Which Life Insurance Providers Offer Best Policies In 2018?

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When looking to find the best life insurance policies, we look for a couple of things. The first is to identify companies with the most comprehensive cover. The second is to find if they’re offering it at the lowest cost.

For our 2018 update, we’ve delved deep into independent reviews, analysed data from various sources and taken into consideration the customer experience ratings data compiled by independent consumer help group, Fairer Finance.

All insurance providers offer different levels of cover at various price points. Some tend to specialise in a particular type of life insurance such as term life cover or over 50s Life Insurance.

For that reason, we’ve split our findings into three different sections with the top ten life insurance providers listed for each category:

  1. Term Life Insurance
  2. Whole of Life Cover
  3. Over 50s Life Insurance Plans

The tables below list the best provider and the best product they have on offer for 2018. There may be terms used that you aren’t familiar with, so we have included a brief guide to buying life insurance, so you know what it all means. That’s continued below the charts.

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Ten of the Best Life Insurance Providers for Term Life Insurance

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Ten of the Best Life Insurance Providers for Whole of Life Insurance

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Ten of the Best Life Insurance Providers for Over 50s Cover

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While the above charts do offer the best price for comprehensive levels of cover, with many being flexible, there can be factors such as health conditions, being a smoker, and other qualifying criteria by each insurer that can affect premiums. That’s why you should know and understand that…

There is No Type of “Universally Best” Life Cover Plan in Existence…

Some of the many factors that insurance providers consider by each applicant include:

  • Your age
  • Your current and historical financial standing
  • Any health issues, including those of your closest family
  • Your profession

In layman terms – what’s great for you likely won’t be great for your significant other. Every policy is as unique as the person’s whose life is insured under the terms, provisions and clauses set out in every type of life insurance/assurance policy.

To find the best life cover to fit your needs, the tables above can be a good place to start doing your research by getting quotes from each of the top performing providers.

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An alternative is to use our free advisory service where instead of you comparing at least ten providers, our knowledgeable team of experts will screen over 300 life insurance companies. We’ll stack the best against each other and return to you a customised list of the best providers with comprehensive policies suitable to your unique circumstances and with the lowest premiums…

Making Sense of the Terms Used When Buying Life Insurance

  • What is Life Insurance about Really?

For the person buying the life insurance, it’s best thought of as buying peace of mind. A policyholder gains nothing from a life insurance policy.

Where it matters is for your loved ones. It’s their financial future. It’s peace of mind for you to know that if the worst happened, your partner would still have a roof over his/her head. Be able to put food on the table and feed the kids. 

The loss of a household earner will impact the household income significantly. The higher the earnings, the more the impact. Life insurance is financial protection for the nearest and dearest of those insured.

  • How Life Insurance Works

Buying life insurance is like paying to enter into a contract. And keep on paying to keep that contract active.

The policy is the contract you pay for. The terms of the policy set out when the policy requires the insurance company to pay out the premiums promised within the policy document.

The fine print is imperative to any contract. You, as the insured have obligations to be met, as does the insurer. Standard commitments you’d expect not covered is that the policy provider will not pay the sum agreed on the policy if the insured commits suicide within a specific time frame of entering into the contractual agreement. 

This ensures that nobody can take their own life deliberately for the financial gain of someone else, thereby, it’s an element of security to the insurance provider. It’s also a safeguard for anyone experiencing suicidal thoughts and of the belief that their family would receive hundreds of thousands if they act on their feelings.

The fine print of each insurer will state the terms that must be met under the contractual agreement for it to remain valid.

In the case of mortgage protection insurance, those are only active until the mortgage is paid, and for term life insurance, the policy remains active for the duration agreed such as 10 years to 25 years.

And in all but one (endowment), the policies have no cash value so they cannot be treated as a way of savings. Life insurers pay out in the event of death, and when people live past the terms of term insurance policies, all the premiums paid remain with the insurance provider. They pay large sums of money out on the death of customers and make their money throughout the life of each customer.

  • How much life cover should I be insured for?

