TIPS FOR BUYING LIFE INSURANCE

Shop Around

Don’t head straight for the nearest high street bank or direct provider just because they are familiar. Some banks and high street providers are tied to one insurer and won’t be able to offer potentially cheaper and better quality cover from other providers.

Use an independent insurance specialist who can compare policies and premiums. Some offer discounted premiums and free advice to help you choose the right policy and provider for your circumstances.Visit our Life Insurance companies category for a comprehensive listing of UK life insurance companies and brokers.Comparing the CostThe UK life insurance business is highly competitive, but the industry tries to avoid price competition whenever possible. Instead, life insurance companies attempt to make their products sufficiently different from their competitors so that price is less of a factor in product selection. However, there are ways you can keep your premium rates to a minimum without affecting the quality of your cover.

• Consider Term Life Insurance - Term Life Insurance is the cheapest form of life cover available and premiums are very competitive.
• Shop around - in particular, if you know exactly what type of cover you require and don’t need advice, you can reduce your premiums by applying through a discount life insurance broker. They discount the insurance companies standard premiums by rebating the majority of the commission paid to them as an agent for the company. This reduces your monthly payments below the premium you would pay by applying direct to the insurance company.
• Stop smoking - premium rates for smokers are 30-40% higher than for non-smokers. If you can or are thinking of quitting you will save hundreds on your premiums over the term of the policy.
• Only pay for the cover you need - If you are looking for term insurance and critical illness, you can make big savings by buying a combined policy. These only pay out one lump sum rather than the two that separate policies would pay, if you suffer a critical illness and then die.

Obviously, the cost of monthly premiums is going to be a major factor in your choice of insurer but, it should not be your only consideration.Know What You NeedThere are many different types of life insurance and policy options that are designed for various needs. To ensure you aren’t disadvantaged or paying too much for cover you don’t need, either research the options or take independent advice. Work Out How Much You NeedGenerally speaking, your life insurance should provide a lump sum big enough to pay off your mortgage and other debts, or to invest to provide an income to support your dependants for a sufficient time such as six months or a year.Product QualityThere can be major differences between UK life insurance policies so it is important that you compare like with like and check the small print. This is particularly important if you are including extra’s such as Critical Illness Cover. Always read the policy documentation carefully and look for some of the following benefits:

• Are the premiums Guaranteed? This means the premiums are guaranteed to remain the same throughout the term of your policy. This is opposed to `Reviewable´ premiums which, as the name suggests, are reviewed usually every 5 years and can increase dramatically at the discretion of the insurance company.
• Check that the policy has terminal illness benefit included (not to be confused with Critical Illness Insurance). This is a valuable extra which is now included in most Term Life Insurance policies as standard and will pay the life insurance amount early if you suffer a terminal illness.
• How flexible is the policy? It's important to review your life cover regularly and following any change in your circumstances, so it's useful to be able to alter your cover to suit your changing needs.
• Can the policy be written in trust? This will avoid any delay in the money going to your dependants and the risk of inheritance tax being charged on the benefit.
• Can waiver of premium benefit be included in your plan. This is a valuable extra which, if you become too ill to work for a number of months, will ensure your cover continues without you having to pay the premiums.
• A valuable feature of some policies is counselling for your family if you die?

Write Your Policy in Trust

Even an average life insurance pay out can easily take the value of your estate on your death over the inheritance tax allowance. Anything over this threshold is liable for 40% tax when this can easily be avoided by putting the policy in trust. Its free and simply requires completion of a trust form available from the insurance company. Once in trust, the policy remains outside your estate so won’t increase its value on your death.

If Unsure Take AdviceLife insurance can be as simple as insuring your car if you know what you need and your affairs are simple. However, if you’re unsure or your affairs are a little more complex you should take independent advice.