The Importance of Making Payments: Why Life Insurance Direct Debits Matter

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Life insurance can seem confusing for those not in the business. Just like we insurance experts may get confused at a football match (offside what?), we understand that those not involved in life insurance don’t necessarily understand how premiums work or know the best way to get a good deal on your life insurance in the UK.

After all – that’s our job!

It’s also our job to explain some of those important points of life cover to our customers. So, without further ado, here’s the reason it matters to keep up with your direct debit payments for your life insurance.

Premiums are locked from the start

This is one of the biggest things about life insurance that can determine whether you have a good deal or a bad one – the premiums are locked in place from the moment you start the policy.

What does that mean?

Simply put, it means that the calculation which determines how much life insurance costs you (and it’s different for everyone), is done when you apply for your life insurance cover and then never again.

We all understand that being fit and healthy can lead to cheaper life insurance premiums – after all, you are mitigating a lot of risk by being good to yourself. But what most people don’t realise is that they only have to be fit and healthy at the beginning – right when they take out the policy.

That’s not to say that at Quick Quote Protect we are suddenly advocating a life of doughnuts and couch surfing as soon as your paperwork is through, but it cannot be understated the importance of this one fact.

Why are life insurance premiums locked?

A good question – why not have them adjust as you get older?

It’s a question of resources and administration. In an ideal world (for the insurance company), life insurance premiums would adjust monthly based on your fitness and health state, with the risk factors recalculating as you eat more and then go on a health kick.

But how is an insurance company going to track that?

Instead, it is far easier to look at someone at the point they take out a policy, make the premiums right for that person, and leave the rest to chance.

This is why life insurance for a fit man in his mid-twenties who doesn’t drink, smoke or eat takeaway food regularly has a much cheaper policy than a fifty-year-old who may be overweight and drinks a lot of alcohol.

Importantly though – it always will be! If that fit 25-year-old spends the next quarter of a century topping up his wine glass and enjoying a fine cigar now and then, he’ll still have a cheap life insurance policy in place.

What does it all have to do with direct debits?

Life has a way of changing your circumstances – and that’s good. It makes for a richer life to try new things, visit new places and grow a family.

However, for many people, that fluctuating lifestyle can mean that there are times when you need to make a decision regarding which direct debits get paid on time and which are dropped by the wayside.

You’re looking at the premium TV membership and the life insurance policy side-by-side and considering which one has to be cut. One provides you with endless entertainment, while the other one has done nothing for you for fifteen years! A seemingly endless drain on resources.

So, you cut the life insurance.

No more direct debit for that – a few months of gambling without the security of a financial net for your family, but you can just reinstate it later when funds are a bit more flush.

Only it doesn’t quite work out that way.

What happens to the life insurance policy?

Remember when you took out the policy? Back in your twenties with a trim stomach and 50 chin-ups a day before breakfast? It was so cheap, it was a matter of nothingness – even today it was only just comparable to a TV streaming service cost.

But when you go to reinstate it, the cost has magnified. It’s four times what it once was, how is that? You’re the same person!

Only you’re not. The person that locked that policy in place was a fit 25-year-old with his whole life of running and jumping ahead of him. You’re in your 40s now and struggling to bend over to tie up your shoelaces. Definitely not the same person.

Even if just a few months have lapsed, the life insurance policy you now move to get is a new one, and that means a new assessment and new premiums, all based on the new you.

Is there any way around this problem?

The first solution is simple – prioritise your life insurance a little higher and never miss a direct debit as it pays off in the long run.

By putting your life insurance payment above the extra TV box sets, or a regular charity payment to the RSPB, you make sure it stays as it should – locked at the amount it was when you first put it in place.

The second solution is a little more complicated – give your insurance company a call. Explain to them that you need a break from payments for a while and see if they’ll be accommodating. More often than not, you can organise a short payment holiday.

The third solution is to contact us. At Quick Quote Protect, we are experts in getting the best deals we can, and we’ll do what we can to get the best life insurance quote out there!

Are there any plans to change the system? What does the future of life insurance look like?

With the advent of new technology, life insurance is changing too. Fitness tracking watches and online access to your life insurance account means that already, some insurance providers are offering flexible policies where the ultra-low premiums stay that way if you live a healthy life. With a load of benefits including cut-price gym memberships and deals on smart watches, some of these new deals are incredibly tempting.

What’s more, they are not particularly harsh on those who slip a little as the years go on. With a realistic understanding of life’s changes, much has been done to produce a system that works with you, helping you keep fit throughout your life and hopefully ensure you life just a little bit longer – something which benefits everyone.

For more advice on your life insurance policy, or to see if we can help you get a better deal, give Quick Quote Protect a call today – or fill in our contact form to have a helpful advisor get back to you when it’s more convenient.