Are You Paying Too Much for Life Insurance?

Premiums for life insurance can vary significantly from one provider to the next – even for the same level of cover. So, if you haven’t reviewed your policy recently, it could be possible that you're overpaying.

In this article, we’ll explore why it’s worth having a closer look at your life insurance costs. From understanding how premiums are calculated to spotting the signs you might be overpaying, we’ll cover the essentials to help you make sure your policy is providing the best value for your money.

Why review your life insurance costs regularly?

Life can change at the drop of a hat, and in many ways, the same could be said for life insurance. As you go through life, major events can impact your insurance needs.

Such events can include:

• Marriage

• Having children

• Buying a house

• Changing jobs

• Retiring

• Changes in your health

Once you take out cover, it's not uncommon to forget about it or assume you got the best deal at the time of purchase. However, there may be better options out there that could save you money on premiums. 

We recommend reviewing your policy at least once a year to make sure it still meets your needs.

If your situation changes, you may need more cover or less, and adjustments to your policy could lead to significant savings. Insurers regularly update their rates and offerings, so what was the best deal when you first took out your policy may no longer hold.

What influences the cost of life insurance?

One part of owning life insurance is paying a premium each month to your insurer.

The cost of these premiums can depend on several factors, including:

• Your age

• Health and medical history

• Type of cover

• Amount of cover

• Lifestyle factors, such as smoking or high-risk activities

• Occupation

Age and health are two of the biggest factors in particular. Buying life cover at a young age could be cheaper than waiting until you're older. Similarly, maintaining good health can also lead to lower premiums.

The type of policy you select – whether term life insurance or whole life insurance– can also affect your premium. Term policies typically offer lower premiums compared to whole life policies because they provide cover for a specified period rather than a lifetime.

If you are facing financial difficulties and can no longer afford your premiums, please contact your insurer as soon as possible to stop the plan from lapsing automatically. They may have a scheme that allows you to keep the cover.

Signs you might be overpaying for cover

It may be worth taking another look at your policy if:

• You haven’t checked whether your cover still meets your needs for a while.

• Your circumstances have changed, such as having children, moving home or paying off your mortgage.

• You’ve found a lower quote for comparable cover, taking into account the policy’s benefits, exclusions and remaining term.

• You’ve stopped smoking and may now meet your insurer’s definition of a non-smoker. Rules on vaping and nicotine replacement products vary, so check before assuming you qualify.

Reviewing your policy doesn’t necessarily mean replacing it. Cover bought when you were younger could still offer better value, especially if your health has changed. Don’t cancel your existing policy until any replacement cover is fully in place.

One of the easiest ways to determine if you are overpaying for cover is to compare life insurance quotes from different providers.

How to switch life insurance providers

If you’ve found a cheaper quote elsewhere, check how the policy compares with your existing cover before deciding to switch. Look at the amount of cover, remaining term, benefits, exclusions and whether premiums are guaranteed or reviewable. A lower price doesn’t necessarily mean the policy is a better fit.

Apply for the new policy while keeping your existing cover in place. You’ll usually need to answer questions about your health and lifestyle, and the insurer may request medical information or an examination. Your current age and health could affect the final premium and whether cover is available.

Only cancel your existing policy once your new application has been accepted, you’ve checked the final terms, the replacement cover has started, and you’ve paid the first premium. This helps avoid a gap in protection.

You can compare life insurance quotes online through Cavendish Online to explore your options. Whether you switch or keep your existing cover, reviewing your policy regularly can help you check that it still meets your needs.

If you apply online through Cavendish Online, you can pay a one-off £25 fee so the commission normally paid to a broker goes towards reducing your premiums.

Alternatively, you can choose the no-fee option, where Cavendish receives a small amount of commission instead. Where available, you’ll see both prices when you get a quote, so you can work out which option suits you.