What is Life Insurance?
Life Insurance pays out on the policyholder’s death, providing loved ones with a cash lump sum so they can cover any financial obligations that are left behind.
There are a few different types cover you could consider, which is where getting Life Insurance advice is so valuable.
Types of Life Insurance
There are four main types of Life Insurance:
- Term Life Insurance
Either decreasing (so the benefit falls over time) or level (so the benefit stays fixed); designed to cover you financially against the risk of death for a set period of time
- Mortgage Life Insurance
Similar to Term Life Insurance, but with the cover specifically aligned both in terms of level and length of cover with an outstanding mortgage debt
- Family Income Benefit
Instead of receiving a lump sum, your family receives a regular income for the remaining term of the policy should you pass away whilst the policy is in force
- Whole of Life Insurance
Life Insurance that lasts for your whole life providing you continue paying the premiums; it’s typically used for inheritance tax purposes or funeral expenses.
Do I Need Life Insurance?
If you’re wondering whether you need Life Insurance, put yourself or your family in some of the common scenarios below and ask yourself how you’d cope if it happened to you.
- According to our Wealth & Protection Survey 2017, 39% of Brits had less than £1,000 in savings. If the breadwinner in the household passed away, would the household have enough savings and ongoing income to cope?
- The same survey also found a quarter of UK workers have an outstanding mortgage of at least £100,000 – could you keep up with repayments if the main earner in your household passed away?
- Would clearing your mortgage be enough if you passed away or would your family need extra cash on top to help them cope with your loss?
- With the average funeral costing more than £4,000(1) would there be funds available to cover this? Or would your loved ones have to pay for it out of their own pocket?
How Much Does Life Insurance Cost?
The cost of Life Insurance depends largely on one major factor: how much you’re going to insure yourself for.
This will be different for everyone and will depend on your needs, the type of policy you’re taking out and any liabilities you’re looking to cover.
The more you want to insure yourself for the higher the cost of premiums.
Other factors that will influence the cost of Life Insurance are less in your control. While you can opt for a lower benefit to reduce the cost of cover, your Life Insurance premiums are based on factors that are far harder, if not impossible, to change. These include:
- Your age
The older you are at the start of the policy, and when you want the policy to end, the higher the premiums you should expect to pay.
- Your state of health
Your current state of health will have a big impact on the cost of cover, particularly if you’re overweight or have medical conditions, such as high blood pressure or diabetes
- Your medical history
Life Insurance is less concerned with minor medical conditions you’ve suffered from in the past, such as back pain, but if you’ve suffered from a serious medical condition such as cancer or diabetes, it will increase the cost of cover
- Your smoking status
While Life Insurance for smokers is possible, it costs more due to the increased risk you present to the insurer.
The Risk of Passing Away
Based on the latest government life expectancy data, Drewberry’s Life Expectancy Calculator works out the risk of death of the average person over a set period. Below is the risk of death in the next 20 years for a male of three different ages:
Life Insurance Advice: Setting Up a Policy
To set up a Life Insurance policy, the first step is to research the whole UK market to compare policies and work out which one is best for you.
Only once you’re armed with all of the details from the leading insurance providers can you make a decision on the best policy for your needs.
Medical Underwriting
Everyone is medically underwritten for Life Insurance. This means that, on application, you’ll be asked a series of medical questions to determine your health and the level of risk you present to the insurer, which will ultimately be translated into the cost of your premium.
Sometimes, insurers require further medical evidence than just your disclosures on the application, which may be as a result of:
- Your age
- The benefit you’re applying for
- Your state of health
- Your BMI
- Family history of illness
- Smoker status
- Any combination of the above.
Life insurers have set thresholds, or ‘triggers’, above which further medical evidence will be required. Medical evidence allows an insurer to better work out what the premium should be and assess the risk your pose accordingly.
Unfortunately, there’s no easy answer to whether the insurer will need further medical evidence.
This is because a younger person can apply for a higher benefit without the insurer needing medical evidence, whereas an older person applying for the same benefit could need a medical.
The younger person represents less of a risk to the insurer and the insurer is therefore willing to cover their life for a higher benefit without medical evidence than they would be willing to insure a higher-risk, older person.
Life insurance and Existing Health Conditions
The same is true for your state of health. Two people of the same age could apply for the same Life Insurance benefit but one might need medical evidence because they’ve ‘triggered’ the insurer’s criteria because of their medical history.
Again, the person with a health condition presents a higher risk to the insurer and the insurer may therefore require medical evidence to insure them even as they insure the healthy person for the same benefit based on the application alone.
Will I Need a Medical for Life Insurance?
In some cases, you will need a medical for Life Insurance, yes. This will depend on how much you’re looking to insure yourself for, how old you are and your existing state of health.
A full Life Insurance medical could involve a medical assessment by a doctor, which will be entirely paid for by the insurance company and done at your convenience.
They’re often held in private clinics around the country or alternatively you may be able to arrange someone to come to you. This will involve a full health MOT, including blood tests.
A less invasive medical may be a nurse’s screening, where a qualified nurse visits your home or place of work and does basic tests, such as your height, weight and blood pressure.
Sometimes, it may necessary for an insurer to write to your GP to collect your medical history. This could be especially likely if you’ve disclosed a pre-existing medical condition.
GP reports could be required on top of medical screenings – it all depends on you as an individual and what you disclose on your application.
Life Insurance With No Medical
It is possible to get Life Insurance with no medical screening, especially Whole of Life / Over 50s Life Insurance.
You may be able to get Life Insurance without a medical screening beyond the questions asked at application if you don’t trigger any of the insurer’s requirements for further medical evidence, such as a high benefit, older age, medical history, a combination of these or any other conditions that prompt the need for a medical.
Best 10 UK Life Insurance Companies
Below is a high-level overview of the top 10 UK life insurers each with their own policy details and their own way of assessing medical history.
Get Expert Life Insurance Advice
When there are so many different providers each with their own approach to setting up cover it can be tricky to know which one will be most suitable for your needs. We exist to help you make an informed decision and find the most cost-effective solution for your situation.
Why Speak to Us…
We started Drewberry because we were tired of being treated like a number and not getting the service we all deserve when it comes to things as important as protecting our health and our finances. Below are just a few reasons why it makes sense to let us help.
- There is no fee for our service
- We are independent and impartial
Drewberry isn’t tied to any insurance company, so we can provide completely impartial advice to make sure you get the most appropriate policy based solely on your needs.
- We’ve got bargaining power on our side
This allows us to negotiate better premiums for you than you going direct yourself.
- You’ll speak to a dedicated expert from start to finish
You will speak to a named expert with a direct telephone and email. No more automated machines and no more being sent from pillar to post – you’ll have someone to speak to who knows you.
- Benefit from our 5-star service
We pride ourselves on providing a 5-star service, as can be seen from our 3770 and growing independent client reviews rating us at 4.92 / 5.
- Gain the protection of regulated advice
You are protected. Where we provide a regulated advice service we are responsible for the policy we set-up for you. Doing it yourself or going direct to an insurer won’t provide this protection, so you won’t benefit from these securities.
- Claims support when you need it the most
You have support should you need to make a claim. The most important thing when it comes to insurance is that claims are paid and quickly. We are here to support you during the claims process and make sure it’s as smooth and stress free as possible.