Best Life Insurance Policy UK. Top 10 Companies For 2021
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 2021 update, we’ve delved deep into independent reviews, analysed data from various sources and taken into consideration the customer experience rating data compiled by independent consumer help group, Fairer Finance.
Without life insurance protection would those close to you be able to do the following if you weren’t around to help financially?
- Pay off the mortgage
- Clear any outstanding debts in your name
- Fund their current lifestyle
- Buy a new home
- Plan for a funeral
- Deal with inheritance tax
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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:
- Term Life Insurance/Term assurance
- Whole of Life Cover
- Over 50s Life Insurance Plans
Top 10 Life Insurance Companies
Below we list the best provider and the best product they have on offer for 2021. There may be terms used that you aren’t familiar with, so we have included a brief guide to buying life insurance and life insurance claims (life insurance payout), so you know what it all means.
Ten Of The Best Life Insurance Providers For Term Life Insurance
After detailed research we have determined that the UK life insurance companies below were often suggested to be the best for Term Life Insurance:
- Scottish Widows – Protect Personal
- LV= – Flexible Protection Plans
- Nationwide Building Society – Multi-Protection
- Legal & General – Level or Decreasing Term Assurance
- Sainsbury’s Bank – Level Term Insurance
- Barclays Bank – Mortgage Protection Plan
- Zurich Insurance – Life Protection
- AA (From L and G) – Mortgage Protection
- Aviva – Life Insurance
- VitalityLife – Comprehensive Cover
Ten Of The Best Life Insurance Companies for Whole of Life Insurance
Through research by our team has concluded that the following UK life insurance companies below were regularly suggested to be the best for whole of life insurance:
- Zurich – Adaptable Life Plan
- Vitality – VitalityLife
- NFU– AIG Whole of Life Insurance
- Royal London – Pegasus Whole of Life Plan
- Legal & General – Whole of Life Protection Plan
- Scottish Widows – Protect Whole of Life Cover
- Aegon – Whole of Life Plans
- AIG Life – Whole of Life Insurance or Care Coverage
- LV= – LifeTime+
- Old Mutual – Protect Guaranteed Whole Of Life Plans
Ten Of The Best Life Insurance Policy Providers For Over 50s Cover
The Insurance Hero team has concluded that the UK life insurance organisations in the list below were suggested to be the best for whole of life insurance:
- Smart Insurance – Smart Guaranteed Life Insurance Coverage (For Over 30s)
- Legal & General – Over 50s Life Insurance Plan
- Sainsbury’s Bank – Over 50s Life Insurance Plans
- AA – Over 50s Life Insurance Plan
- Post Office Money – Over 50s Life Cover
- Sunlife – Guaranteed Over 50 Plan
- Royal London – Over 50s Life Coverage
- Aviva – Guaranteed Lifelong Protection Plan
- Santander Bank – Over 50’S Life Assurance
- Liverpool Victoria LV= – 50 Plus Plan
The above comparisons which we researched here do offer the best price for comprehensive levels of cover, with many being flexible. However, there can be factors such as lifestyle factors, pre-existing health problems, terminal illness, alcohol abuse, being a smoker, and other qualifying criteria like drug overdose by each insurer that can affect premiums.
That’s why you should know and understand that when taking out life insurance…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 excellent for you likely won’t be great for your significant other. Every life insurance cover policy is as unique as the person whose life insures under the terms, provisions and clauses set out in every type of life insurance/assurance policy.
For finding the best life cover to fit your needs, the tables above can be an excellent place to start doing your research by getting insurance quotes from each of the top-performing providers.
Comprehensive Life Insurance Comparisons. Cheaper Than Going Direct.
An alternative is to use our free life insurance cover advisory service where instead of you comparing at least ten providers, our knowledgeable team of experts will screen over 300 life insurance companies to find you the best life insurance quotes. We’ll stack the best against each other and return 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 cover, think of 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 their head as a rent or repayment mortgage debt can repay in full. Maintain an acceptable lifestyle by being able to put food on the table and feed the kids and pay off any other loans or financial debts.
