Doing your homework before choosing a life insurance policy is a very important exercise if you want to save yourself considerable amounts of money. From the example in the infographic above, you can see how by purchasing life insurance at a car yard could end up costing you 17 times more (i.e. $1355 vs $80 in premiums) than through a super fund. Below I've provided a list of bullet points that are considered the best ways to find the most affordable life insurance plans according to MoneySuperMarket.
Tips to cutting Life Insurance costs:
- Always compare premiums because they will vary from insurer to insurer.
- Pick a suitable policy e.g. ‘whole of life’ insurance is different to just insurance.
- Set the right term to suit your needs e.g. until your kids leave home.
- Insure the right sum e.g. the bigger the pay-out the bigger the premium.
- Prices rise with age so you can save money by setting up earlier on in life.
- Stop smoking since non-smokers pay considerably less.
- Joint life cover usually comes with lower premiums.
- Watch out for costly extras e.g. companies will try to sell add-ons such as critical illness.
- Write the policy in a trust to avoid Inheritance tax on pay-outs.
- If employed, check if you are covered for ‘death in service’.
The cost of life insurance can make a big difference to the amount of disposable income we end up with every month. This is why choosing the right product is essential since it could easily cost you a small fortune if you don't do your homework properly. No matter what stage of life you are in, whether you’re starting a new family or enjoying retirement, for many it’s comforting to know that if anything were to happen then your loved ones would be financially looked after.
Although Australians have close to one trillion dollars invested into superannuation, there are experts out there who believe that their individual cover is generally inadequate. A report was conducted by the University of Canberra that based its results on a hypothetically based case study which looked at a couple in their 30’s with two children. The case study considered both parents to have jobs and what the effect would be on the government services over the next 10 years. The eventualities that were considered were as follows:
- Husband dies prematurely
- Husband temporarily unable to work
- Husband being unable to work again
- Wife dying prematurely
- Wife temporarily unable to work
- Wife being unable to work again
The results from the report revealed that all eventualities meant that the family were left with inadequate insurance that would put a financial strain on the family. Assistance provided by the government was not adequate enough to fully support them and in some cases resulted in families being forced to survive on less than half the original income they were accustomed to.
If you have found any other ways in which you have saved money on life insurance, then please feel free to share your experiences with the Buckscoop community in the comments section below. Any feedback would be greatly appreciated.