Life Insurance Tips

If you’ve ever looked for life insurance quotes, then the chances are that you’ve been dazzled by the sheer number of products on offer. In fact, ‘dazzled’ is probably a […]


If you’ve ever looked for life insurance quotes, then the chances are that you’ve been dazzled by the sheer number of products on offer. In fact, ‘dazzled’ is probably a polite way of putting it. In the age of choice, finding the right policy for you can be something of a minefield unless you know what you’re looking for.

What is life insurance?

Life insurance is a way of providing financial security to your family in the event of your death. This can either be done through a lump sum pay-out, pay-outs made in gradual instalments (useful for budgeting), or an arrangement that takes care of your debts so that your family won’t have to worry about them.

Why is life insurance important?

With the average UK household debt at an all-time high of £15,400, considering how your family would cope in the event of your death is more important than ever. When your loved ones are already dealing with the emotional impact of your passing, unexpected debts will be the last thing they want to face.
Life cover is a way of ensuring that your care goes on beyond the grave. You may not be replaceable, but your income is, and could make the world of difference to your loved ones during this difficult time.

Know your outgoings

A good first step in the quest for the right policy is to know how much cover you need. Some providers, like Legal & General life insurance, provide an insurance calculator to do the sums for you. Things you may wish to consider include:

– Your age, and how long you wish to provide support for your children.
– Food, clothing and general living expenses.
– Mortgage payments, rent and utility bills.
– Household debts.
– Travel and transport expenses.
– Childcare and education costs.

If education costs are of particular concern to you, it might be worth investigating additional cover, such as the Education Plan option that Vitality life insurance offers. As well as covering private schools fees and university tuition costs, it will also pay for expenses like uniforms, equipment and trips – as well as paying out a £1000 Star Award if your child excels at an activity.

Don’t ignore the value of stay at home parents

While it makes sense to insure the main family breadwinner, stay-at-home parents are often overlooked in terms of their financial contribution.

The Money Advice Service estimates that average UK childcare costs stand at £127 per week for 25 hours, and £242 for 50 hours. When you factor in all the other household jobs done in the course of a day, it’s easy to see how Salary.com set the economic value of a stay-at-home parent at around £128,000 per year.

The power of two

Buying joint life cover can often be cheaper than buying two single policies. However, it’s important to bear in mind that a joint policy only pays out once, leaving the surviving person without any life cover. If this happens in later life, it can become much more expensive to get a new policy, as premiums increase with age.

Use a good life cover comparison site

Like most things in life, the more life cover quotes you get, the more likely you are to find the right policy for you.
Using an insurance comparison sites can save you the hard work of trawling through all the policies offered by individual insurance companies, saving you time and money in the process.

Start young

The younger you are, the cheaper your monthly payments (also known as premiums) are likely to be. Some insurance companies offer products with premiums that increase over time like AIG Life’s Start Range – which can be an ideal way for those on a low budget to take a first step onto the life insurance ladder.

Quit smoking

In fact, quit nicotine products altogether. Research shows that on average, smokers pay twice as much for their premiums on average as non-smokers.

According to Cancer Research UK, tobacco use remains the UK’s biggest cause of preventable illness and avoidable death. It’s estimated to cause 2 out of 5 cancers, and more than a quarter of cancer deaths.

With increased risk comes increased cost, which is why smokers pay far more for their life cover.

Unfortunately, insurers make no distinction between heavy smokers and those in the process of weaning themselves off the habit through nicotine patches, gum or e-cigarettes. In order to be classed as a non-smoker for insurance purposes, you’ll need to have gone 12 months without using any kind of nicotine product.

Be honest

As well as smoking, a family history of certain medical conditions can also increase the cost of life cover.
Although tempting, trying to pull the wool over your insurer’s eyes is never a wise move. For one thing, it’s classified as insurance fraud and is illegal. For another, developments in medical technology mean that these days it’s almost impossible. Many insurers will contact your GP for your full health history, and those with a history of smoking may be subject to random testing.

Apart from invalidating your cover and potentially leaving your loved ones out of pocket, insurance fraud is something that must be declared on future applications, and could raise your premiums considerably.

Know your terms

Fixed term life cover policies tend to come in three varieties, each with their advantages and disadvantages:
Decreasing term life insurance is perfect for paying off mortgages and other gradual repayment debts. The pay-out decreases over the course of the policy in alignment with your debt, and the length of the term usually matches the length of the loan.

Level term life insurance offers beneficiaries a lump sum pay-out in the event of your death. However, it doesn’t take inflation into account and if taken out over a long period of time, the value of the pay-out can be a lot less than anticipated.

Increasing term life insurance can be the most expensive option, but unlike level term cover it takes inflation into account. As a result of this, monthly premiums are raised on an annual basis.

Look for the free extras

With so many companies offering life cover, many add value to their product by including other free extras, such as Smart life cover’s free will kit and 10% cashback on your first year’s premium.

Similarly, AIG Life insurance offers free childhood bereavement counselling from Winston’s Wish, along with a Best Doctors Service will enable you to get a second opinion and treatment recommendations from a globally renowned specialist for up to 3 years after a claim is made.

Whilst not the most important thing in looking for life cover, extra services such as these can go a long way towards providing you with peace of mind.