Guest post by Sam Lyne
One of the biggest myths out there is that you don’t need life insurance in your 20s. But if someone’s counting on you — your partner, your flatmate, even your cat — it’s worth having cover in place.
If you’re worried about having another bill to pay each month, there are plenty of ways to save on cover while still protecting your family’s future. In this article, we’ll look at some of the main ways you can buy cover on a budget but still have adequate protection in place.
1. Buy sooner rather than later
While it may seem like an unnecessary expense, getting cover in your 20s and 30s is often cheaper than if you wait until your 40s or 50s. Age and health are two of the main factors insurers use to assess your risk.
Typically, the younger and healthier you are, the lower your premiums will be. So, opting for a policy early means locking in lower rates, which can lead to substantial savings over the life of the policy.
Certain policies, like level term life insurance, have fixed premiums, so if you buy cover early, you can keep your premiums down over time. Even if your circumstances change, like having kids or getting married, you can always adjust your cover.
2. Go with term life insurance, not whole
When it comes to buying life insurance, there are two main options for cover. Whole life insurance covers you for the rest of your life, paying out regardless of when you die. It’s great if you want long-term protection, though premiums are typically more expensive.
Term life insurance, on the other hand, covers you for a set number of years. The good news is premiums are usually cheaper than for whole cover. On the downside, the policy will only payout if you pass away within the policy term; if not, it expires.
If you only need cover for a certain timeframe, such as to cover your mortgage or until your kids have grown, having term cover can be a cheaper option. So if you want cover but also want to save money, term life insurance can be a good choice.
Top tip: Smoking (including vapes) can increase your premiums. Ditching the cigarettes now can help you save money on cover.
3. Compare before you commit
If you bought any type of insurance before, be that car insurance, home insurance or travel insurance, you know it’s always best to compare quotes before you buy. There are plenty of comparison sites out there where you can compare quotes to find the cheapest rates.
However, cheaper cover doesn’t always mean you’re getting the best. That’s why you need to find the right balance between cost and the amount you will be covered for.
Before you begin, think about how much cover your family would need if anything were to happen to you. That will give you a good indication of the amount you should aim for. If you’re living in London you may need a higher cover amount compared to other areas.
4. Check if you already have cover
You might not know it (or forgotten) but you may already have a life insurance policy through your employer. Many employers offer life insurance cover as part of their employee benefits package. As it’s free, you could save money by taking full advantage of this benefit instead of purchasing an additional policy.
That said, it may be worth having your own policy as your employer cover can’t be transferred if you leave the company. It may also have limitations, such as lower coverage amounts that might not meet your needs.
5. Consider a joint policy
If you have a partner or spouse, it’s likely you share bills like rent or mortgage payments, household bills, or childcare costs. In this case, it makes sense to opt for joint life insurance cover.
A joint policy covers two people under one policy and typically results in lower premiums compared to buying two separate policies. These policies either payout after the first death or once you’ve both passed away, so the surviving partner has enough to cover expenses.
To wrap up
Think of life insurance like a subscription to peace of mind — it’s like Netflix, but for your future. It doesn’t have to be expensive, but what matters is that you choose a policy that fits your needs and circumstances.
It could also be worth speaking to an insurance broker, who can provide guidance and help you compare different policy options to find the most suitable one for you and your partner.
