Published by Joe Davine on
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Evaluate life insurance costs before buying

Getting your life insured is one of the most important financial decisions you can make. Life cover can give your loved ones much-needed financial support at the most difficult of times, but it’s very important you make sure you’re getting a policy that gives you the level of cover you need and has affordable monthly premiums.

Not all policies provide equal coverage, and life insurance costs vary between providers, so it’s important to compare your options. After all, you might be paying into this policy for 30 years or even the rest of your life: you want to make sure you’re putting your money to good use.

The advice on this page is centred around things to consider to get a life insurance policy at the right price, rather than giving precise pricing information. This is because it is impossible to be accurate about life insurance costs without knowing each person’s individual situation, and so our aim is to guide your search to find the best policy for you. If you follow our advice and use our comparisons, you will be able to find the right policy while keeping the cover cost down.

So, with that in mind, here are some of the key issues you should be aware of when looking into life insurance costs.

Is life insurance good value for money?

When you visit any insurer’s website you’re likely to see promises along the lines of ‘life insurance from only £5 a month,’ but there’s more to a life insurance policy than just the level of the premiums - and these will vary considerably depending on the level of cover you take out. As a ball-park figure, insurance premiums usually fall between £5 and £30 a month, but when thinking abut life insurance consider the following options:

  • What would happen without this cover? Ok, so if you don’t accept this life quote what is the worst that could happen? Could your family get by financially, or would that simply not be possible without the insurance payout? This is a very important question, because it can make you realise whether you need life insurance in the first place.
  • Will the premium payments alter your quality of life? You don’t want to take out a policy with premiums which are very hard for you to afford every month. Life insurance is meant to give those you leave behind financial security, but it shouldn’t come at the cost of your own.
  • Are there optional extras you want to include? You may specifically want a policy that includes extra protection, such as critical illness cover. This will increase premiums significantly, but can be invaluable if an illness that keeps you out of work for a long time will have a major impact on your family finances.
  • Is it a good price for peace of mind? While it is hard to put an exact value on this, you should instinctively understand whether the life insurance cost you are looking at is worth paying in order to feel more at ease about the uncertainties of the future.
  • Is there a better deal out there? You don’t want to miss put on the best deals. The life insurance cost varies significantly between different insurers, so it’s definitely a good idea to compare quotes before taking out a policy?

Remember not to get distracted by high cash payouts being advertised, and instead to consider what level of cover you actually need. If you’re taking out a policy to pay off a mortgage, there’s no need to take out a policy that covers more than that amount, as it’ll just mean higher life insurance costs.

Can you afford to pay the premiums year after year?

Life cover is typically something that we take out when planning for the future. You may take out a term life policy for 20 or 30 years, for example. You might even opt for a whole of life policy that just keeps on running as long as you pay it. It’s common that policies cancel completely if you stop paying your premiums, with no refund. This means you should only ever take out a policy that is affordable in the long term.

Consider carefully if there are any major changes to your finances that you expect to happen while you are still paying for your life insurance policy. You obviously cannot predict the future with total clarity, but it is definitely worth giving some thought to.

If you think that there’s a chance you won’t be able to afford to pay life insurance costs in the long term then it is a good idea to get an alternative quote, possibly for a lower level of cover instead. Choosing less cover with more affordable life insurance costs is a good way of getting a price that suits your situation better.

Would you be better simply saving the money?

A common question from people faced with a relatively high life insurance cost is whether they would be better off just saving the money instead. Put simply, with pretty much every life insurance policy (whole of life over 50s plans sometimes differ if you live a very long time), the size of the payout in the event of your death will be more than the accumulated amount of the premiums you have paid.

It is also worth bearing in mind that it is extremely difficult for most of us to have a very large amount of money sitting in an account all the time just in case the worst happens. It is far easier to get a life policy that we only need to pay a relatively small amount to each month and that is designed to pay out to our loved ones when they need the money the most.

Of course, if you have a large amount of money that you don’t intend to spend then putting it in an account can act in much the same way as a life insurance policy. However it will likely take your relatives longer to access this money in the event of your death than a life insurance payout, and sadly very few people can really afford to do this.

Make sure you get a policy that suits you

As long as you keep in mind that your life insurance policy should be determined by what you need, then you should be able to locate a great deal by comparing the different options for that level of cover. You can find calculators that give you an indication of what life insurance costs you can expect to pay for different levels of cover, and using our comparisons you’ll be able to find the right policy.