Types of Life Insurance Policies Available in the UK

UK life insurance is intended to help financially safeguard your loved ones following your death. Here’s a breakdown based on what we know now:

Types of Life insurance policies available in the UK:

Term life insurance: This is the most popular type and includes:

Level Term: Pays a specified amount in the event of your death during the term of the policy.

Decreasing Term: This type of policy is a mortgage protection, where the amount paid will decline with time and matches the mortgage balance.

Rider for Growing Term: The benefit grows over time to beat inflation.

Whole of Life Insurance: Provides lifelong coverage with a guaranteed payout upon the insured person’s death, no matter when it happens. It’s usually costlier than term insurance.

Over 50s Life Insurance: Tailored for individuals aged 50 and above, these policies ensure acceptance without medical examination but provide lower coverage amounts.

Pros and Cons:

Premiums: Your monthly or annual payments depend on your age, health, smoking status, occupation, and the level of cover. Older, less healthy people tend to pay more.

Cover Amount: You can select the amount of cover required, whether that is life cover for mortgage balances, debts, or simply financial support for dependants.

Payout: When you die (or are terminally ill in certain policies), the policy pays out a lump sum — or sometimes regular payouts — to your beneficiaries.

Add-Ons: More cover are available for an additional fee, such as critical illness or income protection.

Trusts: By putting your life insurance policy into trust, you can all but avoid inheritance tax on its payout, and also ensure the money reaches your beneficiaries without going through probate.

Recent Trends and Updates:

Gifts and Incentives: A few companies offer gifts or cashback to new customers who take out a new policy

Health and Wellbeing BenefitsCompanies go beyond that when they include health and wellbeing services with their policies, and they also encourage healthier lifestyles with a variety of reward options, such as discounts on gym memberships or tech gadgets.

Claims Paid: Insurance companies like to tout their claim payouts to convince customers of their viability. For example, a recent thread on X highlighted Vitality as having a high payout rate.

Cost:

How much is the average life insurance cost in the UK? New research shows that the average level term insurance cost is £37.02 a month, and the average price for a decreasing term insurance is £31.83. But these numbers do vary depending on personal circumstances.

Comparison and Buying Tips:

Comparison sites — With comparison sites such as MoneySuperMarket or GoCompare, you can get quotes from different insurers.

Independent brokers: Independent brokers may provide you with personalized advice and may also give you access to plans that aren’t available to consumers directly, possibly saving you money or providing you a better plan.

Read the Fine Print: Know what’s included — or excluded, especially when it comes to preexisting conditions.

No Medical: Many policies, particularly over 50s, don’t need medical exams, though they potentially cost more as there is no health screening.

Life insurance is a key part of financial planning in the UK, providing financial security for family or dependants in the event of your death. However, remember to contact an insurance advisor or personalized service to apply the policy according to your needs.