How To Easily Compare Life Insurance Quotes

Elaine Brookes Steve Case

Author: Steve Case - Insurance Expert

Reviewed & Fact Checked By: Elaine Brookes

Updated: 19th March 2024

Buying life insurance is never going to be an easy purchase as there are so many variables

Ultimately, it boils down to the same set of information being used to provide you with a quote for the level and type of cover you need.

With the ease of online browsing and the uptrend of comparison websites, it’s never been easier to shop around for the best deal on any type of insurance. However, what many may be missing are the savings that can be had when you know where to look.

The 4 Ways to Buy Life Insurance

  1. Via a high-street bank
  2. Via an insurance broker or advisor
  3. By going directly to the insurer
  4. Online via life insurance comparison website

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The end price you’re quoted is affected by margins added by any seller

High street banks add a markup to their policies to cover the price of the advice offered to consumers and the level of protection offered… although no matter where you buy from, you’re always protected due to the UK regulations across the insurance sector.

Buying via an insurance broker or independent advisor can work out cheaper. Independent advisors, as they aren’t concerned with shareholders and corporate red tape, have more control over the markups they add or perhaps forego markups in favour of a flat fee service.

The next option is to go directly to the insurer. Surprisingly, this option can be more expensive. An investigation by The Telegraph highlighted that Tesco sells Aviva products rebranded as Tesco Bank Policies, which costs more than buying through a broker, but surprisingly… “Aviva charges the most for its own products by a considerable margin”.

When Aviva was asked about its pricing position, the reason given for the price difference was that they are comfortable charging more because some customers prefer the convenience of buying directly. So, there you have it: Direct isn’t always cheaper.

The other option is to go online and to use a life insurance comparison website, these are becoming more and more popular as people become increasingly aware of the differences in price different providers offer.

Insurance Products Related to Mortgages

The vast majority of mortgages come from high street lenders, such as Barclays, Nationwide and Yorkshire Building Society.

When you take out a mortgage, the topic of insurance comes up at some point. Lenders will insist you have insurance in place, but what they’re referring to is your buildings insurance.

This is because they have a financial interest in your property while it’s co-owned and, therefore, insist on insuring the property, not your life. All the other insurance policies above and beyond that are entirely optional, although it is advisable to consider further insurance seriously.

Mortgage-Related Life Cover Policies…

When you speak with a mortgage advisor, they will advise of the different types of life cover that would be suitable for your financial needs. The types of insurance products you’re likely to be discussing are detailed below.

Term life cover

This is the most common and the most affordable because it’s directly tied to the term of your mortgage. Term cover will cover the term of the mortgage period, such as 25-years. These rarely have any cash in value. The policies are solely for financial protection and not for investment purposes.

Whole of Life Cover

This is more expensive and as the name suggests, it covers you for the whole of life. In other words, it lasts beyond the term of your mortgage.

Decreasing Term Cover

This is the cheapest form of life insurance. The idea behind taking this level of cover is simply to cover the mortgage in the event of the policyholder’s death.

The sum paid out by insurers will decrease in line with the amount outstanding on the mortgage. It should be noted that the payout will decrease, but your premiums will remain fixed.

The benefit of a decreasing cover is that in the event of your death, the payout will meet the outstanding balance of the mortgage.

That’s all, and that’s why it’s the cheapest policy available. If this is all your budget can stretch for in terms of life insurance, it will still help your family financially and give you peace of mind knowing that they won’t have a monthly mortgage payment to keep up or risk losing the family home.

Critical illness cover/mortgage protection insurance

When you agree to a mortgage, the next upsell-of-sorts from high street banks and brokers are mortgage protection cover.

This covers you in the event that you can’t work and usually will pay your mortgage premiums for a set time, stated within the policy agreement, for example, the first 12-months of being unemployed due to a critical illness such as cancer or a mini stroke or stroke.

Critical illness cover will do the exact same thing as what a lender calls mortgage protection cover, so you aren’t obligated to purchase from the same lender providing your mortgage. You can arrange critical illness coverage from an alternative insurer at whatever sum you need to be covered.

Any lender’s quote will include their markup, which can be cheaper or more expensive. For that reason, it’s best to shop around for alternative quotes. All insurers, intermediaries, and lenders have different fees and pricing structures, each of which will impact the quote you receive.

The Best Way to Compare Insurance Quotes…

  • Never accept the first price you’re quoted, even if it seems great
  • Check the other two means of obtaining the same level of cover…

Since there are four ways to buy insurance – online, bank/lender, broker/advisor, and direct – obtain quotes by using all three methods to ensure you get the best price. The same policies will be obtainable from all three sources. Find the best offer with the same level of cover.

When you’re purchasing life insurance as a means of financial protection to ensure your mortgage is paid, even just an increase of £1 per month on a 25-year term life insurance policy will add £300 to the cost of the policy over the term of the cover. The higher the monthly difference, the higher the cost is to your cover, all because lenders, advisors and insurers price the same level of cover differently.

Where you purchase insurance is just as important as the type of insurance you buy. The price differences can be significant so it’s worth taking your time to explore your options.

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