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, there’s a good chance you could be 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

There are signs you may be paying more for your life insurance cover, such as:

• You’ve had the same policy for over five years without review.

• You purchased life insurance when you were younger (policies sometimes cost less for the same cover later on).

• Your life circumstances have changed, but your policy hasn’t.

• Competitors offer similar cover for a noticeably lower premium.

• You've quit smoking for at least 12 months

One of the easiest ways to determine if you are overpaying for cover is to compare life insurance quotes from different providers. If you can get similar cover for a lower premium, it may be time to switch.

How to switch life insurance providers

If you've found cheaper quotes elsewhere and decided to switch providers, you'll need to contact your current provider and let them know you wish to cancel. Make sure you have cover in place before doing so to avoid any gaps in protection.

Once the policy has been cancelled, you can apply for cover with the new provider. Be prepared to provide personal information, answer health-related questions, and possibly undergo a medical exam, depending on the insurer's requirements.

Then it's just a case of reviewing your policy regularly to make sure it still meets your needs. You can use our free online comparison tool to compare quotes from leading providers to find a policy to suit your current situation and budget.

Cavendish Online charges a one-time £25 flat fee when you buy with one of our advisers. We’ll automatically place you on an annual review scheme. We’ll get in touch every year to check that your policy is still adequate, and look into alternatives if it’s not.