To the uninitiated choosing a life insurance policy can feel like running through a minefield. With a baffling array of terms to decipher, different types of insurance to choose from, and hundreds of seemingly identical companies competing for your cash, it’s easy to see why choosing life insurance can be one of the most difficult decisions you’ll ever have to make. The choice you make now will affect the legacy left to your family after you’re gone, potentially easing the financial burden of your loss and allowing them to pay off debts such as your mortgage and loans. It’s important to go into the purchase of life insurance well informed so you are able to find the best deal for your circumstances.
Types of Life Insurance
Before you can choose a provider, you need to identify which product best suits your needs. Life insurance isn’t all the same and can be broadly grouped into the following categories:
1. Term Insurance – This is one of the most popular and straight-forward kinds of life insurance policy. The policy is taken out for X number of years and if you die within the policy term then a lump sum will be paid. Term Insurance is often taken out alongside a mortgage for the same period of time, so when your mortgage is paid up the life insurance will also expire.
2. Whole of Life Insurance – These policies are designed to offer a lump sum on your death regardless of when you die. They are more expensive than term insurance but are designed to provide for your loved ones after your death.
3. Over 50′s Cover – This is lowest level of cover as it is designed to provide primarily for funeral costs with perhaps a small pot of money for the beneficiaries.
It’s useful to bear in mind that the policy that suits you the best right now might not do so in the future. Life insurance is for the long term so if you’re planning on a new addition to the family you may need to plan for increased coverage.
Top Life Insurance Providers
As a multi-billion dollar industry the UK life insurance market is teeming with competition for your premium. Despite this it’s difficult to see on the surface what differentiates one insurance provider from the other. I’ve taken a closer look at the top 4 players in the UK life insurance market to give you a better idea of their strengths and weaknesses, helping you to find the provider who best matches your needs.
1. Standard Life
In the past 3 years Standard Life have increased their premium income by over 200%. All life insurance products are underwritten by Liverpool Victoria, a friendly society with no shareholders entirely run by its members.
- One of the most trusted on-line brands in the UK
- Guaranteed acceptance for over 50′s with no medical or health questions
- Cover for life and payments that stop when you reach 90
- Includes bereavement support and counselling as standard
- UK only call centres
- If you go through Standard Life directly they take a £200 commission before passing your details on to Liverpool Victoria
- There have been some complaints they can take up to 3 months to pay out after a claim is made
Aviva prides itself on providing a caring and sympathetic service to clients. As the 6th largest insurance company in the world it holds an enviable market share of the life insurance market and offers a variety of premiums to suit all tastes.
- Paid out on 99.7% of death claims in the first half of 2011
- Quick turnaround – only takes 2 minutes to apply and most customers have the documents in under a week
- Monthly payments guaranteed never to rise
- Complaints of poor customer service and short opening hours so can’t always get in touch when you need to
- Have a reputation for being expensive compared with other providers
Prudential aim to offer a competitive service by undercutting the cost of their competitors. They actively encourage people with existing life insurance policies to use their on-line comparison to see if they can find a like for like police at a lower price.
- Flexibility – They offer guaranteed insurability if you need to expand your police in the future such as adding children or increasing mortgage
- Accidental death benefit for up to 90 days or until your application is completed
- Search other insurance companies prices as well as their own
- 54 is the maximum age for guaranteed insurability
- Customers have complained about poor customer service from the call centre
Zurich offers a full range of life insurance services. All plans must be purchased through a financial adviser.
- As it’s purchased through a financial adviser you will be given a full run down of what the product entails and have the opportunity to tailor the plan to suit your needs
- Quick and efficient processing of claims
- Easy to deal with when making an enquiry or a claim – lots of positive reviews from users
- The cost of meeting with a financial adviser in order to take out the policy is paid by the customer
- Generally known as one of the more expensive life insurance providers
As a prospective life insurance customer you have a wide array of options to consider when choosing your policy. It’s perhaps wise to bear in mind that due to the huge number of policies available this guide merely scratches the surface. If you are in doubt and have questions call the insurer direct or arrange an appointment with a financial adviser. Despite the initial outlay of this consultation it could save you thousands in the long run and help you find the right insurance policy for you. Careful research in this area can pay dividends in the long run and offer you the peace of mind that your loved ones will be taken care of when you’re gone.
As an independent writer focused on personal finances and money management, Thomas Sterlin writes outlines of leading insurance providers like Legal & General and Liverpool Victoria and their life insurance products with the purpose of helping consumers make an educated choice for their cover.