How to Save Money on Life Insurance

In this short guide, we explain how you can save money on your life insurance by following our 12 simple steps.
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1. Compare life insurance policies

First and most importantly, shop around. Prices of policies vary from one provider to the next so it’s always worth comparing them to get the best deal. 

Shop around for the best life insurance deal

2. Pick the right life policy

There are two main types of life insurance policies, “term” and “whole-of-life” insurance.

Term insurance will payout if you die within the policy’s duration.

Whole-of-life insurance covers you until you die, and is therefore guaranteed to pay out.

Whole-of-life tends to be more expensive, so you need to decide whether you need a policy which will definitely pay out, or if term insurance would be suitable. 

Going one step further, you can also get what’s called decreasing term insurance, where the pay out gets gradually smaller over time, usually in line with a debt such as a mortgage.

Pick the right life insurance policy

3. Get the term right

You need to think realistically about how long you’d like your policy to run. You might for example, consider linking your policy length to your mortgage, for example, 25 or 30 years. Or, you might want your policy to just run for the time your children are still at home, in which case you might opt for a shorter term.

First class service from start to finish, my advisor was extremely knowledgeable and took the time to fully understand my requirements before finding the best insurance policy for me.

Term of life insurance


4. Don’t over-insure

It’s tempting when taking out a life insurance policy to get as much cover as possible, but remember this needs to be affordable in the years to come as well as now. For example, there’s no point getting cover for £600,000 when your family could manage just as well with £300,000. 

5. Buy life insurance when you’re young

The cost of life insurance increases with age, so the earlier you buy life insurance the better. What this means is that you can save money by taking out a policy in your 20s and 30s in comparisons to your 40s and 50s. 

Did you know that you can have multiple life insurance policies? Often you’ll find that a 20 something only needs a small amount of cover as they have few debts or responsibilities, however as they get older and they perhaps take on a larger mortgage, they need more cover. 

Rather than cancelling the policy they have, they should simply take out another policy to cover the additional amount

Don't over insure

6. Stop smoking

Smokers pay more for life insurance than non-smokers, so if you want to reduce your premiums (and improve your health) it’s time to quit. Here’s a link to an NHS resource where you can get help quitting.

Quit smoking to save on life insurance


7. Consider joint life insurance

Couples policies can be a little cheaper than two individual policies so it’s worth considering that if both you and your partner need life insurance. One thing to remember though is that joint policies only payout for the first death, not both.

get couples life insurance


8. Beware of extras

Companies will often try and sell extras alongside life insurance policies. Things like critical illness and terminal illness cover as examples. They can both of course be beneficial additions, but they will put the cost of your policy up.

beware of hidden extras on your life insurance policy

9. Sidestep tax

Life insurance pay outs are free from income and capital gains tax, but your family could be liable for inheritance tax on the proceeds of a life insurance policy.

The simplest way to sidestep inheritance tax, is to write the policy ‘in trust’. It’s a simple and straightforward process and your insurer or advisor should be able to help you with that. 

Avoid tax when you set up your life insurance


10. Do you actually need life insurance?

Not everyone needs life insurance, if you have no dependents and little debt, you might not actually need a policy. 

Do you need life insurance

11. Switch providers

It’s true that as you age the cost of life insurance increases, so switching frequently isn’t usually recommended, but it could be that there are better deals available now than there were a year ago when you took out your policy. If you’re not sure if you’ve got the best deal speak to an independent advisor. 

Switch life insurance providers

12. Get a quote from a broker

Life insurance brokers can often get discounts that aren’t available when you go direct to an insurer so it’s always work speaking to one. To get a free quote from an FCA Approved broker, please complete this quick form.

quote from a life insurance broker

In another recent article we've reviewed in detail the best life insurance in the UK, so be sure to read that before you buy a policy.


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