Want to save money on your life insurance?

Life insurance is seen by some as an unnecessary monthly outgoing, but for many, it's essential in securing the future financial stability of loved ones.

However, it doesn't have to be a significant monthly outgoing. There are a number of things YOU can do to save on life insurance, keeping your monthly life insurance premiums low.

When arranging your life insurance policy be smart and don't pay over the odds.

Save money on life insurance

Generally speaking, the shorter the policy term, the cheaper the monthly premium.

Therefore, it's important to consider what you're looking to protect and ensure the term length is appropriate.

For example, you may want your life insurance term to align with your mortgage, securing what's probably your largest asset. Or perhaps until the children have left home and are financially independent.

A higher pay out sum, usually means paying higher premiums.

It's important to find the right balance between having enough cover so that your loved ones aren’t exposed, but not too much cover, so that the cost is unnecessarily high.

Think about how much you have left on your mortgage, the cost of family living costs and any personal debt you may have. Ideally, your policy pay out should cover all this.

Please note: Some employers offer group life insurance (or death in service). If you enjoy this employee benefit you may be able to trim the cost of your own life insurance accordingly. (Remember if you change your employer you could lose this benefit).

Life Insurance Calculator

Calculate how much life insurance you may need by filling in the costs you’d like your policy to cover.

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£137,934 is the estimated mortgage debt per household in the UK.

The purchase of a home is likely to be the largest financial commitment any of us will make in our lifetime. Your life insurance should cover your remaining mortgage balance to allow your loved ones to stay in the family home should anything happen to you.

Source: Moneynerd.co.uk

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The average monthly household budget in the UK is £2,548 (that’s £30,576 per year), which is spent on transport, food & drink, utilities (gas, electricity, water etc), clothing, council tax and leisure activities.

With energy prices hitting a record high and the cost of living rising sharply in the UK, you may wish to factor in utility bills and family living expenses into your cover.

Source: Nimblefins.co.uk

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The average personal debt of UK adults has risen to £34,566 (not including mortgage debt), with credit cards, personal loans and overdrafts being the most common forms of debt.

Factoring in any debts into your life insurance cover means that, if they need to be paid back from your estate after your passing, your loved ones won’t miss out financially.

Source: Money.co.uk

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According to SunLife, the average cost of a funeral in the UK is £3,953 (with the overall cost of dying at £9,200).

Funeral costs have increased by 116% since 2004 and are a significant cost which should be factored into the amount of life insurance you secure.

Source: SunLife.co.uk

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When factoring in cover for your children, you may wish to calculate the amount based on how long it is until they reach financial independence.

This could include childcare (£7,000 per year for part-time care), school expenses (£1,519 per school year for uniforms, lunches, stationary etc), as well as an additional sum for further education (this could be a contribution of up to £5,000 per year).

Sources: Daynurseries.co.uk, Primarytimes.co.uk & Savethestudent.org

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2 in 5 adults say they are relying on an inheritance to fund their retirement.

Factoring in an inheritance to your sum assured could allow loved ones to live a more financially comfortable life. Alternatively, you could leave a cash gift to a charity of your choosing.

Source: Moneyage.co.uk

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If you’re lucky enough to have your own savings or are part of the 30% of UK residents who already have a life insurance policy in place, this can provide financial protection for loved ones.

By entering your current cover, savings or death in service amount you can reduce the sum assured you require.

Source: Scottishbusinessnews.net

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Your overall health directly affects the amount you pay, therefore, the healthier you are, the lower your monthly premium.

For example, being both overweight and a smoker significantly increases the cost of monthly premiums due to the associated health risks.

Therefore, losing weight or quitting smoking, can reduce the cost.

To be classed a non-smoker with regards to life insurance, you must not have smoked or used nicotine replacement products in the past 12 months.

Alcohol consumption is also taken into account when calculating your monthly premium, so cutting down on your intake can also have a positive effect.

Provide policy information

Taking out joint life insurance requires you to pay one monthly premium, instead of two.

As a result, it's usually cheaper than taking out two single policies - offering a significant saving over the entire policy term.

One thing to be wary of, however, is that joint life insurance only pays out once. Whereas two single policies offer two separate pay outs.

This means that the remaining partner is left either having to obtain a new policy whilst older (which is likely to bring with it increased premiums) or risk being uncovered.

Therefore, the suitability of joint life insurance is dependent on your individual circumstances and level of life insurance cover you require.

Life insurance jargon explained

As a general rule, the younger you are when you take out life insurance, the cheaper the premium.

This is due to the increased risk of health implications as you age.

