Life Insurance for Pilots

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26-06-2020

Life Insurance pays out on your death, offering a cash lump sum to your loved ones to help see them through any financial bumps in the road your absence causes.

Common uses for Life Insurance include protecting outstanding mortgages or other debts, covering funeral costs, leaving a lump sum legacy for loved ones or simply replacing your income.

You can use Life Insurance however you see fit, allowing you to choose the best option for your family.

Opt to include Critical Illness Cover to protect against the risks of illnesses such as heart attack, cancer and stroke.

Can Pilots Get Life Insurance?

In most cases, commercial pilots won’t have trouble obtaining Life Insurance. Of course, this will be subject to your medical history and the level of risk you present to the insurer, but for the most part those flying commercially for airlines such as British Airways, Virgin, easyJet etc. won’t have much preventing them from getting cover.

Helicopter pilots can sometimes have more difficulty obtaining Life Insurance depending on the nature of your work. Riskier helicopter pilot jobs such as providing transport to oil rigs or flying for the military could make it trickier to get Life Insurance.

This said, Drewberry has placed risk for hundreds of pilots over the years and has had a great deal of success in matching pilots with Life Insurance, so it always pays to have a conversation about cover regardless of how, when and what you fly.

What Does Pilots Life Insurance Cover?

  • Death
    Should you pass away during the life of your policy, it will pay out a cash lump sum (or potentially an income, depending on the type of insurance) to your beneficiaries.
  • Terminal Illness
    The vast majority of Life Insurance policies will pay out early if you’re diagnosed as terminally ill (usually defined as having fewer than 12 months to live).
  • Critical Illness
    If you add Critical Illness Cover and Life Insurance together, you get a policy that will pay out not just on death but also if you’re ever diagnosed as critically ill.

Types of Life Insurance for Pilots

There are several types of Life Insurance for you to consider as a pilot, such as:

  • Level Life Insurance
    Here the sum assured (what you’ll receive on death) remains fixed for the whole policy term. You’ll receive the same amount if you die during the first year of the policy as if you died in the final year. As such, it’s commonly used to protect an interest-only mortgage or cover other costs which will remain fixed over time, such as offering a level of family protection.
  • Decreasing Life Insurance
    The sum assured falls over the term of the policy, reaching zero by the end of the policy’s life. It’s used to cover liabilities such as repayment mortgages, where the amount outstanding also falls over time and so you need less and less Life Insurance as time goes on given your liability is decreasing each year.
  • Family Income Benefit
    Family Income Benefit is a little different from Level and Decreasing Life Insurance in that it pays out a regular income to your loved ones for the remainder of the policy term rather than a single lump sum. This can make it easier to manage the payout from a policy, which can feel overwhelming for some people when it comes as a large lump sum.
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Do I Need Life Insurance?

While not something anyone wants to think about, and while the risk of death is fortunately low for the average healthy adult in the UK, the reality is that tragedy could strike when you least expect it and so having protection can be incredibly valuable should the worst happen.

While death may not be likely today or tomorrow, especially as a pilot who needs to be in top shape to pass all the physicals required to retain their licence, the point of most Life Insurance policies is to protect you for the long run e.g. over the term of a mortgage.

It’s here that the risk of death starts to get larger when you consider it over the longer term.

The risk of death for a healthy, 30-year-old man over the next 10 years is 1 in 85. However, when you extend this period to 25 years, which is around the typical length for a mortgage, the risk rises to 1 in 18.

Life Insurance tends to be one of the least expensive insurances on the market, especially if you’re young and healthy. Given this, if you have a family and liabilities such as a mortgage, it tends to make sense to take out Life Insurance as soon as possible rather than delaying until you’re older or have unfortunately developed a health condition that could push up premiums.

Life Expectancy CalculatorA bit morbid we know, but this tool works out the risk of you passing away based on ONS Life Expectancy Data
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How Much Does Life Insurance Cost?

It’s difficult to put a figure on how much Life Insurance costs for pilots because each individual is different and will have different policy factors and personal needs from their Life Insurance, all of which will impact the price.

