Life Insurance is there to pay out a sum of money – either as a lump sum or a regular income – if you pass away while the policy is in force.
There are different types of policy and, as such, which Life Insurance is best for you will depend on your individual circumstances and what you require the policy for.
The question you should really be asking yourself is what types of Life Insurance are available and which best fits my needs.
Although no single answer can be given, there are a number of factors you can look at to help you judge the quality of a Life Insurance policy. These include:
The size of payouts can’t really be used to determine the quality of a Life Insurance policy, as this will depend on the amount that each individual client has chosen to cover themselves for.
You also need to think about value for money, as simply paying the most expensive premium won’t necessarily guarantee you the best life cover. You’re looking for the right policy at the right price, so think about a product:
Before thinking about any detailed consideration of the best Life Insurance, you need to decide what type of life protection policy is right for you and your circumstances.
For example, a Decreasing Term Life Insurance policy may be right if you want to protect your loved ones until the mortgage is paid off as the amount insured will fall alongside your mortgage.
A Level Term Life Insurance policy, meanwhile, is generally more suited to family protection or ensuring an interest-only mortgage, where the capital balance doesn’t fall over time, remains protected throughout your mortgage term.
Family Income Benefit is a type of Life Insurance which, rather than paying out a lump sum, pays out a regular income (either monthly or annually) to your dependents after your death.
This provides a much more manageable payout than a single lump sum and tends to be best for ensuring your loved ones can maintain their lifestyle should you pass away.
Whole of Life Insurance could be the right option if you want to ensure your loved ones have a lump sum after you’ve gone, possibly to pay funeral costs or meet an inheritance tax bill, as there is no set term – the policy lasts until your death providing you keep paying the premiums.
Some of the best UK Life Insurance companies on the market today include:
Of course, there a number of factors you should look at when comparing Life Insurance companies to find out which one is the best for you.
Most life insurers, like all insurers, publish their policy documents on their website, so you can see the level of cover you might be getting if you chose them.
We’ve provided a brief summary of the cover offered by the UK’s leading Life Insurance companies in the table below (for term assurance, the most commonly-purchased type of Life Insurance), but for more detail it always pays to check the policy wording carefully.
Aegon’s Scotland-based UK operations are wholly owned and operated by Dutch insurer Aegon N.V.
US insurance giant American International Group, Inc. (AIG) was first founded in 1919 and since then has grown to operate on a global scale. It provides a range of protection products for both individuals and businesses.
Aviva was founded in 1797, but the Aviva brand as it is today was formed in 2000 by the merger of Norwich Union and CGU PLC.
Guardian is a relaunched protection brand with a number of unique features to its policies.
L&G was formed as an insurance company for lawyers, by lawyers in 1836. It has since grown to become one of the country’s best-known financial services companies
LV is the UK’s largest friendly society, with more than 5.8 million customers, 1.1 million of whom are members.
Royal London previously operated Scottish Provident and Bright Grey as separated brands providing Critical Illness Insurance under the Royal London umbrella. From 2016, both were merged into the main Royal London brand.
Founded in 1812, Scottish Widows is today part of Lloyds Banking Group.
Vitality entered the UK market in 2007 with a joint venture with PruHealth and PruProtect, part of the Prudential Group. It has since bought out Prudential and is now branded solely as Vitality.
Zurich is a Swiss-based global insurance giant, operating in more than 170 countries. It employs around 55,000 employees worldwide, including 4,500 in the UK.
The cost of Life Insurance will depend on various different factors, with the main five being:
In the below table, we’ve laid out the monthly cost of Life Insurance for a smoker and non-smoker of various ages. They’re all looking for £250,000 worth of Level Life Insurance over 25 years and have no untoward medical history that would impact their premiums.
The quotes shown represent the best Life Insurance quotes from across the entire UK market, as of February 20th, 2019.
30 Years Old
40 Years Old
50 Years Old
Many of the best Life Insurance policies will have additional benefits above and beyond offering a payout on the policyholder’s death. These may be included as standard or offered for an additional premium.
It may seem natural to assume that the ‘best’ policy has the widest range of such additional cover areas, but consider what it is that you actually need and want.
Paying for more cover than you need is not the way to find the best Life Insurance, but some of the cover areas to think about include:
Most Life Insurance policies will offer Critical Illness Insurance as an add-on. If you choose this cover, it will increase the price of your premium; however, this is likely to be a better choice in terms of price than taking out Life Insurance plus a separate critical illness cover (CIC) policy.
If you add CIC to Life Insurance, the main thing to be aware of is whether you’re buying an independent policy or an integrated one.
With an integrated policy there can be only one payout, meaning that – should you make a successful critical illness claim for the full sum assured – there will be no further payout from the Life Insurance after you die.
Independent critical illness cover allows the Life Insurance element of the policy to continue after a successful critical illness claim.
Terminal illness cover is usually a standard feature of Life Insurance policies, allowing for a payout to be made before the policyholder’s death if they’re diagnosed with a terminal condition (having less than 12 months to live).
If the prognosis is that you’ll survive for less than 12 months, most Life Insurance policies will pay out early on Terminal Illness Benefit, meaning you have some financial support for you and your loved ones during this difficult time.
Independent Protection Expert at Drewberry
Generally, guaranteed Life Insurance premiums – where the monthly sum you pay doesn’t change through the life of the policy – are seen as ‘better’ than reviewable Life Insurance premiums.
This is because the insurer can’t change the amount they charge you
Reviewable premiums may be cheaper at the outset of the policy, but could prove significantly more expensive in the longer term as insurers are free to raise premiums over time.
This may happen if, for example, the provider experiences higher claim levels than it had anticipated, or if a major change in interest rates increases its cost base.
This option can mean that, if you find yourself in unfortunate circumstances, your Life Insurance policy remains in place without you having to continue to make premium payments; this may be, for example, if you can’t work because you’ve become seriously ill.
Policies can come with an enormous range of flexible options that can seem great to cope with changing, unpredictable circumstances. But you also need to remember that the more flexibility you build into a product, the more you’re likely to pay in premiums.
Some common options include:
It’s often best to write a Life Insurance policy into trust, but there are times when it may not be needed.
If you’re married and taking out a joint Life Insurance policy, for example, the payout usually goes directly to the remaining policyholder (your husband / wife / civil partner), so a writing your joint Life Insurance policy into trust isn’t usually needed.
However, if you were both to die at the same time, or the joint life policy is written on a second life basis, then writing the policy into trust would be of benefit. Writing your Life Insurance policy in trust costs nothing and can cut delays with probate, so it’s often worth it.
A discretionary trust is probably the best answer for joint Life Insurance policies, as these can be specifically designed to pay out to the second partner on request, if they survive at least 30 days after the first death occurs.
We exist to help you find the best life insurance for your circumstances and do so at the most competitive premiums. We are completely independent so can provide you with all the advice you need to make an informed decision.
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.
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If it is all getting a little confusing and you need some guidance then please do not hesitate to pop us a call on 02084327333 or email firstname.lastname@example.org.
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