The cost of your life insurance, known as the ‘premium’, can depend on a range of factors including your gender, age, existing health conditions, family medical history, your weight and of course your smoking status.
It goes without saying, if you smoke, your premium is going to go up, but it’s worth noting that if during the life of your policy you quit smoking (and remain a non-smoker for over 12 months) you may be able to revisit your policy and have your premium revised. The key message, is live a healthy lifestyle and your premiums will be lower.
Generally, applicants who are older will also pay a higher premium so it really pays to take out life insurance at a younger age.
There are three main types of life insurance – level term, decreasing term and whole-of-life. So what’s the difference?
Well, the first two require you to state a number of years over which your policy will cover you whilst the latter covers you for the duration of your life. Clearly the shorter the term, the cheaper the overall policy will be – however this can be a false economy, because if you chose to take out another policy when your first one ends, you’ll be a good deal older and your policy will be more expensive as you’re deemed “at higher risk of death” (morbid – we know!).
Level term assurance means that if your policy covers you for a £500,000 pay out when you buy it, it will still cover you for that amount in 3, 5, 7 or 10 years times, whatever the duration of your policy is.
Decreasing term assurance could bring your premium down significantly. This means the value of cover will decrease in line with your expecting debts during the course of the policy. Perfect if you simply need to make sure there is enough to pay the mortgage off.
Get value for money
If you are a couple, there is another relatively simple measure to greatly improve the value you can get from your life cover.
Couples are often offered joint life insurance policies. This means the policy pays the same sum if either of them dies. However, this is only suitable if both parties need the same level of cover.
What’s more, the price of joint cover is often only slightly cheaper, if at all, than two single life policies with the same sum assured for each. Taking out two separate policies instead of a joint policy means that, if the very worst were to happen and both parties died, any dependents would get twice the pay-out.
Ultimately, the best way to get the most for your money and ensure you have the right cover for your needs is to speak to an independent adviser who will have hundreds of products at his or her fingertips.
Credius will provide you with a concise and professional service. To find out more click here to view our website, or contact us directly at firstname.lastname@example.org or on 020 7562 5858 for completely independent advice and a free consultation today.
Next time – Critical Illness vs Income Protection. What’s the difference?