How to pay less on your life insurance premiums

Key Takeaways

• Life insurance premiums are based on age, health, lifestyle, occupation and policy structure
• Regularly reviewing your level of cover may help reduce premiums
• Lifestyle factors such as smoking and weight can affect what you pay in premiums
• Switching insurers may lower costs, but can involve new underwriting, applications or exclusions

Life insurance premiums increase over time, especially as you get older or if your circumstances change. The good news is there are practical ways to manage and potentially reduce your costs if you need to.

That said, paying less isn’t always the right choice for everyone. Reducing cover or changing your policy can have long-term consequences if you become underinsured. This article explains how to reduce life insurance premiums, what affects the cost of cover, and what to consider before making changes – so you can make informed decisions with more confidence.

How are life insurance premiums calculated?

Life insurance premiums are typically calculated based on your level of risk and the structure of your policy.

Key factors that often affect life insurance premiums include:

• Age: Premiums generally increase as you get older
• Health history: Medical conditions may result in loadings or exclusions
• Lifestyle choices: Smoking, alcohol use and certain hobbies may increase premiums
• Occupation: Higher-risk jobs can attract higher costs
• Type and level of cover: The amount insured and whether premiums are stepped or level affect long-term affordability

Understanding what affects life insurance premiums can help you identify areas where adjustments may be possible.

How to reduce your life insurance premiums

There are several ways you may be able to lower life insurance premiums. Some involve adjusting your level of cover, while others relate to how your policy is structured. Always consider the long-term impact before making changes.

Review how much cover you need

If your financial situation has changed, you may not need the same level of cover you originally took out. For example, if you’ve paid off your mortgage or your children are financially independent, your required cover may be lower. Reducing your sum insured can reduce premiums – but keep in mind that it also reduces the payout available to your loved ones.

Select the right type of cover

Different types of life insurance structure premiums in different ways – some may increase as you get older, while others keep premiums level for a set period. Understanding the difference between options like term life vs life insurance can help you plan ahead and choose cover that suits your needs and budget.

Review optional extras

Optional extras, such as serious illness insurance or children’s insurance may increase your premiums. While these features may provide valuable protection, it’s worth reviewing whether they are still relevant to your needs. For instance, if your children have grown up and have their own insurance policies, then children’s insurance may not be suitable for you.

Choose how and when you pay premiums

Paying premiums monthly can spread the cost, while annual payments may help reduce additional instalment fees, if that’s something your insurer charges. Understanding your payment options can help you choose what works best for your budget. So, be sure to check how different payment options may affect the overall cost of your cover.

Review your policy as your circumstances change

Life changes such as paying off a mortgage or children becoming independent can affect how much cover you need. Reviewing your policy from time to time can help ensure you’re not paying for cover that no longer suits your situation.

Lifestyle factors that can affect your premiums

Some personal factors and lifestyle choices can influence how insurers assess risk. Improving these factors may not automatically reduce premiums, but they can affect pricing at application or policy review.

Smoking and vaping

Smokers and vapers generally, pay higher life insurance premiums than non-smokers/non-vapers because of increased health risks. If you quit smoking or vaping, you may be able to request reassessment after meeting your insurer’s criteria which may result in lower premiums. Quitting can also potentially improve your overall health.

Obesity

Body Mass Index (BMI) is typically used to assess risk. Being outside a healthy weight range can result in higher premiums due to associated health risks. If your health improves over time, you can contact your insurer to discuss whether reassessment is possible. Any weight-loss efforts should be approached safely, so it’s important to seek medical advice before making significant lifestyle changes.

Occupation

Your occupation can play a role in determining your life insurance premiums, with higher-risk jobs such as firefighting, typically attracting higher premiums than office-based roles like software engineering.

If you do move from a higher-risk role to a lower-risk one, you should contact your insurer to see if you’re eligible for a reassessment that could help reduce your premiums.

High-risk hobbies

High-risk hobbies – such as skydiving, mountain climbing, scuba diving, and other extreme sports may increase life insurance premiums or affect eligibility for cover.

If you take part in these or similar activities, it’s important to disclose them accurately, as non-disclosure may impact any claims you make.

General health

General health is one of the factors insurers may consider when assessing risk at application or review. Understanding how health information is used can help you make informed decisions about your lifestyle choices in relation to your life insurance.

Things to consider before reducing your cover

Reducing premiums may seem appealing, but it comes with trade-offs.

The risk of being underinsured

Underinsurance occurs when your policy payout is insufficient to meet your family’s financial needs. Reducing cover purely to save money may leave dependants without adequate support.

When paying less might not be the right choice

Maintaining your current level of cover may be important if:

• You have young children
• You carry significant debt
• You are the primary income earner

In some cases, reducing cover now could make it difficult or more expensive to increase it later.

What is the cheapest age to buy life insurance?

Life insurance is generally cheaper when you are younger and healthier.

Because age is a key factor in pricing, obtaining cover earlier may mean lower starting premiums and fewer exclusions. Waiting until later in life could lead to higher premiums or difficulty obtaining cover due to health changes.

Can changing insurers lower your life insurance premiums?

Changing insurers may sometimes reduce life insurance premiums – but it is not guaranteed. Switching may require new underwriting. This means your health and lifestyle will be reassessed, potentially resulting in new exclusions, higher premiums or declined cover. You may also lose benefits linked to the duration of your existing policy.

Before switching, compare features carefully and ensure replacement cover is confirmed before cancelling any existing policy.

When it may be time to get advice

Significant changes to your cover can have long-term financial consequences.

If you’re unsure whether to reduce, restructure or replace your policy, consider speaking with a licensed financial adviser. Professional advice can help balance affordability with appropriate protection.

Frequently asked questions

Can I ask my insurer to reduce my life insurance premiums?

Yes, you can ask your insurer to reduce your life insurance premiums. This may involve lowering your sum insured or removing optional benefits. However, reducing premiums usually means reducing cover, which may affect the amount paid to your beneficiaries in the event of a claim.

Can life insurance premiums increase even if I don’t change my policy?

Yes, life insurance premiums can increase even if you don’t change your policy. Policies with stepped premiums generally rise each year as you age. Insurers may also adjust pricing due to broader factors such as claims experience or regulatory changes, depending on policy terms.

Will improving my health lower my life insurance premiums?

Improving your health may help lower your life insurance premiums if your insurer reassesses your risk profile. Changes such as quitting smoking or reaching a healthy weight may qualify you for different premium rates, subject to underwriting criteria and evidence requirements.

Is it better to reduce cover or cancel life insurance to save money?

Whether it’s better to reduce cover or cancel life insurance depends on your circumstances. Reducing cover may allow you to maintain some level of protection while lowering premiums. Cancelling removes cover entirely. Always review your needs before deciding.

Ready to review your policy?

Managing your premiums is important - but so is making sure your loved ones are financially protected. If you’re thinking about adjusting your policy, take the time to understand what level of cover suits your current needs.

Explore your options and learn more about Real Life Insurance today.