1. Compare premiums
Prices vary from insurer to insurer so make sure you shop around for different quotes. MoneySuperMarket’s online comparison service is free and independent – and it’s easy to use, saving you time and money.
2. Pick a suitable policy
The two main types of life insurance are ‘term’ insurance and ‘whole-of-life’ assurance.
Term insurance pays out only if you die within the policy’s duration.
Whole-of-life cover lasts until you die, whenever that might be, and so is guaranteed to payout.
You might also be able to save money if you are happy with decreasing term insurance, where the payout gets gradually smaller the longer you live.
You can also arrange for the policy to pay a monthly income rather than a lump sum – this can work out cheaper than other forms of cover.
3. Set the right term
Think realistically about how long you want the policy to run. You might consider linking your policy to your mortgage, for example a term of 20 or 25 years.
Alternatively, you might want your policy to only run for the time your children are living at home, which might mean you opt for a shorter term.
4. Buy life insurance when you’re young
The cost of life insurance rises with age. This means you can save money by arranging cover in your 20s or 30s, rather than in your 40s and 50s.
This is because insurers consider you less likely to make a claim, the younger you are.
5. Stop smoking
Smokers pay more for life insurance than non-smokers, so kicking the habit can be good for your wealth as well as your health. To qualify as a non-smoker on your policy, you must have given up all nicotine products for at least 12 months – that includes nicotine replacements and e-cigarettes.
6. Consider joint life cover
Couples often take out joint cover, as the premiums are usually a bit lower than two single life plans. But remember – a joint life policy pays out only on the first death.
Another claim cannot be lodged upon the second death unless he or she has bought another life policy – which would be relatively expensive to do because of their greater age.
7. Beware costly extras
Companies often try to sell additional benefits alongside life insurance.
Critical illness and terminal illness cover are examples of these – they can both be beneficial add-ons, providing your circumstances deem them necessary.
There’s also ‘waiver of premium’, which covers the cost of life insurance if you are unable to work due to illness or injury.
8. Sidestep tax
Life insurance payouts are free from income and capital gains tax, but your family could be liable for inheritance tax (IHT) at 40% on the proceeds of a life insurance policy.
The simple way to sidestep IHT is to write the policy ‘in trust’. It’s a straightforward process and your insurer or adviser should be able to help. Our guide on life insurance and tax explain this further.
9. Do you really need life insurance?
Not everybody needs life insurance, if you have no dependents or you feel like your dependants would be financially stable should you pass away, taking out a life insurance policy could just be a waste of money.
Similarly, you might be eligible for ‘death in service’ benefit, which typically pays out a lump sum of about four times your annual salary should you pass away during your employment with them.
Death in service benefit can reduce or even eliminate the need for life insurance, so it’s worth checking what’s available.
For more information, please contact me. I will be happy to help with whatever questions you have. www.rgwealthsolutions.com +6011-51565649
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