The loss of a household earner will impact the household income significantly. The higher the earnings, the more the impact. Life insurance cover including decreasing term insurance is financial protection for the nearest and dearest of those insured.
How Life Insurance Works
Buying the best life insurance cover is like paying to enter into a contract, and you as the policyholder need to keep on paying to keep that contract active.
The policy is the contract that you pay. The terms of the life insurance policy are set out when the plan requires the insurance company to pay out the premiums promised within the life insurance 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.
It 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 or dependants would receive hundreds of thousands if they act on their feelings.
The fine print of each life insurance cover insurer will state the terms to meet under the contractual agreement for it to remain valid.
In the case of mortgage protection insurance, those are only active until the mortgage repays, and for term life insurance, the policy remains active for the duration agreed such as ten years to 25 years.
Life insurers payout 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 out a large lump sum of money on the death of customers and make their money throughout the life of each customer.
How much life cover should I have?
It is a question that comes up repeatedly, and it has to be answered with follow up questions:
- Do you have people in your life who would need financial assistance in the event of losing you from their life?
- Of everyone who is in any way financially dependent on you, how much would losing you impact them financially?
- 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?
- Are you the principal breadwinner for your family or dependents?
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The Average Cost of Life Insurance in the UK
The cost to get 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 with a good medical history. It 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 life insurance comparison research into how much it costs for a £500,000 life insurance policy, reveals of consumers polled by Critical Research, most assume the average life insurance cost for a £100,000 policy is £51 per month; so cheaper than many thought.
The Different Types of Life Insurance Available
While it is a good idea to compare different providers and top 10 life insurance companies when researching life insurance products, 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 and comparison sites.
Some of the larger insurance providers will cater to all types of life insurance. In contrast, 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 life insurance quotes, you receive for your monthly premiums are not fixed for life. The best life insurance companies review periodically, usually every five years. When they are, the insurance provider can increase the premiums. If you prefer to lock in a monthly premium, that’s going to cost you extra from the outset.
The upside is, then it is 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 insurance cost 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 life insurance comparison guide to whole of life insurance cover.
Level term cover
With a level term insurance policy, everything remains constant throughout the term of the policy. The contract lays out the amount you’ll pay each month in life insurance premium 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. 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 policy premiums sums paid are not returned. See our explanatory guide to level term life insurance
Over 50 life insurance
Many a consumer thinks they need this type of life assurance just because they’re over 50. It’s not required. Insurers are not allowed to discriminate based on age. It’s the law. Insurers and the best life insurance companies focus on the guaranteed element of the over 50s plan when compiling bespoke life insurance quotes.
For those who feel you have health issues or a pre-existing medical history 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 have two choices. To increase your life insurance policy premiums in favour of a higher lump sum payout or stick to the same policy 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 quote for life insurance is higher than you anticipated, then over 50s plans can be beneficial because of the guaranteed acceptance for the cover.
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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 life policy paid reduces. It often uses as insurance for repayment of mortgages. The more mortgage payments you make towards your home, the less your dependents will need to repay the bank or lender in mortgage repayments. 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 expenses in addition to a full sum of money payout to your loved ones. Naturally, there will be a cap on the expenses the policy will pay such as £5,000. It can work out cheaper or more expensive than purchasing a prepaid funeral plan.
Life insurance with critical illness cover
These types of life insurance policies cover you for two scenarios. 1) Full payment of your policy’s insured amount in the event of your death. 2) Upon being diagnosed with any defined critical illnesses.
A key term to critical illness is “defined”. A policy could list a defined serious illness as stage four cancer or heart attack. 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. It 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 lump sum payout for your care and any medical bills throughout the treatment process before it spread. A life assurance policy listing medical conditions like 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, risk level and medical conditions can integrate with life insurance or can purchase as a standalone policy when we compare life insurance plans on your behalf.
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.
Reduce Premiums By Comparison-Shopping-How To Compare Life Insurance Policies
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 available from the 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 regulated by the financial conduct authority deals with multiple life insurance companies to compare life insurance policies and some brokers operate online. A financial conduct authority regulated broker may pass a portion of its commission fee to a policyholder so it can offer a type of policy and life insurance quote that is more competitive.