This is a question that comes up repeatedly, and it has to be answered with follow up questions:

  1. Do you have people in your life who would need financial assistance in the event of losing you from their life?
  2. Of everyone who is in anyway financially dependent on you, how much would losing you impact them financially?
  3. How much of a salary would your household lose if you weren’t around to bring in a wage? And in your employment, does your employer have any death-in-service benefits that could assist those dependent on you?

For more detailed advice on how much and what type, click this link: How Much And What Type Of Insurance Is Needed

The Average Cost of Life Insurance in the UK

The cost of life insurance will vary by individual. However, as a ballpoint figure, a 38-year old applying to SunLife for a ten-year term life insurance policy can expect to pay £10 per month for a £100,000 policy as a non-smoker in good health. This doubles to £20 per month on average for the same policy but as a smoker with no current health conditions at the time of applying for a quote.

Our research into how much it costs for a £500,000 life insurance policy, which for the majority of people would be considered as being overinsured, revealed that of the consumers polled by Critical Research, most people assumed the average cost for a £100,000 policy would be £51 per month, so it is cheaper than you perhaps thought it would cost.

The Different Types of Life Insurance Available

While it is a good idea to compare different providers when researching life insurance, you do need a place to start. That place is with the type of life insurance that’s most suited to your needs. There are as many types of policies as there are providers.

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Some of the larger insurance providers will cater to all types of life insurance, whereas there are what are considered niche specific insured providers, who perhaps only cover term life insurance for those with diabetes or others who specialise in providing cover for cancer patients.

A list of the most common types of policies are:

  • Whole of life cover

Whole of life insurance is as it sounds for the rest of your life. It sounds favourable on the surface, but there are some things you ought to know. Like the quotes you receive for your monthly premiums are not fixed for life. They are periodically reviewed, usually every five years. When they are, the insurance provider can increase the premiums. If you prefer to lock in a premium, that’s going to cost you extra from the outset.

The upside is, once it’s done, it’s done. You keep up with your monthly premiums, and you don’t have to worry about it expiring. Or being close to renewal and finding yourself worrying about all those medications you’re on now that you weren’t when you took the policy out.

There is a guaranteed element, which is why people often want to choose this cover, but when you learn what the costs can be, it may work out to be out of your comfort zone.

To get to grips with whole of life cover and learn what you would agree to with this type of cover, read our guide to whole of life insurance cover.

  • Level term cover

With a level term policy, everything remains constant throughout the term of the policy. The contract lays out the amount you’ll pay each month in premiums to the insurer, and the insurer agrees to pay the agreed upon fixed amount sum upon your death. The term part is how long the policy will be active for. That can be ten years, fifteen, twenty years and up. When the term is over, the plan expires, at which point you’d have the option to renew, switch to a different policy, or remain uninsured. There is no cash value paid out if the policy expires. The sums paid are not returned.

See our explanatory guide to level term life insurance

  • Over 50 life insurance

Many a consumer think they need this type of insurance just because they’re over 50. It’s not required. Insurers are not allowed to discriminate based on age. It’s the law. Insurers hype the guaranteed element of the over 50s plan. For those who feel you have health issues that would drive your premiums up, still get the quotes for a more general life insurance policy first because there’s no guarantee that you need the assurance. If that were the case, you’d likely to have two choices. To increase your life insurance policy premiums in favour of a higher lump sum payout, or stick to the same payout you were considering in support of lower monthly premiums.

See: Over 50 Thinking About Life Insurance? Here are Your Real Options

If you find your quotes are higher than you anticipated, then over 50s plans can be beneficial because of the guaranteed acceptance for the cover.

  • Decreasing term life insurance

A decreasing term policy costs less than a level term as the sum insured is not fixed. It’s an agreed amount whereby your premiums remain constant through the duration of the policy but the amount your policy paid reduces. It’s often used as insurance for a repayment mortgage. The more payments you make to your home, the less your dependents will need to repay the bank.

