Are you paying too much for life insurance?
Buying life insurance can be a good financial decision, as its sole purpose is to provide you comfort that your family and loved ones would be financially covered in the case of your untimely demise.
However, many people question whether they are currently paying too much for life insurance, as there are many plans that provide the same, or similar benefits at different costs. This is especially as life insurance requires you to pay usually monthly premiums, which can add up. If you did not account for certain factors, or there have been changes in your circumstances, you may want to consider reviewing your policy and switching to a different and potentially cheaper life insurance plan.
Reasons why you may want to consider switching
1. You have an exceptionally large death benefit or an exceptionally long coverage plan
If you are currently on an exceptionally long coverage plan, or one with a larger than needed death benefit, you may want to consider switching plans. Your death benefit should just be enough to cover costs (including paying off your mortgage and covering daily expenses). It doesn't need to be more than this, as a larger death benefit would result in higher premiums.
Furthermore, exceptionally long coverage would also lead to unnecessarily high premiums since insurers charge more for longer coverage plans.
If you feel that you fall in either of these categories, it may make sense to consider switching to a different life insurance plan.
2. You have whole life insurance, but a term life insurance plan suits your needs better
If you are on a whole life insurance plan, you may want to consider switching to a term life insurance plan.
Whole life insurance plans can be a lot more expensive than term life insurance plans and are not always necessary. They keep coverage intact indefinitely, however, this is not always the ideal solution. Situations in life change including no longer having dependents (children growing up), and your mortgage getting paid off - just a good example of why having coverage intact indefinitely may not exactly be ideal.
Instead, it may be more beneficial to have something like term life insurance, which is only for a set period of time. This would likely offer coverage for the duration it is necessary, at a much lower rate. For example, taking out a term life insurance plan for the duration of your mortgage might be an ideal scenario
Once again, if you feel that you fall in this category, it may be worth considering switching to a term life insurance plan.
3. Your health/lifestyle has improved
If at the time of applying for your life insurance plan, you were a smoker / heavy drinker, you may have been quoted a higher premium, as these habits may have harmful effects on your body, resulting in a higher risk taken on by the insurer.
However, if you have since quit these habits, it could be a good time to look at switching your life insurance plan, as you would now be eligible for lower premiums.
4. Change in family circumstances
Since life insurance is such that your family will receive compensation in the case of your untimely demise, it is important to keep the nature of your policy up to date with your family situation.
For example, if you have a child, then the initial amount in your life insurance plan may not be able to cover the cost of raising another child. Hence, it may be worth considering switching your life insurance plan in order to accommodate this.
5. Changes in mortgage/debt circumstances
Another reason why people put life insurance plans in place is so that in the case of their untimely death, a lump-sum amount is put towards their mortgage payment, so there would be less of a burden on their dependents.
However, in the situation that your financial well-being improves and you may not need as big a payout as you initially anticipated or if you move to a bigger house and a larger payout may be needed, you may need to consider switching to a different life insurance plan, which aligns with your policies.
If you’re keen to revisit whether you can adjust your existing policy and perhaps reduce your monthly premiums, then you can speak to a vetted Life Insurance expert via the Sprive app.
How to speak to a Life Insurance Expert with Sprive
- Open the app and click on the heart icon on your dashboard.
From here, you’ll be able to book a time that suits you to speak with an FCA-approved expert, to review your policy and get a free quote.
If you decide to switch to a new policy the expert will be able to help you switch hassle-free.
