Published: 18/03/2008

1. Start When You're Young
   
   Many people feel that they don't need life insurance when they're young. However, it's much, much cheaper to buy cover the younger you are. This means that it is often cheaper in the long run to buy cover at an early age rather than waiting until you're older.
   
   
    
2. Review Your Cover Often
   
   It's tempting just to take out life cover and then forget about it. However, there are very good reasons for reviewing your cover often. Your circumstances will change as you go through life meaning that the amount of cover you need will change - you may have children, buy a house or get married - all of these are likely to mean that you need to increase your life cover. On the other hand, the cost of life cover can change as well. Today, life cover is much cheaper than it was a few years ago. This means that many people can benefit from a reduction in their premiums if they review their cover now.
   
   
    
3. Understand the Difference between Reviewable and Guaranteed Premiums
   
   
   When comparing prices make sure you are comparing like with like. Life insurance policies fall into two categories - those with guaranteed premiums throughout the term and those where the premium will be reviewed (i.e. go up) every few years. A reviewable premium will be cheaper initially but is likely to be more expensive in the long run.
   
   
    
4. Make Sure You've Got the Right Amount of Cover
   
   To ensure that your dependents are adequately covered it's important to make sure you've got enough cover. Broadly speaking, you should have enough cover to ensure that your mortgage and other debts will be cleared with enough left over to provide around 66% of your usual income. An IFA or life insurance broker will be able to guide you through and help you ascertain exactly how much cover you need.
   
   
    
5. Make Sure the Policy is Written in Trust
   
   In most cases, life insurance should be put in trust for your dependents. This not only means that the proceeds can be paid out without delay it will also avoid the proceeds becoming subject to inheritance tax. Again, your IFA or life insurance broker will be able to advise on how you go about this.
   
   
    
6. Understand the Difference Between Decreasing and Level Term Assurance
   
   There are broadly two types of basic life insurance. Level Term Assurance where the value of the policy stays constant throughout the term and Decreasing Term Assurance where the level of the cover is reducing year on year. Decreasing Term Assurance can be used to cover a repayment (capital & interest mortgage) where the debt is reducing throughout the term and can provide cheaper cover than a level term assurance policy.
   
   
    
7. Give Up Smoking
   
   If there wasn't already enough incentive to give up you can also save money on your life insurance premiums. The difference between smoker rates and non-smoker rates can be quite staggering, particularly the older you get. If you're an ex-smoker, have kicked the habit over a year ago and do not intend to start again, then you may be able to rearrange your life insurance at non-smoker rates. Ask your existing insurer if they're prepared to reduce your premium. If they won't play ball then shop around for cheaper cover elsewhere.
   
   
    
8. Check out Guaranteed Insurability Options
   
   Many policies offer a 'Guaranteed Insurability Option' which will allow you to increase the amount of cover (within set limits), without the need for any medical evidence, at various stages in your life. This could be when you get married, become a parent or increase your mortgage. These guarantees can give you access to additional valuable cover later in life even if your health deteriorates.
   
   
    
9. Be Truthful with your Application
   
   Don't be tempted to gloss over important facts when making your declaration. The biggest cause of policies not paying out is failure to declare medical or other information. Even minor ailments or medical conditions should be mentioned on the application otherwise you run the risk of the insurance company declining a claim if one is made.
   
   
    
10. Understand the Difference Between Terminal Illness & Critical Illness Policies
    
    A common cause for confusion are terminal illness and critical illness policies. They sound similar but are in fact very different. Many policies offer a terminal illness clause which allows the policy proceeds to be paid out in the event that a terminal illness is diagnosed and medical opinion states that life expectancy is less than 12 months. This means that the policy proceeds can be used to ease the financial strain and provide care in the last months. On the other hand Critical Illness Policies are designed to pay out on diagnosis of certain critical illnesses regardless of projected life span. With Critical Illness Policies the conditions covered are very specific and it's important that you understand exactly what critical illnesses are covered. Critical Illness cover is usually an add-on to a life insurance policy at an additional cost whereas terminal illness is often included at no additional cost.