Statistics released by the Association of British Insurers in 2005 showed that less than 50% of British households have any life insurance at all. Of those who do own a life insurance policy, a similarly staggering number are either under or over insured.

It appears that once reason for this might be that more than a third of those with life insurance do not regularly review their policy to ensure that it continues meets their needs. Just being insured isn’t always enough and it’s important to ensure that your life cover correctly reflects your current lifestyle and family circumstances.

Have your family circumstances changed?

The type and/or amount of cover you need will change over the course of your life as family and lifestyle changes affect your insurance needs. Some of the most common life events that would warrant a review of your life insurance policy are…

• Getting married
• Having children
• Moving home
• Getting divorced
• Retiring

If you get married but plan to wait a few years before starting a family, term life insurance can be a good solution. Term life cover is less expensive than whole life insurance, and it’s even cheaper whilst you are young and healthy. Once children are on the way, it’s a good idea to review your cover with each additional child and to consider increasing your life insurance or perhaps extending the scope of the cover to include more comprehensive options such as critical illness insurance so that your family’s financial needs will be met if you or your partner dies, becomes seriously ill, or is permanently disabled.

Divorce or retirement may reduce or even eliminate your need for life insurance. If you divorce without having had children and have no other dependants, you’ll likely decide you no longer need life insurance at all. If children are involved, you may want to change your beneficiaries to include your children and exclude your former spouse. As you approach retirement, you may decide to include your adult children as beneficiaries, or reduce your total coverage.

Has your lifestyle changed?

The same principle applies when you make lifestyle changes. It’s prudent to review your life insurance if you…

• Start or stop smoking
• Change your level of fitness or health significantly (including blood pressure, weight or cholesterol levels)
• Start or quit a higher-risk job
• Take up or quit a risky hobby

Poor physical health, smoking, a high-risk job or past-time will increase the amount you pay for life insurance but it’s important to declare such changes to your insurer to prevent any claim being invalidated due to non-disclosure. The good news is that if you improve your health or make positive lifestyle changes you can reduce your insurance costs too. For example, if you quit smoking several years ago but you’ve still got the same insurance policy, you’re likely to be paying much more than you need to.

You may also find that a review of your life cover reveals significant savings if you’ve had life insurance for more than five years. Although you are five years older, premium rates on average have reduced over the last five to ten years meaning the same cover could cost less today.

Action steps

1. Digg out your life insurance policy and review the features, terms and conditions of your cover.
2. Decide what cover you need to meet your current financial needs and take advice if you are unsure.
3. If you don’t require advice, go online and compare the cost of your existing cover and any replacement. Consider using a discount life insurance broker.
4. If you do apply for a replacement policy ensure your existing policy stays in force until your new cover is on risk.
5. Don’t forget to cancel your old policy once any new cover has started.

Whilst a good life insurance policy should be an important part of your overall financial planning, there’s no need to pay more than you have to.  As long as you know what protection needs you have and don’t require any advice, a discount life insurance broker can save you as much as 40% when compared with policies offered by banks and other high street providers.

Most discount brokers only operate online minimising their overheads so they can maximise their discounts and stay competitive in a growing market. So how does a discount broker work and how do you benefit?

Like any broker or middleman, a discount life insurance broker receives a commission for selling an insurers policy. The difference is that a discount broker can sacrifice some or all of their commission when setting up your policy with an insurer to reduce the premium you pay. Some brokers will give up all of their commission and charge you a small fee whereas most will sacrifice the majority but keep say 10% or 20% rebating the remainder to discount your monthly payments. This is totally above board and common practice for most UK insurance companies with the end result being that you get an identical policy for about 20%-30%  less than if you bought direct from the insurer. The savings are even greater if compared to policies sold by banks and building societies.

One point to bear in mind though, discounted premiums are based upon standard rates so if have an extensive medical history or hazardous occupation, the insurance company could still ‘rate’ or increase your premiums. Although any increase will still include your original discount and be lower than if you had bought direct.

The only downside to buying through a discount broker is that most won’t provide you with any advice if you are unsure which policy is best for you. If you are unsure, it’s best to take professional advice from an IFA or other FSA regulated broker.

To find a discount broker simply Google (UK) ‘discount life insurance’ or ‘life insurance quotes’ to find pages of websites offering policies at discounted prices. Again, ensure they are FSA regulated by searching the FSA register.

Some popular discount brokers all directly or indirectly FSA regulated are:

Life Brokers
Life Saver
Life Search

The short answer to this question is: yes, absolutely. Obesity is an increasingly prevalent problem in Britain and world-wide, and the negative effects of being overweight are much more widely known than ever before. Insurers are responding with massive increases in premiums for overweight and obese people.

Higher Risk Means Higher Premiums

Insurance companies calculate the cost of your life cover by assessing the risk of your lifestyle. Other factors such as age are also important, but high-risk lifestyle choices such as smoking and being overweight increase your premiums by a significant margin.

This is simply because excess weight is a health hazard—a known cause of health issues such as stroke, heart attack, and diabetes. Overweight and obese people are more likely to experience these health problems and are more likely to die at an early age than people of a healthy weight, and insurers adjust premiums accordingly. If you’re overweight or obese, you can expect to pay anywhere from 50% to a staggering 400% more for your life insurance premiums.

Life Insurance Companies Use the Body Mass Index to Decide who is Overweight

Insurance companies do not use weight alone to determine if you are of a healthy size. Instead, they’ll ask you to disclose your height and weight, and then use this information to determine your Body Mass Index (BMI). If your BMI is outside what they consider normal limits, they may ask you to undergo a medical examination to confirm your health status. This is particularly important because in some cases, people with a higher BMI are not necessarily at risk—someone who is very fit, with a high proportion of muscle, may have a higher BMI because muscle is heavier than fat.

If you’re interested in calculating your own BMI, use the following equation:

1. Multiply your weight in pounds by 703
2. Divide the total by your height in inches
3. Divide the new total by your height in inches again
4. The figure you get is your BMI

The average insurance company considers a normal BMI as between 18.5 and 24.9. Between 25 and 29.9, you are considered overweight, while a BMI of 30 or more puts you in the obese category.

However, it’s important to note that insurance companies also take your age into account when determining how your BMI affects your premiums. Most people do naturally gain a little weight as they age—“middle aged spread” is a fact of life that insurance companies do acknowledge. As you age, the effects of weight on your premiums does reduce slightly, and insurance companies are more likely to be lenient if you’re overweight at 55 than if you’re overweight at 35.

Reduce Your Weight and Reduce your Premiums

All of this means, quite simply, that being overweight will increase the costs of life insurance. However, the reverse is also true. If you’re currently overweight or obese, losing weight and keeping it off will entitle you to apply for a review of your insurance costs. Given the obvious health benefits of losing weight, it’s definitely something to think about.