Posted 25 Nov 2021

How to buy the Best and Cheapest Life Insurance in the UK

It can be difficult to know where to get life insurance that is best for you and to get the lowest premiums. There are lots of options when it comes to buying life cover to protect your family, so here’s our guide to getting to the very best premiums and the right policy for your loved ones.

Here we’ll explain the difference between the main types of policies and why it’s important to make the right choices. Each insurer has their own pricing and especially when it comes to medical underwriting.

Quick Guide – Get the Best Life Cover for less

  • Aggregator websites (Price Comparison sites) can be good for things like getting a quick quote to get an idea of the price for the cover that you’re looking for. This can also be misleading as the price can change, especially if you have a medical condition.
  • Insurance companies (direct) can seem like the best way to go to get the best price for a new policy, however, this is not generally the case. If you apply directly to one insurer then your options will be limited to that insurer and they may not be right for you.
  • Insurance experts are often the easiest and cheapest way to get the best cover for your family because they’ll search for the top insurers for you. It’s often easy and you can also now get a quick quote and complete the process online by completing this simple form*to get free independent expert advice, or you can speak to a friendly expert by calling 0800 009 6559.

In the rest of this article:

  • How much is life insurance?
  • Why do I need life insurance?
  • How does life insurance compare to other options?
  • What is the best and cheapest life insurance?

How does life insurance work and what is a life insurance policy?

Life insurance is a type of personal protection insurance policy that is specifically designed to pay out a lump sum if you pass away. The lump-sum benefit will usually be paid to your family (beneficiaries) which can be partners, children, dependent parents, or a specified charity/organisation.

You can choose to protect yourself (single cover) or yourself and a partner (joint cover) depending on which type of policy is most suitable. The main difference between single-life and joint-life policies is that your cover will payout based on the death of one or two individuals. A joint-life policy will cover two people and pay out once, on the death of one of the policyholders.

What are the different types of life insurance policies?

There are several main types of life insurance and all are designed for a specific purpose. Each policy will cost a different amount depending on what they are designed for and how they payout.

Level term life insurance (family protection) is the most common and most simple type of life cover. This policy will pay out a set amount (£’s) for a set term (years) on the death of the main policyholder.

Decreasing term life insurance (mortgage protection) is the second most common type of life insurance and is specifically designed to protect a Capital & Repayment mortgage. This type of cover is slightly cheaper than a level-term policy because the amount of cover (benefit) reduces throughout the term of the policy.

Family income benefit is a less common type of cover that is often used to provide a monthly or annual income for your family if you die. Generally, this type of policy is slightly cheaper than level term and decreasing term life insurance.

Whole of Life insurance is a form of life assurance because the payout is guaranteed on the death of the policyholder. People often use this type of coverage to pay for Inheritance Tax (IHT) planning or provide a legacy for their children.

Over 50’s life insurance is another type of guaranteed life cover that is available to people ‘over 50’ as the name suggests. This type of cover is often used for paying funeral fees and other costs that are incurred when you die.

Accidental Death Insurance (Personal Accident Insurance) is another type of policy that will pay out for certain causes of death. If you pass away as a result of an accident such as a car accident or other unnatural causes then this should pay out a lump sum benefit.

How much is life insurance?

The cost of a life insurance policy is dependent on several key factors as well as other variables that can have an impact on premiums. The main factors that can change the cost of cover for someone are:

  • Age (your age when you apply for cover)
  • Sum assured (amount of cover you need)
  • Term (how long you want to take the cover out for)
  • Smoker status (are you a smoker or a non-smoker)
  • Type of cover (which type of life insurance you need)
  • Insurer (which insurer you apply for cover with)

Basically, the higher the amount of cover and the longer the term, the more your premiums will be. This is because you would be more likely to pass away as you get older and higher sums assured cost more to pay out if you claim.

There are also a number of other factors that can have an impact on the premiums that you might pay for life insurance. These are some of the less well-known elements that you might not always think about or consider.

  • Medical history: if you have a pre-existing medical condition then that might have an impact on your life insurance premiums. Each insurer has a different attitude to risk for medical conditions so you’ll be able to get a lower premium by applying to the right insurer. The severity of your condition and your symptoms will also have an impact on your premiums.
  • Occupations: if you work in a high-risk occupation or industry then you might find that your premiums might vary. High-risk industries can include construction, armed forces, aviation, off-shore workers, etc. Any job that includes hazardous duties such as working at heights or working with dangerous materials can change your premiums.
  • Sports and Hobbies: people who take part in certain sports or hobbies that are classed as dangerous or extreme can affect your premiums. These sports and activities can include flying, sailing, diving, climbing & mountaineering, etc.

If you do have any of these or consider that these may be an issue for you potentially then you can complete this form* to speak to an expert.

Why do I need life insurance?

You need life insurance if you’ve got children, dependents (e.g. parents or other family), or a large debt (e.g. mortgage, secured loan, business loan, etc.). These are the main reasons why you might want to consider life cover, however, there are lots of other quite specific reasons for considering cover.

Your life insurance can be tailored very specifically to suit your needs, length of cover, and the amount of coverage that you need. There are also very specific policies that suit your needs and budgets so you’ll just need to consider what you want life insurance for.

How does life insurance compare to other options?

Many people think that life insurance is expensive so just consider what options might also work. Some people feel that if they put money into a savings account or a bank account then they would perform a similar job.

Life cover is a very specific insurance policy that provides cover for your family from ‘DAY 1’ which is the biggest difference from a savings plan. You must be aware that any savings account would take many years to accumulate enough to protect your family.

If you take out a life insurance policy for your family then you would be protected for the full amount from the date you start cover. Savings will not give you the same security and protection in the early stages of the plan.

Other forms of financial planning:

  • ISA’s
  • Savings accounts
  • Pensions
  • Investments
  • Property portfolios

You should consider your options carefully before making any financial decisions to protect your family, and you should always consider life cover as an option.

What is the best and cheapest life insurance?

Life insurance is generally a lot cheaper than you might think and there are lots of options to suit all budgets. Finding the cheapest and best cover can be as simple as speaking to an advisor who has the right expertise and insurers.

There are also options that can be cheaper initially and some top tips to get the best cover for your money:

  • Take out cover when you’re younger (people who are younger are lower risk and generally in better health to get lower premiums)
  • Compare premiums from several insurers (a broker who has access to several insurers or whole market will give you more options)
  • Speak to an expert, especially if you have a medical condition
  • Consider Low-start options if they work for you
  • Quit smoking (if you’re a smoker)
  • Lose weight (if you’re overweight or have a higher than average BMI)

Note: It’s important to make sure that you get the right life insurance to protect your loved ones. Price is important because you shouldn’t pay more than you need to but the right cover is the most important element.

Daniel Sharpe-Szunko