Understanding premiums
Life insurance premiums work this way - the more likely it is that you’ll die in the near future, the more you’ll need to pay for cover. The specific factors insurers look at are:- your age
- your job
- whether you smoke
- your current health and medical history
- your lifestyle, and
- how much cover you want
If you’re older - or if you’re asking for a lot of cover - there’s a greater chance the insurer will ask for further medical information from your GP or require you to undergo a medical examination before offering you cover.
A quick word on simple level term insurance
If you’re looking for a straightforward term life insurance policy, you probably don’t need a specialist adviser. These policies don’t differ much between providers, so you can save money without compromising cover by searching for the best deal on your own and checking with an insurance broker or financial adviser to see if you can get it any cheaper.Where to go for quotes
Did you know?
Shopping around could save you nearly £100 a year on term life insurance, according to comparison website Moneyfacts.- comparison sites that search the market for the best deals - use at least two sites to be sure you get a wide range of offers
- big insurers that don’t sell through comparison sites
- your mortgage provider - most offer you life insurance automatically when you take out a mortgage, but you don’t need to take the offer, you should be able to find a better deal elsewhere
- banks
- credit card companies
- retailers like major supermarkets
- specialist broker, or
- independent financial advisers
If you use a broker but don't receive advice you can buy on an ‘execution only’ basis. If you do this, you should ask the broker to waive the commission - you may save quite a bit of money.
You can find an independent financial adviser via the links below. All of the following websites let you search by postcode and some let you search for specialist advisers only.
Read the small print
Read the small print before you take out the policy so that you know what you're buying. Make sure you know exactly what is and isn’t covered. If you see something you don’t understand, ask the insurance provider, or your insurance broker or financial adviser.Exactly what is excluded (what isn't covered) can vary by insurer. When you’re comparing offers, you must read these definitions so you can be sure you’re comparing similar policies.
Be honest about your medical history
It’s vitally important that you are honest and give all the right information when you apply for life insurance. When a claim is made, insurers will look at your medical history. If you didn’t take reasonable care to answer truthfully or accurately on your original application, or didn’t disclose everything the insurers asked you for, they may not pay out.Read the application carefully and give all the information you can. Then keep a copy of your application so you can refer to it later. If, on reflection, you don’t think you’ve answered a question correctly, get in touch with your insurer as soon as possible to let them know.
If you already have life insurance is it worth switching?
In the last few years, life insurance costs have really come down. Now is a good time to shop around to see if you can get a better premium.If you’re young or still very healthy, you may find it easy to get a better deal. But as you get older or develop medical problems, you may find it’s cheaper to stick with a policy you bought when you were younger.
In any event, if you do decide to switch, don’t cancel your existing policy until the replacement policy is fully set up and you have paid at least the first premium. Once you have cancelled a policy, you can’t later change your mind.
Using the 30-day cooling-off period
Companies that sell life insurance must either be regulated by the Financial Conduct Authority or be the agent of a regulated firm.Thanks to Financial Conduct Authority rules, all life insurance contracts come with a 30-day cooling-off period. During this time you can cancel your policy and receive a full refund of any premiums paid.
Keeping your cover up to date
Life insurance needs will change. Once a year, you should review your policy to make sure your premiums are still competitive and that you still have the right amount of cover. You may need to add more cover if:- you've had another child
- your partner has stopped working, or
- you’ve taken out a new or larger mortgage