Tips To Lower The Cost Of Your Life Insurance Policy

Making sure your loved ones are well protected after your death is an important part of financial planning but life insurance can be an expensive cost.

Shelling out a chunk of cash each month for something you will never feel the benefit of can be difficult, especially if the household budget is a bit squeezed.

However, there are some ways to get life insurance for less without compromising on quality. This article tells you what you need to know.

All policies are not created equal

Before you sign on the dotted line make sure you understand the type of policy you are applying for. Life insurance is a complex product and there is a wide variety of different types of cover you can purchase.

If you are simply after life insurance, taking out a no-frills policy with no add-on benefits can help to lower your premium. Many policies include extras such as Waiver of Premium or an investment element both of which are only provided at a cost.

Picking a term for the policy can also be way to get a cheaper premium. Policies with no expiry tend to be significantly more expensive whilst term policies which offer the option of renewing can be far cheaper.

 

Shape up

Underwriters are the people at life insurance companies that assess the risk you present, and are responsible for taking a good look at your overall health when deciding how much to charge you for the cover.

Not to put too fine a point on it, they are interested in anything which could reduce your life expectancy, not anything which is simply uncomfortable. Therefore, a bad back might be unpleasant but won’t mean you pay a higher premium. On the other hand, a condition such as high blood pressure may cause you to suffer no adverse symptoms at all, but could well mean your premium increases.

If you have health problems, it is essential to be as honest as possible. Insurers are experts in detecting the tiniest signs that not everything was disclosed on the application form and the last thing you want to do is to cause your loved ones financial stress and worry when you are gone.

However, there are some things you can do to make the underwriter consider you more favourably. Lifestyle habits such as smoking and drinking can have a significant effect and being overweight can have even more of an impact. No-one expects you to be the perfect size and completely tee-total but only drinking socially and staying within normal weight limits will lower your premium by a surprising amount.

Get the cover from the right place

If you are unfortunate enough to have medical problems, you may assume that either you cannot get insurance or that you have no choice but to pay extortionate premiums in return for cover. Neither is necessarily true.

If your health is less than perfect, going to a mainstream insurer may mean that you don’t get the most competitive deal. Knowing how to assess complex, chronic or more serious conditions takes a lot of experience and as a general rule, the underwriters will not normally see enough cases to gain the necessary knowledge.

However, there are a number of insurers in the market who specialise in helping individuals who can’t get standard rates elsewhere and because of their expertise, the rates on offer are usually far superior. Anything from high blood pressure through to being diagnosed as HIV positive can be considered.

These type of insurers can also help if you have a hobby or a job deemed as higher risk. Mainstream insurers tend to follow more rigid rules about how to treat these kind of applications and again, will charge a higher premium.

Conversely if your health is excellent and you have no dangerous hobbies or work, make sure you go to an insurer who assesses you individually. Because of the low risk you present, you will qualify for the cheapest premium for your age bracket. Using an insurer which doesn’t underwrite applications completely, offering blanket cover for everyone who is vaguely healthy, means you will be lumped in with others whose medical history is a bit iffy. Because the risk has to balance out, this means you will have to pay a higher premium to make up for them.

 

Conclusion

Life insurance cover is vital to provide peace of mind and make sure that your family is well provided for if the worst happens. However, it doesn’t have to mean that you should have to pay the earth for cover and taking a few simple measures can really slash the premium.

Image Credits: s_falkow and Gerry Balding.

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