Guest Blog: How I Reduced The Cost Of My Life Cover?

December 13th, 2019

When I took out my mortgage with a High Street Bank I was offered life cover, so I thought to myself, I have a family now and I’m in my 30’s. I need to protect my family, I’m not the invincible man I thought I was when I was in my early 20’s. I have to be sensible and think of my family. So I asked her how much and to tell me more about life insurance.

So she tells me that “in the event of my death the outstanding amount of my mortgage would be covered, and if I took critical illness cover that would make sure my income was not compromised due to my illness. “

I then asked her “how much?” She then tells me that “if you took the life cover that would be £15 per month for 25 years (on a £90k mortgage) and critical illness for £40k would be another £16, so £31 in total.”

I then thought to myself you know what, I’ve been with this bank since childhood, I have my mortgage with them, it only made sense that I do my life insurance with them. I then proceeded to sign on the dotted line, and every month without fail £31 came out of my account.

Few years passed I did not think much about the life insurance and then I started to see TV ads for life insurance companies. I asked myself, “am I paying too much for my life insurance policy?”

Using the internet I found, I logged my details and within minutes got a call. Now I was clueless as to what I had in terms of a policy. So the adviser then began asking me questions like,” do you want decreasing term or level term?”

I said I needed to understand what that meant. So he explained if you have a decreasing term, then the amount of life cover would decrease in line with your mortgage and level term would stay consistent for the term of the policy. He then asked what my mortgage amount was I said £210,000 on a buy-to-let mortgage.

He concluded I should go for a level term, so I then asked “how much would that be including critical illness cover? “ To which he replied “I will be able to get more cover on a level term (as my mortgage was much higher) for about the same price as you are paying at the moment, £31.

Later I get another call from a different life cover comparison company, I tell him I’ve had a quote already and proceed to tell him the details of that quote. He then throws at me the same level of cover for £5 less per month.

I get the third call but now I’m a lot wiser. I tell her what I’ve had before, and she asks me “have you ever thought of a Low Start policy?” I said “no, what is it?” She begins to explain that is a policy in terms of cover and will be identical but its starts off low and increases every year by about 7%-8%. I ask “is there a penalty if I change policy after 6 months” and she says “no”. So I ask her “how much?” And she says “£15 for both life cover and critical illness.”

At this point I thought I’ve done well here and agreed to the policy. The lesson I learned, just like loans and everything else in life, it pays to shop around and get at least three quotes.

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