The cost of life insurance will depend on different factors, with the main five beings:
- How much you choose to insure your life for
- How long you want to ensure your life for the sort of life insurance plan you want (e.g. Level / Decreasing Term Assurance, Family Income Benefit or Whole Life Insurance)
- Your current state of health and any pre-existing medical conditions
- Your smoker’s.
In the table below, we set out the monthly cost of life insurance for smokers and non-smokers of different ages. They’re both competing for £ 250,000 of Level Life Insurance for 25 years and have no untoward medical history that would have an effect on their premiums.
The quotes shown represent the best life insurance rates from all over the UK market as of 20 February 2019.
|30 Years Old||£9.55||£16.16|
|40 Years Old||£18.14||£37.85|
|50 Years Old||£44.63||£100.59|
Preferences for additional life insurance coverage
Many of the best life insurance policies will have additional benefits beyond receiving coverage on the death of the policyholder. They may be included as standard or sold for an additional premium.
It may seem natural to assume that the‘ best’ policy has the widest range of such additional cover areas, but consider what it is that you actually need and want.
Paying for more cover than you need is not the way to find the best Life Insurance, but some of the cover areas to think about include:
Life insurance coverage of critical illness
Most Life Insurance policies will offer Critical Illness Insurance as an add-on. If you choose this cover, it will increase the price of your premium; however, this is likely to be a better choice in terms of price than taking out Life Insurance plus a separate critical illness cover (CIC) policy.
If you add CIC to Life Insurance, the main thing to be aware of is whether you ‘re buying an independent policy or an integrated one.
With an integrated policy there can be only one payout, meaning that–should you make a successful critical illness claim for the full sum assured–there will be no further payout from the Life Insurance after you die.
Single critical illness coverage allows the Life Insurance portion of the policy to proceed after a positive critical illness claim.
Shield of terminal illness
Terminal illness coverage is typically a standard feature in life insurance policies, requiring payment to be made before the death of the policyholder if they are diagnosed with a terminal condition (with less than 12 months to live).
What are the best premiums for life insurance?
Generally, guaranteed Life Insurance premiums–where the monthly sum you pay doesn’t change through the life of the policy–are seen as‘ better’ than reviewable Life Insurance premiums.
It is because the insurer would not be able to adjust the amount that they charge you Reviewable Rates might be cheaper at the beginning of the policy, but may be much more costly in the longer run because the insurers are free to increase rates over time.
This may happen if, for example, the company encounters higher claims than expected, or if a major change in interest rates raises its cost base.
Waiver of premiums
That choice can ensure that, if you find yourself in unfortunate circumstances, your life insurance policy will remain in place without you having to continue making premium payments; this may be the case, for example, if you can’t work because you have become seriously ill.
Policies should come with a wide range of flexible options that may seem to be perfect for coping with shifting, unforeseeable circumstances. But you also need to remember that the more flexibility you add to the product, the more you’re likely to pay in premiums.
Some of the popular options include:
Guaranteed insurability: Allows you to increase the amount of coverage without a further medical examination
Benefit indexation: The level of your future benefit will rise in accordance with inflation
Renewable term Life Insurance: Allows you to renew at the end of the period without a further medical assessment
Flexible term Life Insurance Can be transformed into a full life insurance policy without a further medical examination
Renewable and flexible hybrid life insurance A term policy with the ability to be renewed and/or converted into a full life insurance policy.
Is it the right thing to write life insurance to trust?
It is often better to write a life insurance policy to trust, but there are occasions when it may not be required.
For example, if you’re married and have a joint life insurance policy, the premium usually goes directly to the remaining policyholder (your husband/wife / civil partner), so you don’t usually need to have your joint life insurance policy signed into the trust.
Furthermore, if both of you were to die at the same time, or if the common life policy were written on a second life basis, then it would be better to write the policy into trust. Writing your life insurance policy in confidence costs little and will cut down on probate delays, so it’s always worth it.
A discretionary trust is probably the best answer for joint Life Insurance policies, as these can be specifically designed to pay out to the second partner on request if they survive at least 30 days after the first death occurs.
What Are The Best Life Insurance Companies?
- Legal & General
- Liverpool Victoria
- Royal London
- Scottish Widows