Click here for more details on decreasing term life insurance

  • Life insurance with funeral cover

With the cost of funerals rising, some insurance providers don’t force your loved ones to use the money they pay out to pay for your funeral. You can add on funeral cover to your life insurance policy, whereby the insurer will meet the funeral costs in addition to your full sum being paid out to your loved ones. Naturally, there will be a cap on the expenses the policy will pay such as £5,000. This can work out cheaper or more expensive than purchasing a prepaid funeral plan.

  • Life insurance with critical illness cover

This type of policy covers you for two scenarios. 1) Full payment of your policy’s insured amount in the event of your death. 2) Upon being diagnosed with a defined critical illness.

A key term to critical illness is “defined”. A policy could list a defined illness as stage four cancer. That would mean the policy would only pay out upon you being diagnosed with cancer once it’s spread to other parts of your body. This would make it difficult to treat and unlikely to be cured.

If that were the case, you’d likely want a more sympathetic insurance provider with a better policy that would provide a payout for your care and any medical bills throughout the treatment process before it spread. A policy listing a pre-malignant tumour as a defined illness and therefore would cover you in the event of an early stage diagnosis of a cancerous tumour before it spread to other major organs.

Critical illness can be integrated with life insurance, or it can be purchased as a standalone policy.

If you feel this type of cover would be important, find out more about how critical illness cover works and how to shop for the policies smartly.

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Reduce Premiums By Comparison-Shopping

Insurance companies are not the only providers of life insurance in the UK. Building societies, banks, high street retailers, and supermarkets also offer these plans. In some cases, a company may sell insurance plans provided by another company.

For example, Legal & General life policies are offered by Nationwide Building Society. Where the plan is purchased may determine the premium even if the policy and insurer are identical. These factors reveal the importance of comparison-shopping to find the best offer.

A life insurance broker deals with multiple life insurance companies and some brokers operate online. A broker may pass a portion of its commission to policyholders so it can offer premiums that are more competitive.

Some brokers rebate commissions throughout the term of a policy, resulting in an ongoing premium reduction. UK residents can find competitive quotes from both online brokers and price comparison websites.

Cashback websites offer third-party rebates to consumers purchasing life cover directly from insurance companies. Cashback and voucher offers are usually the best options only when the premium is at or near the top of the table. Offers for cash back differ between sites so the same insurance company may offer a different voucher or cashback deal through different cashback sites.

Direct Purchasing

Some UK residents bypass price comparison and cashback sites and purchase their life cover directly from a provider. Based on the age, smoking status, and health of the insured and the term of the policy, different providers are best. LV=, Aviva, Saga, Sainsbury’s Bank, and Zurich are several providers to look at during the research phase.

When buying insurance direct, it is essential to comparison-shop, but this process can be time-consuming. Consumers wondering which kind of life insurance is best for them should get free advice from a financial provider or an insurance professional in an unbiased position. Some UK non-profits and charities offer free advice regarding financial and insurance issues.

After identifying the cover that is most suitable, these consumers should use the guidance above to locate the best plan with the most reasonable premium.

Without Life Insurance in place, this is All the State Will Pay

The Bereavement Payment Support System came into effect on the 6th April 2017. For those who have lost, or know someone who has lost a civil partner, husband or wife since the introduction of Bereavement Support, here’s what you need to know and why everyone needs financial protection now…

The types of payments for families who have suffered a bereavement

  • Bereavement Support Payment

This only applies to those who have lost a loved one since the 6th April 2017. If any family loses a loved one, the eligibility criteria to receive financial support is that a) your husband, wife or civil partner has paid at least 25 weeks National Insurance contributions and b) died because of either an accident at work or a disease caused by his/her work.

In addition, they must have been living in the UK or another country that has a similar Bereavement Support Payment system in place, at the time of their demise and be under the state pension age.

The payments are based on a first lump sum payment of either £2,500 or £3,500. Following that, monthly payments of either £350 at the higher rate can be made, and for the lower rate, only £100 per month will be paid. For both amounts of monthly payments, they will only be paid for a maximum of 18 months.

