Imagine you could sell yourself. How would you calculate your own price tag?
Despite the obvious benefits of life insurance, Brits don’t have much of an appetite for this product – perhaps we don’t think we need it or can’t afford the premiums.
However, many of us may be mistaken in this belief that we don’t need cover. If your death would cause financial hardship for someone, life insurance could free him or her from a financial burden.
Furthermore, a policy may be considerably cheaper than you imagine although the price you pay will depend on factors such as age, health and the type of cover you purchase.
Take a non-smoking male aged 41. If he is assured for £150,000, he can expect to pay as little as £2.71 per week for life insurance according to Stephen Ratcliffe, Life Insurance product manager at BeatThatQuote.com.
Health and finances
In many instances, an insurance company will charge less if you are in top physical condition. Cutting your alcohol intake, not smoking and a healthy diet may reduce your life insurance premiums.
Statistically speaking, those in good health are more likely to pay into the policy for a considerable number of years before collecting a pay out or outlive the term of the policy.
According to Sainsbury's Life Insurance, 3.3 million ex-smokers are paying a combined £316 million extra every year on life insurance premiums because they haven't informed their provider they’ve ditched the cigarettes.
Your insurer will amend your policy if you have been a non-smoker for more than 12 months and haven't used any nicotine replacement products.
A male smoker aged 45 assured of £150,000 will pay a monthly premium of around £44 over 21 years. A non-smoking male of the same age can expect to pay around £11 per month which is a savings of £396 per year – that means you’ll save £8,316 over the term.
Young people
According to protection specialist LifeSearch, just 3.5% of life insurance policies are purchased by those under the age of 25.
If you are young and healthy the one place your mind won't stray is towards the grave. However, this is probably the best time to purchase some form of life insurance – every year you grow older, life insurance premiums increase.
In fact, if you are young and healthy you could secure life cover for as low as £5 to £6 per month.
What you need to consider
Life insurance, unlike many other types of insurance can be set up with a longer term so it's important to ensure that a policy is able to reflect your present and future needs.
As long as you answer all the questions honestly and provide correct information your premiums and your cover should stay the same as you age, even if you were to become seriously ill.
There are a number of things to consider when you decide to take out life insurance. First off, you need to decide what you want the policy to protect. For example, if you want to cover existing debts such as your mortgage taking out a policy for your total debt should be adequate. However, if you want to ensure that your family is protected there are a number of things to consider.
• How much would your family income drop?
• What are your family’s outgoings and how much would they change?
• Do you have any savings to factor in?
• Does your employer offer death in service benefits?
• Could state benefits provide extra support for your family's needs?
