If you are young and healthy, life insurance may not be at the top of your list of priorities. However, if you have young children, and particularly if you have a mortgage, it certainly makes sense to ensure your family would not need to leave the family home and that their existing lifestyle could be maintained, if you were no longer around.
And don’t forget, that doesn’t just apply to the main wage earner. One should never dismiss the value of a full-time parent and home-maker. Apart from the emotional devastation such a loss of life would cause, the financial implications could be extremely impactful.
Anyone diagnosed with a life-threatening illness will inevitably endure many heart-breaking trials and tribulations; and whilst it can never compensate for the suffering and possible loss of life, knowing the financial future of your family is taken care of will avoid a great deal of additional stress for all concerned.
There may, of course, be other reasons for considering life insurance. For example, if you are in your 70’s you may want to take out life insurance to cover your funeral costs and/or provide an inheritance for loved ones.
Whatever your motives, life insurance cover protects those closest to you. It can help alleviate a great deal of stress for both the insured and the potential beneficiaries. And a monthly premium can be a very small price to pay for that peace of mind.
But did you know that your lifestyle will have a direct impact on your monthly insurance premiums?
Life insurance premiums
That’s not really surprising because, as with any insurance, the greater the risk you pose to the insurer, the higher the cost of insurance will be. An example of that is the extremely high cost of motor insurance for young people because statistically they are far more likely to be involved in accidents than drivers over the age of 25.
So, at a time when many of us are having our budget squeezed, what can we do to keep our life insurance premiums as low as possible?
This is a big one. If you smoke your premiums will be significantly inflated and as you age this increase only intensifies.
Typically, cover costs approximately a third more for a 30-year-old smoker and double for a 50-year-old smoker, compared with a non-smoker, (with all other aspects being equal).
This is because of the clear correlation between smoking and certain serious medical conditions, such as lung cancer, high blood pressure and heart attacks.
But who do insurers classify as a smoker? This may surprise you!
Insurers classify you as a smoker, if you’ve smoked or used any nicotine replacement products within the past year.
As well as cigarettes and cigars, this includes nicotine replacement patches, gum and vaping.
With over 3 million people now vaping in the UK, it’s likely many are unaware of this insurance providers classification of a smoker.
As a result, the best way to secure the lowest possible premiums is to have never smoked. However, if you did smoke but have since given up the habit:
a) this is great for your health; and
b) after one year you may be able to secure lower premiums, either with your current insurer or another one.
When you fill out a life insurance application the insurer will ask you among other things, your age, height, smoking status and your current weight.
As you would expect, if you are overweight you will pay higher premiums for the same level of cover as someone of the perfect weight for their height.
This is because of the associated health risks linked with obesity, such as type 2 diabetes and high blood pressure.
Lastly, it’s worth saying that an insurer accesses your weight at the point of application. So, as long as you are of a healthy weight at this point in time you can potentially lock in low premiums for decades to come.
An insurer will also ask about your alcohol consumption during the application process.
You guessed it; the more you drink, the greater the risk to the insurer and thus the higher your monthly premium.
If you are thinking of taking out a policy and want to ensure you pay as little as possible for the cover you need, why not cut down on your drinking, reduce your health risks and save some money!
An insurer will ask you about both your own medical history and your family’s medical history.
It makes sense for them to ask about your own personal medical history, but you may be surprised by the inclusion of questions about your family’s. This is because there are some hereditary conditions which need to be factored into their underwriting criteria.
Whilst you clearly cannot alter your family’s medical history, it is certainly worth considering the implications of this for your own health and perhaps taking steps to minimise your personal risk factor. Some conditions such as muscular dystrophy and cystic fibrosis are directly caused by genetic mutations which you may have inherited. For many other conditions such as heart disease and cancer, your hereditary disposition could indicate an increased risk but, in most cases, this can be substantially negated by making good lifestyle choices.
NON-DISCLOSURE – be honest!
With any of the questions asked during the application, it is vital that you are open and honest with your answers.
Although it may be tempting to be economical with the truth in order to secure lower premiums, it could affect a future pay out. If, after you are gone your loved ones claim on your policy, but it is discovered that you lied on your application, the claim can be denied.
This is known in insurance as non-disclosure and obviously renders your selfless investment in life insurance a total waste of money.
All the above are factors are in relation to traditional term-based life cover or whole of life insurance.
However, if you are aged between 50 – 85 and a UK resident, there is another option available; an over 50 plan.
Over 50s plans – life insurance with no medical questions
An over 50s plan guarantees acceptance with no medical questions being asked at all.
In fact, this is a form of life assurance (not insurance) because a pay-out is assured for your loved ones after you are gone.
As a result of the insurer not knowing the level of risk you pose, these plans only tend to offer up to £25,000 worth of coverage.
Additionally, premiums also tend to be high for the level of cover you receive compared with other policy types. However, according to personal circumstances, it could be a plan worth considering for some people.
So, there you have it, if you live a healthy lifestyle not only will you look and feel better, you will also enjoy cheaper life insurance cover.
Plus, life insurance can reduce the stress for you and your loved ones of worrying about the financial future if anything happens to you.
If you currently have life insurance but have changed your lifestyle for the better since cover began, it may be worth sourcing a new set of quotes to see if you could save money.
To save time and money identifying the best quotes, you could either use a comparison website or an FCA registered broker.
Another option is to contact your current provider and explain your improved health to see if there is anything they can do for you.
The most important thing is to ensure your loved ones are not financially exposed now or in the future.