(Post by another author) At the time of writing this article inflation is at 8% and the cost-of-living crisis has meant that many families up and down the country are struggling.

In times of economic hardship, it is natural to look for regular outgoing payments to stop. Monthly life insurance premiums may well be one of these expenses.

Life insurance provides financial protection for your loved ones should you no longer be around to provide. The proceeds from a pay out can be used to clear the mortgage, cover future family living costs, put the children through university and/or leave an inheritance. 

Whilst it is possible to pay into a life insurance policy for many years and never see a pay out materialise (if you do not pass away during the policy term), it does provide an invaluable and reassuring safety blanket. This is especially true if you have young children who rely on you and a mortgage debt to consider.

Therefore, if budget allows its best to keep your policy in place or alternatively look for a cheaper policy. This ensures your family is provisioned for whatever the future may hold. 

Below we identify a number of cost saving top tips to make sure you do not pay more than is necessary for your life insurance in 2023.

1. Always compare multiple quotes

This is an obvious top tip, but it really is essential. The cost of premiums can differ wildly between insurers due to different underwriting processes and criteria.

For example, an insurer may deem a certain occupation as ‘high risk’ (and therefore inflate or ‘load’ the premium), whilst another may offer ‘standard’ terms. Similarly, the BMI/weight threshold deemed ‘overweight’ and therefore higher risk for one insurer may differ from another again impacting price.

A term-based life insurance policy could last up to 40 years and therefore even a small saving each month could add up to a significant sum over the lifetime of the policy.

If you know the policy type you need and your cover amount, then it can be a good option to use a reputable comparison website to compare providers.

Alternatively, if you need more guidance and support as to which policy to choose and how much cover protection you require, then a life insurance broker can be a great option.

For example, the UKs largest broker Reassured can compare the UKs best life insurance providers completely free of charge. They can also help you complete the application and explain any of the jargon along the way.

Lastly, you can run your own market comparison by going direct to the individual insurers and this is the best way of ensuring you compare the entire market. However, this is obliviously a very time-consuming process.

2. Calculate your required cover amount & the term

The cost of your monthly premium is impacted by your cover amount (known as the ‘sum assured’). The higher your cover amount, the more your premium will be.

Therefore, it is important to take the time to calculate exactly how much cover you need. Factor in living costs (and future inflation), your mortgage balance, the children’s education, whether you may have more children, transport costs etc.

Lastly, the longer your policy term the higher your premiums will likely be. This is because statistically a claim is more likely and insurers mitigate their risk by hiking premiums.

So, take the time to work out how long you need cover for. For example, until the mortgage is fully paid off and/ the children are financially independent.

3. Factor in any death in service benefit

As mentioned above, the greater your sum assured the higher your premium will be. Therefore, if you receive a death in service benefit through your employer why not factor this into the level of personal cover you need to help lower your premium?

Death in service is usually a multiple of your annual salary which would be paid to your loved ones should you pass away whilst in that employment. Whilst the proceeds are unlikely to cover all your financial needs, it can help lower your premium.

Please note, if you currently do receive this benefit through your work, it does not move with you if you change employer.

4. Consider a joint policy

If your budget is tight then taking out or moving to a joint policy could be a good option.

Instead of paying two premiums a month for separate policies, a joint policy only requires you to pay one. What’s more, a joint policy is approximately 20% cheaper compared with two single policies.

Whilst a joint policy covers two lives simultaneously, it will only ever provide one pay out (usually on the first death). After which the policy expires, leaving the surviving partner without cover. In contrast, two policies could provide two pay outs and double the cover.

Therefore, this option will not be for everyone.

5. Write your policy in trust

Whilst writing your life insurance in trust does not save on your monthly premiums, it does maximise a future pay out to make the most of your selfless investment. 

Writing your life insurance in trust passes the ownership of your policy to a trustee/s to administer on your behalf. Much like an executor of a Will.

By doing this the proceeds from your policy do not form part of your estate and are therefore not subject to 40% inheritance tax or the probate process.

This ensures you maximise the pay out that your beneficiaries receive and because they do not have to wait for probate to be granted for the funds to be released, they also get the funds faster.

In summary

We hope the above has helped provide some useful tips on how you could save on your life insurance in these difficult times.

Life insurance is there for a worst-case scenario, a scenario that may never happen. However, it could be the best investment you ever make to ensure your loved ones are taken care of if you were not around to provide. 

Therefore, if you do not have life insurance it may be a good time to seize the day. If you are under 30 and a non-smoker you could secure approximately £200,000 of cover for 20p a day. As you age the cost increased as insurers regard you as a higher risk.

If you do have life insurance in place, but are considering cancelling it, why not use one of the options above to see if you can secure a lower premium. You can even buy life insurance online now for added convenience day or night.