Looking to save money on life and health insurance premiums?
In these uncertain times many people are concerned about rising living costs and therefore we look to help our clients with reducing their life and health insurance premiums.
Clients often ask me “I need to save some money should I cancel my life insurance?”
My reply is always “Absolutely not! You will be putting you and your family at risk, there are several things you can do to reduce the premiums.”
The premiums on a life insurance policy as well as other personal insurance policies such as critical illness cover and some income protection insurance are set using a number of factors such as:
Age
Health
Lifestyle
Smoker status
These factors may result in your life insurance premiums being expensive and outside of your budget. But rather than just giving up, there are certain things you can do to reduce your life insurance premiums but do remember that the cheapest life insurance policy isn't always the best. Sometimes the differences between policies are hidden away in the terms and conditions which can be difficult to understand without the help of a life insurance expert on your side.
This is the approach I used to help clients to reduce their monthly premiums.
Compare life insurance quotes from different insurance companies
Shop around and look at changing provider. You may be able to get the same level of cover at a reduced premium by searching the market. You can do this yourself with comparison websites or contacts and regulated broker. A regulated broker would be the preferred option as they are aware which providers can offer the best cover based on your financial and medical situation.
My advice would be to apply for the new provider and get acceptance before changing to them. There is no cost to you as the insured to change provider.
Select the right amount of life cover and type of insurance
Index- Linked Plans
An increasing or index-linked option protects the value of your life insurance against inflation by increasing the sum insured each year. Your monthly payment will increase to reflect this too – mostly at a higher rate than your sum insured increases.
The increases are usually linked to the Retail Price Index (RPI), Consumer Price Index (CPI) or a flat rate that the insurance company decides.
When the inflation indices are low, your premium payment probably won't increase by more than a few per cent but in times of higher rates of inflation, you will find the increases become more significant.. To stop or pause the increases to your life insurance, simply get in touch with your life insurance provider and request this. Usually, you can decline an increase for up to three consecutive years before insurer will remove the option from your life cover policy, making it a level term life insurance.
Reviewable/guaranteed Premiums
Look at converting a guaranteed plan to a reviewable plan. This means that the premiums are cheaper now and then reviewed in five or 10 years time without further underwriting
Review your level of cover
It may be that your took our your life insurance with your mortgage. Has your mortgage been paid off or has your mortgage reduced? If the life insurance was taken out to cover this it may be worth reducing inline with your mortgage debt.
Look at reducing the term or cover. This may not be the best option as you are reducing your protection, but in extenuating circumstances it’s better to have reduced cover in place rather than cancelling your plan.
Paying annually may reduce the cost of your premiums
Consider single/joint plans
If you are looking to get life insurance for both you and your partner often a joint life insurance policy is used, however, this might not always be the best option. A joint life insurance policy pays out on the first death if this occurs within the term of the policy. This means that both partners are insured for the same amount which may not always be the best option. If, for instance, one partner has a lower income than the other it might make sense, from a cost viewpoint, to cover that partner for a lower amount. With two single life insurance policies, you will have two separate policies that will both pay out in the event of both partners dying within the term of the policy, not just when the first person dies as with a joint life insurance policy offering you better value for money.
When you obtain quotes for life insurance it always makes sense to get quotes for both single and joint-life insurance policies and compare the cost. Don't forget there is nothing stopping you and your partner from having life insurance policies with different insurance companies as don't assume one insurer will offer the best value for both of you.
Improve your health
When you apply for term life insurance you will be asked to complete a health and lifestyle questionnaire. If you smoke or are overweight your life insurance premiums are likely to be increased due to these factors. It follows therefore that if you quit smoking and lose weight your life insurance company may consider reducing your monthly premiums.
These changes do not happen overnight as companies will require you to be a non-smoker for a period of time (usually a minimum of 12 months). But if you can make these lifestyle changes you could then approach your current insurer or get a quote from others to see if you can reduce your life insurance premiums. Likewise, if you had health concerns when you applied for your life insurance that you've since recovered from, you may be able to shop around for cheaper life insurance.
Check your employee benefits
Many companies offer life insurance cover as part of their employee benefits, usually referred to as death in service benefits so make sure you are aware of what life insurance cover may be available without the need to pay for it. Typically, the cover provided is a multiple of your annual salary and this can be a significant level of cover and may reduce the need for additional life cover.
One word of warning, however, if you leave your current employment then your life cover will usually cease unless, of course, you can negotiate replacement life cover with your new employer. Some companies offer death in service plans which are usually 4/5 times salary as part of your employee package. There also may be an opportunity to add benefits such as health insurance that can be deducted from your salary. Please be aware that there may be tax implications for this type of benefit.
Put Life Insurance on Expenses
Relevant life cover offers a tax efficient way for an employer, usually a small business, to provide life cover for an employee. It is designed to help protect their family against the impact of their death or diagnosis with a terminal illness whilst they're employed.
Paid for by the business, tax efficient with no IHT (Inheritance Tax) to pay.
The plan is put into a discretionary Trust so therefore the beneficiaries have no IHT (inheritance tax) liability.
Cover up to the age of 75 years
Lastly If you’re having financial problems, contact the provider. They are regulated by the FCA and have to consider options to help you. They may be able to put a payment holiday/break in place. This option may affect your credit rating however.
All or some of the above can be used to reduce your premiums. It is worth considering using a broker to do the work for you. Please see my last blog on why to use a broker.
I have been helping people for years to lessen the financial burden for FREE. Contact me at tracey@thelondoncompanies.co.uk for a no obligation quote and get the right cover.
Here is a comment from one client who I helped to save over £11,000 per year on her life and health insurance premiums.
“Tracey has been very helpful, efficient and tenacious. Our medical history is complex, but with Tracey’s patience and Integrity we managed to save over £11,000 per year premiums for the same level of cover for both our business life and health insurance.
During these unprecedented times The London Tax company’s advice has been invaluable. I would have no hesitation in recommending their services.“
Sally Beaumont, Director PB Construction
