As Christmas 2024 approaches it is natural for us mums to give even more thought to our nearest and dearest. However, because of recent high inflation and the rise in basic living costs many families up and down the UK are struggling at this expensive time of year.
When economic times are hard it is common to cut back on what are deemed non-essential monthly outgoings, such as a Netflix subscription or perhaps gym membership.
Unfortunately, it is not uncommon for people to also cancel their life insurance protection as a means of saving money – after all, the policy may never even result in a pay out.
However, in a worst-case scenario where you were no longer around to provide, how would your family afford to remain in their home? What about meeting rising family living costs or provisioning for necessary childcare expenses?
These are very uncomfortable questions, but if you have a young family who rely on you, they are important ones to consider.
If budget allows, why not investigate effective ways in which you could save on your monthly premiums to ensure your loved one’s financial future is adequately protected.
Below, leading life insurance broker Reassured explores some top money saving options for you to consider.
How best to save on your life insurance premiums?
Take out cover whilst you are young
Your age at the point of application is one of the most influential cost factors; the older you are, the more expensive cover is. This is simply because statistically a claim is more likely as we age.
That said, people only usually consider taking out life insurance after a major life event, such as starting a family, buying a house, losing a loved one or getting married.
But why not be proactive and lock in a super-low premium in early adulthood for decades to come? It is possible for a healthy non-smoker in their 20s to secure approximately £200,000 of cover for just 20p a day.
Calculate how much cover you need
The higher your cover amount (also known as the sum assured) the more expensive your premium (all other things being equal). Therefore, it is important to take the time to accurately calculate just how much cover you need to meet your unique requirements.
Consider your remaining mortgage debt, the age of your children/how long until they are likely to be financially independent, any personal debt, household bills and funeral costs.
Lastly, also factor into your calculations any workplace benefits you may receive through your employer. For example, you may benefit from death in service, usually three times your annual salary, which you could use to reduce the level of personal cover you require. Although please note if you change your employer you will lose this benefit.
Consider lifestyle changes
During the application process the insurer will ask you about things like your weight/BMI, smoking status and alcohol intake in order to accurately calculate your premium. Living a healthier lifestyle could help you save on your monthly premiums. For example, a 50-year-old smoker will likely pay double that of a non-smoker.
It is important to be completely open and honest with the insurer. Withholding information during the application (known as non-disclosure) in order to secure a lower premium could invalid your policy, rendering your selfless investment a waste of time and money.
Compare quotes
Lastly, and arguably most importantly, always compare multiple quotes from different insurers. The cost of cover can vary wildly between different providers due to different underwriting processes; so, what one insurer deems high risk, another provider may not. Even a small saving each month over the lifetime of the policy could add up to a significant saving.
You can compare mums’ life insurance quotes from leading insurers such as Legal & General, LV and Aviva, completely free of charge through FCA-regulated broker Reassured.
Does it have to be life insurance?
When looking into financial protection to protect our loved ones many only consider life insurance policies. Whilst life insurance is a great and cost-effective policy option for many, it is not the only policy choice available.
Income protection could be a viable alternative. While life insurance pays out a cash lump sum if you pass away during the policy term; income protection pays out each month, mimicking an income, whilst you’re unable to work due to illness or injury.
There is also critical illness cover which can be added to a life insurance policy and pays out if you are struck down by a condition covered in your policy. Although, these policies tend to be much more expensive as you are much more likely to be diagnosed with a serious illness than to pass away.
In conclusion
Christmas should be a great time of year where we spend precious time with family. However, it can also be a challenging time where we can feel the financial pressure to be the best parent we possibly can.
Life insurance provides a vital safety net to protect our loved ones if God forbid, we were no longer around. We may never need to claim on a policy, however having this protection in place at the very least provides reassuring peace of mind and may also prove to be the best gift your family could ever wish for at the most trying of times.