Since the EU Gender Directive came in to force at the end of last year, insurers have been forced to change the way they price their policies as they are no longer able to take account whether you are a man or a woman when deciding on the price to charge.

According to the financial advisers at Money-minder.com, if you are about to arrange a mortgage your lender will love it if you also arrange your life insurance through them.

But doing so could be a costly mistake. The firm found that a mortgage lender could charge 50% more for mortgage protection life assurance than the best premium found by running a comparison.

Here are a few tips to help save you money on your life cover:

1 – Premiums can vary between insurers by as much as 20% for the same cover – so compare!

For example, a 30 year old non-smoker looking for level term life cover of £200,000 for 25 years without needing advice could find premiums from as little as £8.00 per month with a one-off £25.00 application fee ranging up to £9.84 per month for the same cover from a different insurer. A £1.84 per month difference may not sound like much but over 25 years that amounts to £552.00 which no doubt you’d rather have in your pocket than give to an insurer!

The saving for smokers can be even greater – How does £1000 sound?

For example, if the same 30 year old was a smoker they would be quoted premiums from £13.27pm with a one-off £25.00 application fee ranging up to £16.66pm. The £3.39pm difference over £25 years would amount to a saving of £1017!

2 – On the subject of smoking, giving up the dreaded weed might not only save you a packet (or more!) on cigarettes you can also benefit from substantial savings on your life insurance too.

Using the examples above you’ll notice that the lowest premium for the non-smoker was £8.00pm with a £25 application fee and the lowest premium for the smoker was £13.27pm with a £25 application fee. All the other factors were exactly the same it was just that one smoked and one didn’t. The £5.27pm difference amounts to a saving of £1581 over 25 years which is another very good reason for giving up.

Once a smoker has given up smoking and/or nicotine replacement products for a full 12 months, insurers will rate them as non-smokers and they can benefit from lower premiums. So when you reach your 12 month anniversary it’s a good time to review your life cover and see if you can now get a cheaper premium. A good place to kick the habit could be from Wednesday 13th of March with ‘No Smoking Day’ – for more info head to http://www.wequit.co.uk/.

3 – Arranging a mortgage? Lender’s life cover can cost 50% more!

Research consistently highlights that lenders aren’t always the most competitive.

For example – the same person as above applied for mortgage protection life assurance with Nationwide. They applied for £200,000 of cover over 25 years. With mortgage protection the cover gradually reduces over the term of the policy roughly in line with the reduction in your outstanding mortgage.

The premium quoted by Nationwide was £9.48pm on a no-fee basis.

The best no-fee premium found on Money-minder.com was just £6.18pm making the Nationwide premium over 50% higher and saving Mr Borrower £3.30pm or £990.00 over the term of the cover.

The difference is usually down to the lender giving you a higher premium so that they can earn some commission on the sale of the insurance. Buying a policy where you pay a flat fee and the broker gives up all of the commission is usually the cheapest way to buy life insurance.

4 – Do you really need advice?

There are plenty of online tools to help you establish the cover you need for things like life insurance and mortgage protection. Life cover is quite a simple product and most people will be happy to make their own choices once they’ve done a little homework.

Even if they’re not giving you advice some companies and lenders will still offer you a higher premium because of the C-word. Commission.

As much as 25% of a life insurance monthly premium could actually be paying for the commission to the broker or their employers, not for the cover. You could be paying for that commission every month over the whole term of the policy, so it may pay to use a discount broker.

If you do want advice it still pays to shop around for the best premiums which include advice from an independent financial adviser (IFA) as some will add more to the premium than others for giving advice.

5 – You don’t save by buying direct

The premiums quoted by life insurers direct to the public already have commission included. If you buy the cover from them, they will just keep the commission themselves and increase their profit.

When insurers offer their insurance through brokers they have a minimum cost of the cover and then the broker can choose how much to add to the premium depending on how much commission they want to make. A discount broker will give up all of this commission giving the customer the lowest possible premium in exchange for a one off application fee.

If you don’t want to pay an admin fee the ‘no-fee’ option usually means that the premium is a little higher so that the small amount of commission covers their costs.

6 – Avoid reviewable premiums

Reviewable premiums are usually a bit cheaper than guaranteed premiums but that’s because insurers can increase reviewable premiums throughout the life of the policy. What may start off as cheap insurance can become expensive. Choose guaranteed premiums which are fixed for the life of the policy.

7 – Watch out for online lead farmers

Some websites claiming to compare life insurance are only after your personal details so that they can sell them on to insurance brokers. These so-called ‘lead farmers’ sometimes don’t even give you the online quote they suggest they will!

If a broker has paid £50.00 for the lead they will want to make that money back and make some commission on top so prepare for the hard sell.

If in doubt when getting an online quote, use a false name and telephone number when running quotes. You can give your genuine information when you find a company you trust and want to deal with.

8 – Don’t leave yourself uncovered

If you find you can make a saving on your life cover by taking out a new policy and cancelling your old one, don’t cancel your old policy before your new one is in force. Avoid having any period where you’re not covered by one of the policies, even if there’s a bit of overlap.

Ray Black, from Money-minder.com, says: “With something fairly simple like level term life insurance or mortgage protection life insurance it’s very difficult to argue that it’s worth paying more to get insurance from one provider over another. The trigger for making a claim is the same after all.

“It pays to regularly review your life cover to ensure you still have the cover you need at the best price. Just because you’re a few years older it doesn’t necessarily mean you can’t get a cheaper premium, especially if you’ve previously bought your cover through a mortgage lender or financial adviser.

“By following some basic rules you can make sure you and your family has the protection you need without paying more than you have to.”