The higher rate is only payable to those in receipt of Child Benefit. That means for a single parent with dependents, the maximum Bereavement Support Payment will be £9,800 with the £350 monthly payments being stopped after 18 months. For those who aren’t entitled to Child Support, the maximum Bereavement Support Payment is £4,300 paid over 18 months – a £2,500 lump sum payment followed by 18 monthly payments of £100.

The full amount will only be paid if it’s claimed within three months of losing your civil partner, husband or wife. It is possible to claim Bereavement Support Payments up to 21 months after a partner has passed away, but the payments will be reduced once it’s been longer than three months.

If you’re entitled to any other benefits, the first year won’t be affected, but after twelve months, the monthly payments will be considered as part of your overall benefits and therefore may be reduced in line with the benefit cap, which keeps payments below £20,000 per year in most areas, other than Greater London.

All other benefits below are only applicable to deaths prior to the 6th April 2017.

  • Bereavement Allowance

To receive Bereavement Allowance, you must have been over the age of 45 years old at the time when you lost your wife, husband or civil partner and be under the state pension age.

The amount you’ll be eligible to receive is based on your National Insurance contributions. Your age will determine how much you’ll be eligible to receive.

The maximum for someone aged 45 years old is £34.11 per week. For someone who was 50 years old when they lost a partner, the maximum weekly payment is £73.91. The maximum amount available is £113.70 per week and that’s for those aged between 55-years old and state pension age.

All Bereavement Allowance payments will affect any other state benefits you receive. In addition, there is a benefit cap in place, so should you be unable to work for any reason, the maximum state benefit anyone’s eligible for is limited, and the Bereavement Allowance is an amount that’s calculated for the Benefit Cap.

Benefit Cap Information

The maximum benefit entitlement across most benefits is £20,000 per year for a single parent with children living at home. If your children are no longer live with you, the maximum state benefits for someone living alone is £13,400. Those figures rise for those living within the Greater London area with single parents who have dependents eligible for up to £23,000 per year maximum and if the loss of someone leaves you living alone, you’ll only be able to claim a maximum of £15,410 per year.

  • Widowed Parents Allowance

The Widowed Parents Allowance is only applicable to those who lost a wife/husband/civil partner before the Bereavement Support Payment was introduced on the 6th April 2017. In addition, you must be under state pension age, meet the requirements of Child Benefit for one child (even if you don’t currently claim it) and your partner must have paid National Insurance contributions or his or her death was caused by an industrial accident or have been caused by a disease related to the work he/she did.

The maximum payment is a weekly allowance of £113.70 and that is only when your late wife/husband/civil partner has paid their maximum National Insurance contributions.

Payments will only be continued as long as you’re entitled to Child Benefit. Once you aren’t entitled to Child Benefit, the payments stop. If that’s within the first year of your Widowed Parents Allowance beginning, you’ll be eligible for the Bereavement Allowance for the remainder of the 52 weeks following your late civil partner/wife/husbands passing.

Life Insurance is Fast Becoming a Necessity rather than a Luxury to Provide Peace of Mind

For the wealth and wellbeing of your family, it’s worth considering how and who brings in what income. As many parents are working parents, with a large proportion of families being dual income homes, the loss of a loved one is going to impact on household finances.

If you or your partner were to lose a wage coming into the household, consider what the salary would be for each person if something terrible were to happen to your loved one, or yourself.

  • Could your family survive comfortably with a maximum of £9,800 paid over 18 months before being left with no additional financial support?
  • How much National Insurance have you or your partner paid over the years because that will impact on the amount that they’ll be eligible to receive?
  • In all cases, the payments are only going to continue for one year, before any bereavement payments begin to be affected by other benefits, pushing the state benefit your civil partner, husband or wife receives towards the benefit cap limit, after which, the household income will drop again to keep it below £20,000 per year to take care of your family with you gone.

The only way to safeguard your family’s financial well-being for the future is to take things into your own hands, put life insurance in place, and then you’ll know they’ll be taken care of financially for way beyond a year after losing a loved one.

This is especially important for those who have had breaks in employment, causing a gap in NI contributions, as that could mean there’s lower or even no payments eligible for the surviving spouse, civil partner, husband or wife.

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