Take a look at our six strategies for reducing your life cover premiums.
1. Applying at a young age
One way to get cheaper life cover can be to apply for it when you’re young. Young people are at a lower risk of needing life cover, which means their rates are usually the lowest in the market.
Securing level premiums for life cover at a young age (more on this ahead) could mean that you pay less for life insurance over time. Young people often make the mistake of thinking they don’t need life cover, but income protection and trauma cover are worth considering at any age.
2. Stepped vs. level premiums
One of the biggest questions regarding life insurance is whether to choose stepped or level premiums. Many people who are looking for cheap life insurance see the low starting rate of a stepped premium and think it’s the answer.
Stepped premiums differ from level premiums in that they rise over time. Level premiums, on the other hand, only rise at the rate of inflation, not in relation to risk. You’ll be paying roughly the same rate at 25 as you will when you’re 50.
The catch is that level premiums are more expensive up front. Stepped premiums often attract younger policyholders who don’t think level premiums are worth it.
Stepped premiums are typically ideal for short-term coverage that you plan on cancelling after a few years in favour of a different life cover strategy.
Signing up for level premiums means you won’t be affected by the increased risk as you age. If you want to buy a policy to protect your family from long term financial hardship, for instance, a level premium model might be for you.
There is some room for individual circumstances here, but level premiums are usually the better choice for long-term coverage. We should note that level premiums usually transition to stepped premiums once you turn 65 or 70.
3. Your health
Another major factor in life insurance is your overall health. Some health conditions are unavoidable, and may contribute to your premium costs. However, there are ways to take control of your health that can lower your premiums.
For example, quitting smoking can drastically reduce the amount you pay for life cover. Smokers often see their premiums drop once they’ve been nonsmokers for 12 months or more.
One mistake people make is thinking that they can lie on their application. Life insurance providers dig through your medical history with a fine-toothed comb and often require a medical checkup before they insure you.
Some insurers don’t require a medical exam until it comes time to make a claim. If it comes out that you didn’t disclose important details on your application, your claim is likely to be denied,
Weight can also contribute to higher life cover premiums. Those who are out of shape may pay more for life insurance, in some cases even more than smokers.
Losing weight and living a healthier lifestyle can help reduce your risk, and thus lower the price of your life insurance premiums.
4. Compare life cover
Comparison is your best friend when it comes to life insurance. You should be looking at policy prices at least once a year, and make the switch if you find something cheaper.
You might find a better value for life insurance as well. Another provider might charge a bit more per month but could have additional benefits that are valuable to you.
This is especially important if you want to lock in a low premium price while you’re still young. Do your research, find out how much coverage you need, and buy a plan that fits your budget and lifestyle.
5. Level of coverage
The amount of coverage you buy is another huge determining factor in life cover costs. Cheap life insurance will usually only include death cover, but that’s all some people need.
However, many people benefit from combining policy types to provide cover for a wider variety of circumstances.
Life cover isn’t just for death or terminal illness; for example, total and permanent disability cover provides benefits if you’re permanently unable to work due to an accident or injury. Likewise, trauma insurance helps protect you in the event that you’re diagnosed with a serious illness.
Insurers may offer premium discounts for bundling different types of cover, so don’t miss out on these opportunities to save. It’s important to consider your budget when applying for life insurance, but also your family needs and lifestyle.
6. Make lifestyle changes
Do you take part in high-risk activities or occupations? If so, your life insurance premiums are going to be higher than the average.
As we’ve said, life insurance premiums are all about risk. The higher your risk, the higher your premiums.
If these activities are hobbies, consider limiting or stopping this high-risk behaviour. Not only will you reduce your risk of being injured or killed, but you could also reduce your life insurance premium payment.
Ready to compare life cover policies? Take a look at our comparison page!