Some brokers rebate commissions throughout a policy term, resulting in an ongoing premium reduction. UK residents can find the best or compare competitive quotes for life insurance from both online discount brokers and price comparison websites. Some provide perks such as gift cards and vouchers on single policies or a joint policy.
Cashback websites offer third-party rebates to consumers purchasing life cover or joint life insurance directly from a life insurance company. Cashback and voucher offers are usually the best options only when the premium is at or near the top of the table. Offers for cashback differ between sites so the same insurance company may offer a different voucher or cashback deal through different cashback sites.
Some UK residents bypass cashback and price comparison 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 and Zurich are several providers to look at during the research phase all offer competitive life insurance quotes.
When buying insurance, single policies or joint life insurance direct, it is essential to comparison-shop for insurance quotes, but this process can be time-consuming. For consumers who need life insurance, it is best to get free advice from a financial provider, an unbiased insurance professional or adviser. Some UK non-profits and charities offer free advice regarding finances, the best life insurance companies and insurance issues. Top 10 life insurance companies charts can give you a quick overview but often lack detail.
After identifying the most suitable cover and the best life insurance companies, these consumers should use the guidance above to locate the best plan or single policy with the most reasonable premium. Remember the best life insurance policy is not always the cheapest but the one that closely matches your circumstances. Please also remember to read the terms and conditions in detail and review policy documents.
Without Life Insurance in place, this is All the State Will Pay
The Bereavement Payment Support System came into effect on the 6th of 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 if a loved one should pass away.
The types of payments for families who have suffered a bereavement
Bereavement Support Payment
It only applies to those who have lost a loved one since the 6th of April 2017. If any family loses a loved one, the eligibility criteria to receive financial support has two options. Your husband, wife or civil partner has paid at least 25 weeks National Insurance contributions or passed away because of either covid 19 an accident at work, a terminal illness or a disease caused by his/her work.
Also, 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 base on a first lump sum payment of either £2,500 or £3,500. Following that, monthly payments of £350 at a higher rate take place; for the lower rate, only £100 per month pays. For both amounts of monthly payments, they will only payout 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 of money stopping 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 only pays if a claim occurs 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 reduce once it’s been longer than three months.
If you’re entitled to any other benefits, the first year won’t be affected. Still, after twelve months, the monthly payments will be considered as part of your overall benefits and therefore may be reduced in line with the benefits claims cap, which keeps payouts below £20,000 per year in most areas, other than Greater London.
All other benefits below are only applicable to deaths before the 6th of April 2017.
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 bases 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. Also, there is a benefit cap in place, so should you be unable to work for any reason, the maximum state benefit eligible for is limited, and the Bereavement Allowance is an amount that calculates 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. 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 introduction on the 6th of April 2017. Additionally, you must be under state pension age, meet the requirements of Child Benefit for one child (even if you don’t currently claim it). Your partner must have paid National Insurance contributions a death relates to an industrial accident or a work-related disease.
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 continue as long as you’re entitled to Child Benefits. 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.
Inheritance Tax Considerations
Life insurance provides a lump sum to your dependents should you die and can help towards funeral costs. The policy proceeds are free from capital gains tax and income tax but are subject to an Inheritance Tax bill or IHT. It can be sidestepped legally by writing life insurance policies into trust, which means it is separate from the rest of your estate.
Life Insurance is Fast Becoming a Necessity rather than a Luxury to Provide Peace of Mind
Which family members are providing a household salary? With a large proportion of families being dual-income homes, the loss of a loved one is going to impact household finances, living expenses, credit score and family income benefits.
Can your family or a dependant survive comfortably with a maximum of £9,800 paid over 18 months before being left with no additional financial support?
How much National Insurance has you or your partner paid over the years because that will impact 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. It pushes 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 wellbeing 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. You should also consider a joint policy or single policies and there are many options available. Be prepared for health questions and try to live a healthy lifestyle. Non-smokers and life insurance for women and females are always going to get slightly better deals overall.
It 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.