What is the Best Life Insurance?

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.

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:

• Clarity of policy wording
• The number and range of exclusions
• If premiums are guaranteed
• Optional extra areas of cover
• Percentage of claims paid.

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:

• Covering you for an appropriate period of time
• Offering the payout level you need
• From a trusted provider
• Giving the level of flexibility you’re comfortable with
• At the cheapest price you can find (providing the above criteria have been met).

Which Life Insurance is Best for Me?

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 your repayment mortgage is paid off as the amount insured will fall alongside your outstanding mortgage balance.

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.

Do I Really Need Life Insurance?

Before asking the question which is the best Life Insurance it is important to make sure it is appropriate. Life Insurance is really only valuable if you would be leaving loved ones or an outstanding debt behind.

For many of us there are families who would be left in financial difficulty or mortgages that need repaying. That’s where Life Insurance can step in to provide invaluable financial support should the worst happen.

What are the chances of dying…

Unfortunately death is a risk we often shy away from thinking about, underestimating the chances of it happening and the impact it would have on those around us.

• The Drewberry™ Health & Protection Survey found we are SIX times more likely to pass away before retirement than most people think.
• The survey also found 2 in every 5 households have no more than £1,000 in cash savings to see them through should they fall on hard times, such as after the death of a breadwinner.

Below is data taken from our Life Expectancy Calculator which is powered by ONS Data showing the likelihood of passing away at various ages.

Insurer Liverpool Victoria are very transparent with their claims data publishing the following statistics with regards to their Life Insurance policyholders.

• 63 was the average age for a female life insurance claim
• 47 for a female critical illness claim
• The youngest life cover claimant was 24 years old
• The average person had had their policy for just 9 years upon sadly passing away and leaving their family needing to claim.

What Is Not Covered By Life Insurance?

Life Insurance has few standard exclusions however most policies tend to exclude the following.

• If the death is self-inflicted
• If the death is caused by misuse of drugs or alcohol
• If the death is due to involvement in terrorist activity or war
• If the death is caused by reckless activity or gross negligence

Suicide is excluded with most insurers however it is often only excluded for a set period of time after taking out the policy – typically 12 months.

Will Life Insurance Payout A Claim?

If you are going to spend your hard earned money on a Life Insurance policy you want to know if the worst did happen that it would pay out.

In 2017, the Association of British Insurers collated the industries claims statistics and published results showing 98% of term insurance claims were successful, as were 99.99% of whole of life claims.

For the small proportion of claims that weren’t paid, the ABI cites that this was largely due to clients not disclosing important information when taking out the policy, or claiming for a condition that is not covered by the policy.

When setting up your policy it is important to be as open and honest as possible with regards to existing health conditions and any hazardous pursuits you may undertake. It can be really valuable speaking to an adviser to make sure you have done everything you can to submit an accurate application.

If you need any help them please do not hesitate to pop us a call on 02084327333, our advisers are here to make sure you have everything set-up correctly.

How Much Does Life Insurance Cost?

The cost of Life Insurance will depend on various different factors, with the main five being:

• How much you choose to insure your life for
• How long you want to insure your life for
• The sort of life insurance policy you choose (e.g. Level / Decreasing Term Assurance, Family Income Benefit or Whole of Life Insurance)
• Your current state of health and any pre-existing medical conditions
• Your smoker status.

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.

Additional Life Insurance Cover Options

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:

Life Insurance with Critical Illness Cover

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

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.

Michael Barrow
Independent Protection Expert at Drewberry

What Are The Best Life Insurance Premiums?

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.

Waiver of Premium

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.

Flexible Options

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:

• Guaranteed insurability
  Allows you to increase your level of cover without a further medical assessment
• Benefit indexation
  The level of your potential payout will increase in line with inflation
• Renewable term Life Insurance
  Gives the option to renew at the end of the policy without a further medical assessment
• Convertible term Life Insurance
  Can be turned into a whole of life policy without a further medical assessment
• Renewable and convertible hybrid Life Insurance
  A term policy with the potential for renewal and/or to be turned into Whole of Life cover

Is it Best to Write Life Insurance Into Trust?

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.

What Are The Best Life Insurance Companies?

Some of the best UK Life Insurance companies on the market today include:

• Aegon
• AIG
• Aviva
• Guardian
• Legal & General
• Liverpool Victoria
• Royal London
• Scottish Widows
• Vitality
• Zurich

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

Aegon’s Scotland-based UK operations are wholly owned and operated by Dutch insurer Aegon N.V.

• Minimum entry age: 18
• Maximum entry age: 89
• Minimum term: 1 year
• Maximum term: 50 years (cover must end before an individual’s 90th birthday)
• Maximum cover: Unlimited

AIG

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.

• Minimum entry age: 18
• Maximum entry age: 88
• Minimum term: 2 years
• Maximum term: 70 years (cover must end before an individual’s 90th birthday)
• Maximum cover: Unlimited

Aviva

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.

• Minimum entry age: 18
• Maximum entry age: 89
• Minimum term: 1 year
• Maximum term: 50 years (cover must end before an individual’s 90th birthday)
• Maximum cover: Unlimited

Guardian

Guardian is a relaunched protection brand with a number of unique features to its policies.

• Minimum entry age: 18
• Maximum entry age: 65
• Minimum term: 1 year (Level and Increasing Cover) / 5 years (Decreasing cover)
• Maximum term: 72 years (cover must end before an individual’s 90th birthday)
• Maximum cover: £15 million

Legal & General

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

• Minimum entry age: 18
• Maximum entry age: 77
• Minimum term: 1 year (Level Cover) / 5 years (Decreasing cover)
• Maximum term: 50 years (cover must end before an individual’s 90th birthday)
• Maximum cover: Unlimited

Liverpool Victoria

LV is the UK’s largest friendly society, with more than 5.8 million customers, 1.1 million of whom are members.

• Minimum entry age: 17
• Maximum entry age: 79 (Level or Decreasing cover) / 59 (inflation-linked cover)
• Minimum term: 5 years
• Maximum term: 45 years
• Maximum cover: Unlimited

Royal London

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.

• Minimum entry age: 18
• Maximum entry age: 70
• Minimum term: 1 year
• Maximum term: 72 years
• Maximum cover: Unlimited

Scottish Widows

Founded in 1812, Scottish Widows is today part of Lloyds Banking Group.

• Minimum entry age: 18
• Maximum entry age: 79 (must end before individual’s 90th birthday)
• Minimum term: 1 year (Level and Increasing) / 3 years (Decreasing)
• Maximum term: 72 years
• Maximum cover: £25,000,000 (Level and Decreasing) / £15,000,000 (Increasing)

Vitality

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.

• Minimum entry age: 16
• Maximum entry age: 74 (cover must end before age 90)
• Minimum term: 5 years
• Maximum term: No maximum (cover must end before age 90)
• Maximum cover: £20,000,000

Zurich

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.

• Minimum entry age: 16
• Maximum entry age: 83 (must end before individual’s 90th birthday)
• Minimum term: 1 year
• Maximum term: 50 years
• Maximum cover: £40 million

Expert Advice on Finding the Best Life Insurance

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.

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 2335 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.

We are here to help.

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 help@drewberry.co.uk.

Tom Conner
Director at Drewberry