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How to lower the cost of your life insurance

28th September 2010
By cisamitesh in Taxes
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Usually when you set up a life insurance policy you will base the level of life insurance cover (for example $500,000) on your situation, needs, and budget. For example your life insurance might take care of debt, provide for dependants, or have enough to cover a funeral or final costs.

Most life insurance plans increase in cost over time (every year the insurer will recalculate premiums based on your new age – and as older people pay more for life insurance, costs typically increase yearly). Importantly, an insurer can’t increase the cost of your cover due to reasons like ill health (once your cover is set up, any changes to your health should not affect the cost of your life insurance), however the usual yearly premium increase can become significant.

In this situation, the most common way to reduce costs is to reevaluate the level of life insurance cover that you have - and check if you still require the same amount. It could be that your situation has changed over time – which might mean that you now require a lower level of life insurance. For example have you reduced your mortgage or paid back debt since you initially took out your life insurance policy? If so, you could reduce your level of cover by this amount – which will lower your premiums. Or, if you have had children leave home or become financially self-sufficient you could reduce or cancel this part of the life insurance.

Also in some cases your life insurance might have been increasing over time to match increases in inflation (for example if inflation in a year was 3%, the life insurance sum would increase from $500,000 to $515,000).Yearly increases like this add to the cost of your insurance, and might mean that your cover has grown by more than you need it to. If this is the case, you can reduce cover and even consider removing the inflation adjustment option from the cover. Find more and best advisory services, quotes and more from Newzealand’s top providers life insurance policy and for income protection information you can visit Trauma insurance quotes
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