5 uncommon ways to save on life insurance

Quitting smoking isn't the only way to save on cover

We’ve all heard that smoking is bad for your health, and if you give up smoking, you’ll be rewarded with a lower rate on your life insurance premiums.

But non-smokers obviously can't save any money with that advice, or maybe you are a smoker, but you just don't want to quit.

Here are five less obvious tips for saving on life insurance, even if you’re determined to keep puffing or you don't plan to start.

1. Get a genetic test but don't look at the results

Say your doctor calls you up and says, “We have your test results.” What do you do?

Well, you should panic, slam the phone down and never talk to them again.

A big reason for taking a genetic test is to understand your health risks in greater detail. Genetic testing, however, can do odd things to your life insurance.

This is because when you apply for life insurance, you need to disclose anything that could reasonably cause your insurer to worry about insuring you. But if you don't know the results, you don't know whether they should be worrying.

It's a smart idea to hold off on seeing your results until after you have gotten cover.

How does that save me money?

If your results are unfavourable, your premiums may go up.

If you choose not to see your results when you apply, then your insurer can only make an assessment based off what you know and what you have provided. Insurance companies that are bound by The Financial Services Council (FSC) have to respect your right "not to know".

This way you’ll get clarity on your health risks without bumping up your premiums.

And once I do get cover?

According to genetics.edu.au: "Once a guaranteed renewable policy has been issued, there is no longer any obligation to inform the company of any changes in circumstances, such as the result of a predictive genetic test, unless you want to alter the policy and there is a need for the insurer to reassess the risk."

If your test shows that you are, in fact, lower risk, then you can inform your insurer. You may be able to get reassessed with this information and even have your premiums lowered. You can also provide a favourable test result on new applications if you decide to switch cover later on.

2. Avoid “guaranteed approval” cover if you can

When an insurer boasts that it doesn’t do any medical testing or that it will approve almost anyone regardless of health, it naturally tends to end up with a fairly unhealthy set of customers compared to an insurer that does full medical tests.

This can be a fantastic option for people who need cover quickly, but if that isn’t you, then there’s no real reason for you to go with that insurer if you can help it. Undergoing full testing with comprehensive medical underwriting could save you money if you’re in good health.

It might also mean that the insurer has more freedom to charge lower premiums, as opposed to those offering policies with guaranteed approval.

How does that save me money?

Not to put too fine a point on it, but an insurer with a healthier customer base has a lower mortality rate. This means it pays out fewer claims, which gives it more leeway to offer competitively-priced premiums.

If you can, it’s usually a good idea to go for a more thorough provider. This is especially true if you’re in good shape. Look for an insurer that sends in doctors to admire your great physique.

3. Don’t be afraid to shop around

The longer you wait to take out life insurance, the more expensive it gets, and switching policies when you’re older and wiser will often cost you more.

While that may be the case, take a deep breath and don’t be afraid to get a new quote. It usually takes years before your age significantly hits your premiums.

Insurers often increase premiums in five-year age increments. You might find that they offer different premiums to someone aged 30-35 than to someone aged 35-40. However, you might still go a full 10 years and only bump up one notch on the age pricing ladder.

Age-based premiums don’t always go against you, either. Those reckless youth types in the 20-25 age range often receive a greater age penalty than 30-35 year olds.

Plus, the cost doesn’t necessarily continue to scale up evenly. Rather, it gently curves for the most part, becoming steeper when you get to your 50s and 60s.

How does that save me money?

Basically, age might not hit your premiums as hard as you might think, unless you’re really heading into your golden years. Even if you’ve been with the same insurer for decades, it’s possible that you could still save money by switching providers. This is especially true if you’ve stayed in shape in the intervening years.

If you're in better shape, despite being older, switching might save you even more, thanks to the reassessment.

It’s easy enough do a quick no sign-up, no obligation comparison of life insurance quotes. Try this life insurance engine to see how.

If you’re not happy with the prices you’re paying, then you have nothing to lose and everything to gain by shopping around.

4. Buy online

There are two main ways to buy life insurance online:

  • Direct: Pick a policy off the shelf, put it in your shopping cart and take it to the checkout. So to speak.
  • Through an adviser: Use a financial adviser who assesses your needs and recommends a range of life insurance products that they get paid to sell you.

Some brands are only sold direct, while others are only sold through an adviser. Generally, direct is quicker, while buying through an adviser might help you find a more tailored product, as well as a wider range of options.

How can that save me money?

Whether you’re buying direct or through an adviser, doing so online means you can compare prices.

5. Get re-evaluated

If your fitness regime is working well for you, you might as well go to your insurer and have a brag. They might be so impressed that they’ll offer you a discount.

That’s not exactly how it works, but it’s pretty close.

How does that save me money?

Some insurers will offer strong discounts of around 10-20% if you can show health gains after signing up.

These discounts are usually a part of health programs offered through your insurer. For example, AIA offers members the opportunity to unlock higher-level discounts and rewards by monitoring their health and taking measurable steps to improve their health.

If you’re with an insurer that offers something similar, check the details to find out how it works.

Even if you aren’t with one of these programs, you can still ask for a re-evaluation of your health. If it gets you lower premiums, what have you got to lose?

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Andrew Munro

Andrew writes for finder.com.au, comparing products, writing guides, sniffing out deals and looking for new ways to help people get the most out of their money.

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