Policy Factors Affecting the Cost of Life Insurance

  • Length of Cover
    The number of years you require the cover for will impact the price of the policy. The longer the period Life Insurance is required for and the older you’ll be at the end of the policy, the more it will cost because the insurer will be taking on a higher risk by insuring you to an older age.
  • Level of Cover
    The amount of insurance you need will affect the cost of cover, with higher amounts naturally costing more to insure.
  • Type of Premium
    You can have guaranteed or reviewable premiums when it comes to Life Insurance. Reviewable premiums may be cheaper at the outset, but they can be raised over the course of the policy as the insurer sees fit. In general terms, guaranteed premiums work out cheaper over the full policy term as they won’t increase over time.

Personal Factors Impacting the Cost of Life Insurance

  • Age
    The older we are, the higher the risk of passing away and so premiums will increase based on your age at the start of the policy.
  • Smoker status
    Smoking shortens lifespans and raises the risk of deadly illnesses, so smokers pay higher premiums — sometimes at least double — than non-smokers.
  • Current state of health
    Any pre-existing medical conditions you have, as well as your height and weight, will all be considered when calculating the cost of Life Insurance premiums.

How Much Pilots Life Insurance Costs

In the table below, we’ve outlined the cost of Life Insurance for a pilot of three different ages, wanting £250,000 of cover for 25 years on a level and on a decreasing term basis.

To get these quotes, we’ve assumed:

  • No critical illness cover
  • The individual is a non-smoker
  • They are a commercial pilot
  • The individual is in good health
  • They need £250,000 of cover over 25 years.

Age

Decreasing

Level

25

£6.00

£7.41

35

£8.90

£12.34

45

£18.12

£27.56

As you can see, pilots Life Insurance can be obtained pretty inexpensively if desired, with premiums starting at less than £10 a month for a healthy, non-smoking, 25-year-old pilot. For personalised quotes applicable to your situation, please don’t hesitate to get in touch for fee-free advice.

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Frequently Asked Questions

  • Should I Add Critical Illness Cover?

    While Life Insurance provides protection if you were to pass away during the term of the policy, you may want to consider what would happen if you developed a critical illness as well.

    Adding Critical Illness Insurance to your policy will provide a payout should you suffer a critical illness specified by the insurer. The most common claims on such policies are for cancer, heart attacks and strokes, although conditions such as multiple sclerosis, Parkinson’s disease and loss of limbs also tend to be included.

    As you’re more likely to become ill than you are to pass away, the cost of Life Insurance with added Critical Illness Cover is significantly more than Life Insurance on its own. You may therefore choose to have the Critical Illness Insurance pay out a lesser amount than the full Life Insurance benefit to keep costs low.

    When Income Protection Could Be More Suitable…

    If you’re worried about an illness or injury stopping you working and paying the mortgage on the family home or meeting other bills and expenses it may make more sense to opt for Pilots Income Protection alongside Life Insurance rather than adding Critical Illness Cover.

    This covers you for any illness or injury which stops you from working and will pay out a regular income for as long as you need it, rather than just one lump sum.

    Income Protection tends to be seen as more comprehensive than Critical Illness Insurance because it pays out for anything that medically prevents you from working, rather than just an illness of a specified severity.

  • Should I Opt for Indexation?

    Some people prefer to index-link Life Insurance so that their payout won’t be eroded by the effects of inflation.

    Life Insurance is a long-term product, so it’s inevitable that inflation will take a bite out of your benefit over time.

    If the benefit is for family protection, then rising prices (inflation) means that the basket of goods and services your payout could buy in the future may be smaller than today, not leaving your loved ones with enough to maintain their standard of living if you passed away in the future.

    This is less of a concern with Decreasing Term Insurance, because it is used to protect a known debt such as a repayment mortgage with the benefit designed to fall over time.

    However, if you are trying to protect your family’s standard of living until they are of an age where they are self sufficient, inflation could do a lot of damage to the real purchasing power of the benefit over time.

    In such cases opting to index your benefit amount means your family would have the same purchasing power whether a claim is made today or 20 years down the road.

  • Reviewable or Guaranteed Premiums

    With Life Insurance you can choose to either guarantee your premiums so that they stay fixed (unless you’ve indexed them, in which case premiums will rise each year along with your benefit rising with inflation).

