I recently took out a Life Insurance policy and I wanted to share my research into the best Life Insurance Providers and Policies in the UK for 2021.
Why consider a Life Insurance Policy?
My main reason to take out a Life Insurance Policy is for financial protection for my daughter. If anything happens to me I want reassurance she will have some long term financial security, no matter what she does.
My daughter is 18 years old and I feel her future is uncertain right now. We are still battling a pandemic, educational institutions are trying their best to get give students the right level of eduction despite the disruption and jobs are far from stable. We discuss the need for her to work towards financial independence and to make good choices but life is not always as easy as that.
Other reasons to consider a Life Insurance Policy are:
- Covering your mortgage in the event of death or terminal illness.
- Funeral costs can be covered in your Life Insurance Policy. The average costs of a funeral in 2019 was £3,785, you can add this cost to your Life Insurance Policy.
- Covers any outstanding debts left when you die.
- You have children.
- Imbalance of incomes between you and your partner.
Terms Whole Life or Term Life Insurance
Term Life Insurance for a period of time
A lot cheaper, fixed monthly direct debit. Covered only for the term i.e. 20 years. Specific benefit, for period of time.
Whole Life Insurance
Covers your entire life it is guaranteed to pay out but you are going to pay up to 10 what you could be paying for term Life Insurance.
Life insurance considerations
Specific excludes i.e. death from alcohol, you need to look out for these.
Watch out for the up sells of critical health insurance.
Consider your personal circumstances i.e. who is the bread winner, do you have children. Do your own analysis i.e. what are the top 5 risks.
Factors: Age, lifestyle, do you smoke, current health, how much cover do you want, what period do you want cover for used for calculating premiums. Be honest.
How much to take out
Example would be approximately 6 x annual income of household or what mortgage you have, so what income would I need to protect the mortgage.
When calculating the length of time you can calculate the time of risk i.e. the next 20 years.
Here are a list of the top UK Insurers that offer a good Life Insurance Policy:
1. Aviva
Aviva has grown from the merging of, and the buying and selling of smaller companies such a RAC plc, Norwich Union and Friends Life, which some may remember. You could write a book about the history of the company, but Aviva now has a strong business with a sound reputation giving people confidence in which to invest.
Options:
- Life Insurance
- joint and single policies
- Level cover or decreasing cover
- Fixed term and over 50’s
- Income Protection Insurance
- Critical illness
- Free Parent Life Cover
- Prepaid funerals
You can use their tool to calculate the cover and costs.
Aviva DigiCare+ smartphone app offers lots of nutritional advice, fitness discounts and health check-ups.
Lots of information on the website
2. Legal and General
In 2021 Legal and General were named ‘Best Life Insurance Provider‘ by Moneyfacts.
Options:
- Term Life
- Whole Life
- Level Term Protection
- Decreasing Term Life
- Increasing Term Life
- Family Income Benefit
- Over 50’s Life Insurance
- Critical illness cover
Find out more on their website
3. LV
Liverpool and Victoria are one of the largest Insurers with over 5.8 million customers and mainly offer personal services such as car insurance, travel insurance and home insurance. Voted Best Income Protection Provider 2021 by Moneyfacts.
- Level cover
- Single or joint cover
- Decreasing cover
- Single or joint cover
- Critical illness
- Over 50’s Life Insurance
- Income protection (one of the UK’s leading providers in Income Protection)
Can run between 5 and 50 years
Find out more from their website
4. Zurich
If you are looking to invest your money with companies with a strong sustainable program then Zurich is one of the best in business.
“Zurich Group’s ambition is to be one of the most responsible and impactful businesses on the planet. Cutting down on paper and single-use plastics, using 100% renewable energy in our offices, and planting trees on behalf of our policyholders, are just some of the actions we’ve taken in the UK.”
Options:
- Term Life
- Level Term
- Decreasing Term
- Increasing Term
- Mortgage Life
- Over 50’s Life
- Whole Life
- Joint Life
- Policy in trust option
- Critical and terminal illness cover
5. Scottish Widows
Scottish Widows is one of the oldest Insurance providers in the UK.
Options:
- Term Life
- Level Term Life
- Decreasing Term Life
- Increasing Term Life
- Family income benefit
- Over 50’s Life Cover
- Trusts
Find out more on their website
6. AIG
American International Group (AIG) is an American multinational finance and insurance corporation with operations in over 80 countries.
To get Life Insurance from AIG you will need to go through an Independent Financial Advisor.
Options:
- Term Life Cover
- Level Life Cover
- Decreasing Life Cover
- Increasing Life Cover
- Over 50’s Life Insurance
- Family Income Benefit
- Life Start Term Insurance
- Instant Life Insurance
- Joint Life Insurance
- Terminal Illness Cover and Critical Illness
- Whole Life Insurance
Find out more on their website
Over 50’s Life Insurance Plans
Martin Lewis has written a great article on Over 50’s Life Insurance plans and the potential issues with these specific policies.
The main issue is that you could be paying in more than you get out, which sounds very ominous to me.
He also states that to get one of these plans you will need to commit to paying the premiums for your lifetime.
Summary
There are plenty of benefits for taking out a Life Insurance Policy and if you have kids, a mortgage, a partner or debts then it certainly would cover a lot of risk for the next period of uncertainty.
There are pitfalls to taking out a specific over 50’s Life Insurance Policy as highlighted by the very well informed Martin Lewis so a lot to consider there.
Make a checklist of what you need, what you want covered, how much you can afford etc before making any formal committent.
Reassured called me and gave me a list of 3 recommendations which was very useful so you can use their services for assistance. My personal preference is to spend my money on UK firms, rather than US firms, but that is to keep money in the UK.
If you already have a Life Insurance Policy and have a complaint about a payout or are at logger heads with your provider contact Financial ombudsman use the tool Resolve to draft up your complaint.
Sources:
Money to the masses
Resolve
Reassured
Money Savings Expert
