Life insurance can be one of the more expensive forms of insurance so it makes sense to look for a policy that won’t cost you the earth. Aside from the obvious advice of shopping around to find the best value for money, here are some things to think about when you’re trying to save money on life insurance.
Do you actually need it?
Unlike health insurance, not everyone will need to take out life insurance. If you don’t have dependents who would suffer financially in the event of your death, life insurance can be an expense that you don’t actually need. Even if you do, it may be the case that your family would be able to survive on a combination of savings, superannuation and payouts from other insurance policies and wouldn’t need life insurance.
To work out whether this would be the case, work out exactly how much you’ll need to be insured for and include everything that your family would still need to meet the costs of if you were to die – including future expenses that may not yet have come up, such as school fees. If you can cover some (but not all) of this from other sources, your life insurance only needs to cover the deficit rather than the full amount.
Have you already got it?
If you’re in a super fund, you may already have some form of life insurance. This may not be extensive enough to fully cover your needs though so if you’ve decided that you need life insurance, you may well have to top this up quite significantly.
Don’t be too cheap
Cheap isn’t necessarily best so don’t automatically go for the cheapest life insurance policy that you can find. You want to get the right balance between having a cost-effective policy while still making sure that it offers broad enough coverage.
After all, you’re taking out life insurance to give your dependents financial security in the event of your death so the last thing you want is to risk leaving them with money problems because you opted for a policy that didn’t offer adequate protection. By all means, look for the policy that best fits your needs for the lowest price but don’t let cheap premiums sway you into taking out a policy that isn’t right for you.
Arrange it as soon as you decide it’s necessary
Insurance providers will expect your health to get worse as you get older so if you are reasonably young and healthy, you’re in a good position to benefit from more affordable premiums. If you wait until you’re older, you’ll be deemed a higher risk for many conditions and this can mean much higher premiums.
Adjust your policy if your circumstances change
When you first take out life insurance, you’ll be making sure that you’re insured for an amount that covers things such as your income, debts and future education costs (if this is applicable) so that these costs don’t become an impossible financial burden for your family if you were to die and your income could no longer be relied on. As you get older, you will almost certainly find that your situation changes and that you could benefit from reducing your protection in line with this.
For example, if you pay off your debts or your children are no longer in full-time education, these no longer need to be factored in and you won’t need as much cover as before. On the other hand, if you take on more debt (such as a mortgage) or expand your family, you’ll want to enhance your protection to ensure that your changing circumstances are fully covered. This will obviously mean higher premiums but in the long term, you can be confident that your dependents will be taken care of financially in your absence.
Be as healthy as possible
When you first arrange a life insurance policy, you’ll be asked about your medical history and the type of lifestyle that you lead (e.g. if you smoke and what your typical alcohol consumption is) to determine whether you are a big risk to insure. By adopting a healthy lifestyle involving a balanced diet, plenty of exercise, no smoking and limited alcohol intake, you can cut your chances of developing lifestyle-related diseases that will increase your premiums.
Beware of ‘no questions asked’ life insurance
Be wary of policies which don’t ask about your medical history before they approve your application. These kind of policies can be useful for those with chronic health problems who may not otherwise be approved for life insurance due to being high risk but this often makes them much more expensive than the average life insurance policy.
It’s certainly possible to pay less for life insurance without opting for a bargain basement policy that won’t offer adequate coverage. Completing a life insurance comparison can help you find the most affordable rates, without much hassle. Don’t get sucked into thinking that cheaper is better – where life insurance is concerned, this is almost always not the case as it won’t provide enough cover. Instead, focus on arranging superior cover without paying over the odds.
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