Taking out life insurance in your 20s and early 30s is ideal as health risks are still considered relatively low.

This will allow you to lock in super-low monthly premiums, possibly for many many years.

Offering very affordable cover protection.

FCA-regulated life insurance broker

Insurers prices may vary for similar levels of cover.

For this reason, it’s best to shop around and compare multiple quotes to see if you can save money on your ideal policy.

You could use a comparison site to do this, but it’s not always easy to understand the different cover types available or the jargon that can come with arranging life insurance.

However, using an FCA-regulated life insurance broker, like Reassured, can help you to save time and money by comparing quotes from top UK insurers in minutes.

(Our no-obligation service is completely FEE-FREE to use).

Complete our simple online form today and let us get to work comparing quotes.

An endowment policy combines life insurance with a savings plan

When saving plans and life insurance are discussed, people are commonly referring to endowment policies.

Largely speaking this type of policy has been replaced by ISAs but it's still possible to put this type of investment in place, (although unlikely with the majority of mainstream insurers).

Each month you make payments and a certain percentage of this premium covers the cost of your life insurance, whilst the rest is invested.

The typical period for an endowment policy is 10 years+ and it's often used to save for a significant financial goal or to pay off an interest-only mortgage.

At the end of a set period, a guaranteed pay out will be made, although this may be less than the amount paid-in, dependant on the performance of your investment.

If you die during the term of the endowment policy, a lump sum pay out will be made taking into account the current state of your investment.

A minimum lump sum is usually guaranteed but the overall pay out sum is determined by the performance of your investment, which is dependant on market conditions.

Typically, you'll receive a bonus added to the value of your policy each year your policy is in place.

Whilst it's possible to access the funds before the end of the term, this is often not an easy process and there are usually high charges and penalties incurred.

Please note, Reassured don't currently offer endowment policies

What is the difference between an endowment policy and life insurance?

The key difference between an endowment policy and life insurance is when/if a pay out is made.

An endowment policy guarantees a pay out whether or not you outlive your cover, meaning the pay out could be received by yourself or your loved ones.

Life insurance, on the other hand, only pays out upon your passing, meaning the key benefit is to your loved ones only, as opposed to you as the policyholder.

If you outlive your life insurance, no pay out will be issued.

With regards to life insurance, the pay out amount is set in stone. Therefore, if a pay out is made within the term, regardless of when this is (in year 5 or year 20) the sum assured remains the same.

Whereas, the pay out amount from an endowment policy can fluctuate depending on the performance of the investment part of your policy.

If you pass away during an endowment policy, the pay out amount will combine the value of your life insurance and investment, but outliving your policy will result in a pay out amount consisting of your investment value only.

Determining whether or not you're best suited to an endowment policy or life insurance will depend on what it is you're looking to secure in terms of protection.

  Endowment Policy Life Insurance
Is a pay out guaranteed? Yes No
Is pay out amount fixed? No Yes
Who benefits Policyholder/ Beneficiaries Beneficiaries only
What does pay out consist of Sum assured + Investment (upon death). Investment (if outlived) Sum assured only (upon death)

Can you still get endowment life insurance?

Generally speaking, this type of policy has been replaced by ISAs but it's still possible to put this type of investment in place, (although unlikely with the majority of mainstream insurers).

Unfortunately, at Reassured we currently don't arrange this type of protection.

However, if you determine life insurance is the correct option to meet your needs, we can compare quotes from market leaders to secure our best available deal.

Is life insurance a savings plan?

Unfortunately, life insurance is not a savings plan in the traditional sense.

Paying into a life insurance policy won't result in a pay out to the policyholder, therefore, making it an ineffective means for saving money for future goals.

However, it can be seen as a means for saving money for your loved ones upon your passing.

A life insurance policy can pay out a sum of up to £1,000,000 (depending on your personal circumstances and budget); a sum most wouldn’t have the ability to provide their loved ones even if they saved during their lifetime.

However, it will only pay out to your loved ones if you die within the policy term, or have a policy which offers whole of life cover.

Therefore, by securing life insurance cover, you can be seen as saving for the financial future of your loved ones after you're gone.

Arranging a life insurance savings plan for your loved ones

As discussed, life insurance is an ideal means for protecting the financial future for your loved ones if the worst were to happen to you.

The cost and cover can vary significantly between the top life insurance companies, making it essential to compare quotes.

At Reassured, we provide a fee-free service to provide you with quotes to see if we can help you save money on your monthly premiums.

Simply get in touch today to make the most of our award-winning and FCA-regulated brokerage service.

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