Save money on your insurance premiums

Protection specialists LifeSearch highlight five simple ways to save money on life cover premiums.

Premiums are at their lowest levels for many years. Throughout 2007 the monthly cost of Life Insurance cover has continued to fall (between March and September alone it fell by a up to 10%). It means that now is a good time to buy.

However, it is important to remember that price should not be the only consideration when choosing a protection product and customers should look at the policy that offers the best value for money. This means looking at the product which most suits individual circumstances and offers additional benefits. However, there are still five very simple things consumers can do to save money on premiums.

1 – Shop around

An independent adviser can search the market whereas an agent tied to specific companies will only be able to sell a limited product range. Many people take out insurance with their bank or mortgage provider and this is often a mistake. They are usually very expensive products that do not offer the same level of cover that can be found on the wider market. For example, a customer called LifeSearch recently to enquire about Mortgage Protection. They already had cover with Zurich but because LifeSearch are not tied to any one company, we were able to save the customer £50 a month for the same cover.

2 – Switch existing insurer

The cost of Life Cover has fallen by more than 40 per cent in the last five years, so it is possible that consumers could save money by shopping around to see if they can rebroke the policy. This is especially true if the original policy was not one of the cheapest on the market (i.e. through a mortgage provider) at the time it was bought.

3 – Act early

Premiums are more expensive the older you are when you take out the policy, so there really is no time like the present.

4 – Quit smoking

“Do you smoke?“ is one of the first questions that an insurer will ask a new client, as a smoker will pay considerably higher premiums than a non-smoker. For insurance purposes, you must have quit smoking for at least 12 months to be classified as a non-smoker. At that point, you should speak to an adviser to see if they can rebroker a new policy for you at a cheaper premium. A cheaper premium is not certain, as it also depends on age and health, but there is a very good chance that the premium will fall.

5 – Consider FIB

Family Income Benefit works the same way as a life policy except that it pays out a regular income from the point of claim until the end of the policy, rather than a lump sum. As the rate table shows, you can receive up to 80% more cover for the same premium by taking out FIB.

Matt Morris, LifeSearch Policy Adviser, says: “These are five very simple ways to save money on life insurance premiums. However, this is just a guide and people must remember that cheaper is not always better. Even so, if you can save money and still get the right type of cover for your circumstances, it makes sense to take advantage of the opportunity.”

Tom Baigrie, LifeSearch Managing Director, says “'If you can decide which product you should have on the grounds of one factor, such as price, then websites which compare that factor must be a good thing. If you should not make decisions on that one factor alone, and the websites make you think you should; they must be a dangerous thing. So if you know exactly what you want, and you are right, comparison sites and aggregators can be useful. However, few should rely on them if they want to avoid mis-buying the wrong type of policy for their needs.”