Life insurance could help anyone with dependents to provide them with financial security – we explain who could benefit from it and how to get the right low-cost life insurance policy for you.
Everyone with dependents and debts to pay should consider taking out a life insurance policy to protect their family financially if they die.
There are several things you can do to keep the cost of life insurance to a minimum and make sure you have the right policy for you and your loved ones.
In this guide, we explain how to get a cheap life insurance policy while elaborating on the differences between life assurance and life insurance, and making sure you get the right cover.
There are a few things to bear in mind before you compare life insurance. You could help to reduce the cost of your life insurance by weighing up your options, taking up a healthier lifestyle and considering your age and the risk the insurer may have to take as a result.
Couples (or anyone with a shared financial interest) can choose to buy a joint life insurance policy or two separate policies. Although a joint policy could be cheaper than two single policies, in the event of one partner dying, a joint policy will pay out and the policy will end. With two separate policies, the remaining partner will still be covered. Read our guide on joint vs. separate life insurance policies to find out more.
Smokers will usually pay more for life insurance than non-smokers. If you smoke you could save money on life insurance by giving up. Normally, you will be eligible for a cheaper life insurance policy once you have stopped smoking for a year. Other aspects of your lifestyle that could affect the cost of cover include drinking habits and weight. Our guide to unhealthy habits and life insurance explains more.
The older you are, the more you are likely to pay for life insurance. As premiums are normally fixed for the length of the policy, you should consider starting a policy sooner rather than later to get the cheapest life cover. However, it's not too late to get affordable cover if you're in your 50s or beyond. Our guide to life insurance over 50 has more information.
Like all types of insurance, the best way to find cheap life insurance quotes is often by shopping around.
You must disclose your medical history fully, and if you don't, you risk having limited or no cover. Make sure you buy from a regulated company and read the terms and conditions and key facts documents.
Richard Jackson, 39, is a stay-at-home Dad with two sons, living in Paignton, Devon. He's been saving money by switching his bills with Uswitch for 14 years after buying his first property.
He has some advice for anyone looking for a life insurance policy:
"I check Uswitch multiple times a year to find the best deals and have switched my life insurance, as well as broadband and TV packages with Uswitch in the past. My tip is to set reminders on your phone for when your bills like insurance policies come out or are due for renewal. This means you can shop around for the best deal and don't get caught short with automatic renewals.
It’s such a quick and straight-forward process and it means I can make savings to spend on things like a family cruise or a lush holiday. Sadly, that’s not been possible the last year due to the pandemic, so our savings have instead been put into improving our house and landscaping the garden. I would estimate over the past 14 years I've saved at least £3,000, if not more which has been so helpful for myself and my family.”
Term life insurance can protect your family in the event of your death if it occurs during the policy and pays a lump sum within the length of the policy which you have agreed with the insurer. You will have the option to select a term for the policy, say 10, 20 or 25 years. You might choose to take out a term life insurance policy to match the length of your mortgage repayments.
There are two types of term life insurance policy – level and decreasing term insurance.
Level term life insurance is an insurance policy that pays out the same amount throughout the length of the policy. This means that even if you die in the last year of your policy, your dependents will receive the same amount as they would have had you died a day into your policy.
With decreasing term life insurance, the amount the policy will pay out on death reduces in line with a debt such as a mortgage. This means that decreasing term policies often cost less than level term policies, because the amount they pay out reduces over time. If you die towards the end of your policy, the payout will be smaller than if you died at the start.
Whole of life insurance, also known as life assurance, will cover you until your death, whenever that occurs. There is no set time period for cover as there is in a term policy. However, as a claim is guaranteed to be made (unless the policy is cancelled), premiums for whole of life cover are often higher than for term policies.
Life assurance remains in force for your whole life (as long as you keep up the monthly premiums). Even if you get a term policy lasting 10 years, there's no guarantee you will die within that term, so you could be paying life insurance premiums for peace of mind.
The slight difference in the naming of life insurance and life assurance may suggest that it's simply a matter of preference in wording.
Although many people use the two terms interchangeably to mean the same thing, there is one small but key difference between life insurance and life assurance.
Essentially, life insurance aims to protect your family from a loss of income if you were to die unexpectedly. It’s designed to protect their lifestyle and financial well-being.
This usually relates to term life insurance plans – an insurance policy that runs for a pre-agreed term and only pays out if you die within that period – but as mentioned previously, some providers will use life insurance to mean the same thing as life assurance, so check exactly what they mean.
In reality, life insurance should really only be related to an insurance policy set against a fixed period of time.
Life assurance, on the other hand, is not exactly the same. Death is assured in any life, so the policy is designed to provide your family or next of kin with a lump sum to help meet their financial needs after you die, and this policy is guaranteed for life, for as long as you live (and continue to pay the premiums).
In a nutshell: life assurance is for life and life insurance is for a period of time you agree with your insurer.
There are some things you should do to make sure you're getting the right life insurance cover for you and things you can do to get the cheapest life cover available for your circumstances:
Be honest about your medical history. Your insurer will ask about your health and can check with your doctor.
Two separate policies for couples means each policy will pay out for each death. Joint policies usually only pay for the first death.
Non-smokers pay less for life insurance than smokers - so giving up could save you money
Shop around for cheap life insurance quotes but don't simply pick the cheapest life cover available – do your research
Choose the right policy and right amount of cover - check if you have cover already with your employment or mortgage – don't pay for cover you don't need
Premiums tend to be cheaper the younger you are, so lock in a good price while you can!
*Based on £150,000 of level-term cover for 25 years for a 30-year-old non-smoking male with no pre-existing medical conditions (March 2023).