How to Save Money on Your Life Insurance Premiums

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By Crispin Bateman

Updated on Thursday 5 December 2019

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How much is life insurance?

How can I keep the cost of life insurance down?

Can you negotiate life insurance?

Can you reduce your life insurance premiums later?

6 top tips to save money on life insurance

Finding the best life insurance in the UK

How much is life insurance?

Life insurance can be difficult for many people to understand, mainly due to all the jargon and different types of policies available.

Taking the step towards taking out a premium can be filled with uncertainties, especially when it comes to the best ways to save money on life cover. Many people don’t know what to expect – is life insurance going to cost a few pounds per month or hundreds? Is it worthwhile? Am I just throwing my money away? How do I buy life insurance? It can all seem a bit much.

The truth is that life insurance is a very affordable product. The price scales depend on a few things, such as your age, health and the amount of cover you need, but many life insurance policies can be obtained for as little as £10 per month.

Also, it’s definitely worthwhile and you’re not just throwing your money away!

How can I keep the cost of life insurance down?

Like all insurance, life insurance is down to risk. The insurance provider is offering to make a substantial payout in the event of your death, and they hope – as do you! – that when that time comes, it is very far away. If there is the risk that you will pass away sooner, then the premiums will be higher, but if it looks like you will outlive the terms of the insurance then the premiums will be lower.

The other risk factor is the value of insurance. Obviously higher payouts come with an increased premium.

In essence, there are two ways to keep the cost of insurance premiums down:

  • Prove you are going to live longer

  • Get smaller cover

Can you negotiate life insurance? - Choosing the right level of cover

By far, the best way to get life insurance is through a trusted insurance broker. At Compare UK Quotes, we recommend Quick Quote Life Ltd, a life insurance broker and advice service that we have found covers a wide range of insurance products and provides top quality service.

Purchasing life insurance directly through the insurer is rare due to the complexities and time-consuming process that can be involved. Insurers prefer to work with the brokers, and it is easier for you if you do so too.

When speaking to the broker, you will be given many options. Life insurance is not just a single product – there is a huge range of policies to choose from, from Decreasing Term Assurance (DTA) where the value of your end sum lowers over time, designed to repay an outstanding mortgage, to specialist Whole of Life cover primarily used to cover funeral costs or pay inheritance tax.

Your broker will also want to know the amount of cover you are after. In discussions with Quick Quote Life, we learned that the best baseline for cover is ten times your annual salary – so if you are currently earning £35,000 p.a., you would be looking for £350,000 in life insurance cover.

The main life insurance package is level term life insurance, which means your beneficiaries would be paid that £350,000 if you died at any point during the defined term (or length) of the insurance. This might run for 20 years, be set to end when your children are all 21 or older, or timed to finish upon your retirement – the choice is yours.

Discussing these variables and negotiating on price is a key part to obtaining life insurance. Remember, your broker will have access to many different life insurance providers and their competing packages – ask what else is on offer and see if you can find a provider which better matches your needs.

If your suggested premiums seem unaffordable, try lowering the end pay-out value, or changing the length of the term.

Can you reduce your life insurance premiums later?

The only true way to adjust or change your premiums is to cancel your existing policy and replace it with a new one. While some insurance brokers will try to tempt you into doing this, you should be careful and make sure you know exactly what you are doing before going ahead.

Life insurance premiums are set at the time of application. Usually, this is a huge advantage to you as a customer, because you are able to take advantage of your likely-better health of an earlier you. Replacing a life insurance policy with a new one years later means having a quote for an older person.

For example, suppose you took your life insurance out aged 30, at a healthy weight, as a non-smoker. Your £200,000 cover that you chose at the time might come in at £20 per month.

Then ten years, a few hundred takeaways and a new passion for drinking later, you try again. You occasionally smoke and you are somewhat overweight, and the same level of cover is coming in at almost £50 per month!

It’s easy to see how trying to make a change at a later date is likely to be detrimental. Of course, there’s every chance that the 30-year-old you was a frequent smoker who cared little for his health, and the now 40-year-old you is a vegan yoga-enthusiast – in which case, it’s more than a little worthwhile to renegotiate your life insurance!

