10 Tips to Cut the Cost of Life Insurance
The price of life insurance is determined by measuring risk. Unfortunately, around 28% of businesses avoid getting life insurance due to the price of the premiums. With the average business debt growing each year, it’s important that businesses protect themselves should the worst happen.
Whilst life insurance isn’t always a necessary expense, it can really help business owners and employees to have peace of mind. Whether it’s to protect the business itself or your family against a loss, personal or business life insurance can be part of a good financial plan.
Like most insurance, the prices can go up quite easily over time if you’re not savvy. Yet, even after you’ve already taken out life insurance to protect your business or family, you may still be able to save money. There are some things you can do to help cut the cost of insuring yourself against death.
1) Find a reputable broker
Getting the right advice surrounding your life insurance policy can be really important, especially when it involves your business. Business protection policies can come in all different shapes and sizes based on your particular requirements so having a qualified advisor can help you to find the right policy for you. Reputable insurance brokers don’t charge a fee for their advice or quotes and can help you to find a balance between your needs and budget.
2) Stay healthy
The cost of life insurance is based on each individual and their health. You will be asked your height, weight and family medical history during the underwriting process of your life insurance application. If you’re generally fit and healthy, then your quotes will come out lower. That being said, it’s not always impossible to get life insurance cheaper if you have a health condition. Getting regular checkups, blood pressure reading and controlling a condition can help speed up the process and get the price down.
3) Quit smoking
If you are a smoker, then your life insurance is likely to be at least a third more if not double the price of a non-smoker. This includes social smokers and e-cigarettes too. If you can go for 12 months without smoking, then you may be able to cut down your costs.
4) Compare prices
Getting a good overview on different policies or similar policies from different providers can really help to find the best price. Not only should you compare prices using an insurance broker, you can compare policies too. Some levels of cover can be more comprehensive, particularly if you’re adding critical illness to your policy. Therefore, by seeking out different options you may get better value for your money and extra protection. Discount brokers can be beneficial for simple personal policies, but the complexity of business cover cannot be done online.
5) Get the right term
If you want to cut costs, avoid going for a whole of life insurance policy. They generally are more expensive, despite the guaranteed payout. If you want to cover debts, a mortgage or protect your family consider a term life insurance plan instead. As you pay off your debts or your mortgage or your kids grow up, there will be less need for a life insurance policy. You can take out a 10, 20 or 30-year policy based on your individual circumstances and save money. Decreasing cover or level cover can help to reduce costs over time too.
6) Choose the right cover amount
Much like choosing the right term, it can be equally as important to choose the right amount of cover. You don’t want to under insure yourself, but also there’s no point getting additional cover that you won’t need. Calculating how much cover you need can include property, business assets, shares, as well as considering what would be needed for your family to maintain their lifestyle. Business owners and directors may look at getting life insurance to be paid back into the business. In this instance, the value of the shares can help to dictate how much cover is needed as well as costs for recruitment and training and any loss of goodwill or profits.
7) Review your cover
Life insurance can be easily changed. If your circumstances change, such as you buy a house, get married or have children, you may want to rethink your life insurance policy. Having a look around and getting quotes can help to see if you’re going to save money. All insurance providers are different so it’s definitely worth seeing if switching your policy can save you money.
8) Write it in a trust
So that your family get more out of the pot of money in the event of a claim, you can write your life insurance policy into a trust. The policy is protected, and no tax needs to be paid on the amount provided. What’s more, if your estate is over £325,000 your family will pay inheritance tax at 40%. A life insurance written in a trust can help to counteract their tax bill, so they receive more of what you intended to leave them.
9) Choose your policy
By hunting around and comparing different providers you can find tax-efficient life insurance policies to reduce the cost. Relevant life insurance for employees are completely tax-efficient policies and can be offset against corporation tax. In some instances, key man insurance can be tax-efficient for directors too. Explore your options to find if you can save money on your life insurance policy.
10) Don’t wait
Policy premiums go up with every birthday as your risk increases. Therefore, if you can get a decent price on your life insurance now, you’re best to go for it. As you grow older, your options will only become more expensive.
Life insurance doesn’t have to be expensive. If you need life insurance to protect your business or family, there are options you can take to help cut the costs. Avoid going directly to the insurance provider as you’re likely to pay more. Exploring your options and finding the right policy for you is better than just opting for the cheapest. Insurance advisors can help to provide free advice and quotes so you can find a policy that suits you best.