Save money on term insurance

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PEOPLE who took out term insurance to cover their mortgages a few years ago may be able to save considerable sums of money by cancelling their contracts and taking out new ones.

Term insurance rates have been cut by many insurers over the past few years because Aids is no longer viewed as such a virulent threat, and life insurers have made rates cheaper for non-smokers.

One accountant, Blick Rothenberg, claims to have saved clients between pounds 30 and pounds 50 a month on premiums on policies of up to 25 years in length.

Andrew Croker, who works for a sports goods company, had two term assurance policies taken out three years ago from Norwich Union - one in his own name for pounds 250,000, and one with his wife for pounds 100,000, both for 28 years. The premiums were pounds 103 and pounds 66 per month.

He is planning to cancel his policies and take out two new ones with Scottish Widows. Despite being three years older, his new monthly premiums are pounds 87 and pounds 44 a month over 25 years - a total saving of pounds 38.20.

Mr Croker said: 'I was very surprised about the amount of money I could save, which over the term of the policy can mount up.' Anybody who believes he or she can get a better deal by reinsuring through a new company will have to have another medical.

There are also savings to be made on smaller policies, and by switching within the same company. For example, anyone who took out a 10-year term assurance policy for pounds 100,000 assured at aged 30 in 1990 with General Accident would be paying pounds 18.50 a month. If he or she decided to reinsure with the same company today for a six- year term, the payment would be pounds 13.50 a month, and taking out a new 10-year policy would cost pounds 15.

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