Be careful – the tricks that might be played to offer you cheaper life insurance premiums

There are many unscrupulous life insurance salespeople out there – that’s why we recommend a trusted broker like Quick Quote Life. If you do go to renegotiate your life insurance some years in, you may find that you are being told they can save you hundreds over the year by adjusting your policy. In truth, they are cancelling your old policy and replacing it with a new one of their choosing and in doing so, it may take away some of the benefits that you had with your old policy.

Some examples:

  • You explain to the broker that you have £250,000 of cover at £35 per month. They offer you £250,000 at only £20 per month. What they don’t tell you is that your original insurance policy included Critical Illness Cover of £100,000 which provides you with a lump sum if you find yourself too ill to work. Their offer doesn’t have the CIC so it seems like a great saving, but years later if you find yourself suffering from a sickness, the cover you thought was in place is simply gone.

  • The broker offers you £250,000 life cover plus the £100,000 CIC that you were keen to point out, but they do so with a different provider who has more limited criteria for CIC cover, meaning fewer medical conditions are accounted for and you find yourself without cover once more.

  • Your previous cover was £100,000 under a whole of life term, and the broker replaces it with a level term arrangement that ends when you are 70. You don’t realise and find at 71 you are no longer covered and getting a new policy at that time is many times more expensive.

There are many more tricks available to the dishonest agent. Be sure to check reviews and recommendations before using any broker and don’t be afraid to ask a lot of questions and make doubly sure before cancelling any old policy and replacing it with a new one.

6 top tips to save money on life insurance

There are a few things you can do to get low monthly premiums on your life insurance quote:

1 – Be young and healthy

While this seems ridiculous, all it really means is that you should get your life insurance sooner rather than later. Every month that passes makes you that little bit more of a risk for the insurer. If you are young, don’t put it off – the savings that are possible through being a young and healthy person are probably the greatest that can be made. You will always get the best life insurance deals when you are young and healthy!

2 – Don’t smoke

Smoking is the largest factor in increased life insurance costs. Insurers count you as a smoker even if you have had a cigarette, cigar, vaped, used a patch or anything else smoking-related in the past twelve months. So, quit today and, in an exception to advice number 1 above, wait twelve months and then get your insurance!

3 – Be willing to accept exceptions

An exception is where the insurance company says, ‘we won’t pay if this happens’. Most frequently, it occurs if you are involved in a dangerous hobby or sport. The policy will come back saying that you are covered - except when you are undertaking that specific activity. Accept it! Trying to cover yourself for a dangerous activity is incredibly expensive and it is far better to take out specialised insurance for that part of your life than force your general life insurance to cover it.

4 – Don’t be greedy

It’s easy to see the numbers and think, ‘ooh, half a million pounds is far better than three hundred thousand!’ Don’t. Get the policy that fits you and don’t push beyond your means.

5 – Understand the packages you are being offered.

There’s a lot of difference between whole of life policies and decreasing term ones. There are also a lot of additional products, such as critical illness cover, or income protection. Take the time to do a little research and go in understanding the terms. It will stop you buying things you do not need or being pushed down a path you do not like.

Here at Compare UK Quotes, we have an extensive library of articles on life insurance and associated products to help.

6 – Shop around

Like all insurance, it pays to shop around. If you have a good broker then they should be doing this for you, but talk to them and ask them what insurers they don’t work with and then find another broker who covers that too. Don’t jump in straight away with the first offer you are given. Take time to think about it and come back to the quote you liked the best.

You could also find a provider offering life insurance with a free gift!

What is the best cover for me? Finding the best life insurance in the UK

At Compare UK Quotes we spend a lot of time behind the scenes doing just what our name suggests – comparing quotes across the country. Finding the best insurance policy at the best price is just part of that job, which is what led us to Quick Quote Life.

As an advice service as well as a broker, QQL are legally allowed to give you sound advice and provide understanding rather than just trying to tell you the product that provides them with the best commission. This makes them stand out from a crowd of brokers that are quick to take your money but cannot help you through the process at all.

For more advice on all your personal finance and life insurance needs, take a browse at our related articles here on Compare UK Quotes!

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