    The alternative is reviewable premiums. As the insurer can adjust these each year as they see fit, the issue becomes that you never know how much your Life Insurance will cost year-on-year, and your premiums could rise significantly over the course of your policy.

    Whether or not reviewable premiums are right for you depends on your circumstances, but they can increase the cost of cover significantly over time. Guaranteed premiums may start off more expensive, but they’ll usually work out cheaper over the life of the policy.

  • Will My Medical History Impact My Life Insurance Application?

    When you apply for your Life Insurance you’ll be medically underwritten, which entails you being asked a series of medical questions to assess your current state of health and therefore the level of risk you present to the insurer.

    Although this is sufficient for insurers to price cover for the vast majority of applicants, in some instances further medical evidence may be required because of:

    • Your age
    • The size of the benefit you’re requesting
    • Medical conditions / your state of health
    • Your BMI
    • Smoker status
    • Family history of hereditary illnesses
    • Any combination of the above.

    While most applications don’t need additional information, some will. It’s difficult to say whether or not additional medical evidence will be required because the thresholds differ from insurer to insurer. Some are more lenient than others and it will also depend on the applicant.

    Additional information required may include a GP report, a nurse’s screening or a full-blown medical with a doctor, which will all be paid for by the insurer and held at your convenience.

  • Will I Need a Medical for Life Insurance?

    Not everyone needs a medical for Life Insurance, so it’s perfectly possible to get Life Insurance with no medical screening.

    Especially if you’re young, the benefit you’re applying for is modest and you don’t have any health conditions then it’s entirely reasonable that you could take out cover without ever needing a medical examination.

    For pilots Life Insurance, this might be especially the case given that you have to be in the best shape possible to pass regular physicals to ensure you remain fit to fly.

    If, however, you’re a little older and are applying for a higher benefit, you may find that the insurer requests further medical evidence from you. This could take the form of a GP report, a nurse’s screening or a full blown medical with a doctor depending on what comes up in the application.l

  • Do I Need to Write My Life Insurance Into Trust?

    For most people, buying Life Insurance can be like buying peace of mind. You know that your loved ones will be taken care of no matter what happens to you.

    However, what many people don’t realise is that the payout from a Pilots Life Insurance policy may be subject to inheritance tax, which could take a 40% bite out of any legacy you leave for your loved ones.

    If you’ve gone to all the trouble of carefully calculating how much your loved ones will need then you don’t want anything to take cash out of your family’s hands, but inheritance tax could do just this.

    While Life Insurance is free from income tax, if you pass away and the Life Insurance policy pays out to your estate it may be subject to inheritance tax at 40%.

    This bill must usually be paid before your family even gets access to your estate, which could cause significant financial hardship. Many people don’t realise this and could be in for a bit of a shock to receive such a big bill form HMRC at a difficult time.

    Inheritance Tax for Unmarried Couple with Life Insurance

    If you’re not married then the inheritance tax implications on any wealth you leave behind, including Life Insurance payouts, are even greater.

    While married couples can leave Life Insurance to each other usually IHT-free, there’s no such protection for cohabiting couples — you need to be married.

    With a rise in the number of families made up of unmarried couples named in each other’s Life Insurance, it’s rapidly becoming the case that the spousal exemption is available to fewer and fewer people.

    Avoid Inheritance Tax by Writing Life Insurance into Trust

    The best way to avoid inheritance tax on Life Insurance is to write the policy into trust from the outset.

    This involves the payout going into a legally separate entity (the trust) from your estate, so it never counts towards your inheritance tax bill. The trustees (those people you’ve entrusted to distribute the funds should you pass away) then pass on the benefit to your loved ones from the trust, sidestepping any inheritance tax burden on the payout.

    Although this may sound complicated, it’s free of charge and Drewberry’s advisers help our clients with this every day and are more than happy to walk you through the steps required to ensure your loved ones receive every penny they deserve.

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Compare Best Pilots Life Insurance

aegon

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

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

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

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

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

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

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

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

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

Zurich is a Swiss 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

Get Pilots Life Insurance Quotes & Expert Advice

Drewberry’s team of expert advisers arrange cover to protect clients and their loved ones every day, so we’ve got a wealth of Life Insurance tips and tricks to pass on to make sure you get the best deal.

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Jonathan Chadwick
08/06/2020
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