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Article on: Cheap Life Insurance in UK
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‘Cheap Life Insurance in UK’
With rising UK household bills & pressed monthly family incomes in Post Brexit & Pandemic 2020’s, people are now looking to save money where they can. This is naturally understandable.
‘Cheap Life Insurance UK’ Quotes may start from £5pm from Leading UK Insurers. However, we will go onto examine here how getting the ‘cheapest life insurance in uk’…maybe costly in the longer run.
But let’s turn the question around and ask instead…
How much Cheap Life Insurance do you need?
Money Saving Expert Martin Lewis on Life Insurance, his advice is for a good rule of thumb use the…
‘THE 10 x RULE’
Using that principle, if you earned £29,250pa gross, Martin Lewis says you should maybe consider insuring yourself (after any debts, mortgages & loans are fully repaid) for say £292,500.
Then you need to work out a cheap life insurance uk deal (ie; 10 x the annual gross income) to achieve that goal, if following his advice.
Following on from this simple Martin Lewis example formula above, if you then worked for the next 34+ years until state retirement, you could potentially earn over £1 million gross ie; £29,250pa x 34+ years [or more with any future inflationary wage rises].
As such, unlike the 10 x £29,250 gross salary life coverage insurance example above – you could instead protect your family with either;
- Income = £2,437pm or £29,250pa family income benefit lifecover policy
- Lump sum = £1 million level term life insurance policy [if invested @ 2.92% return = £29,250pa]
- Or a mixture of the 2 policy types over the next 32 years – all dependant on your family circumstances.
- You can also decide wether you want the cover to be level or inflation linked
- A Single ‘protect policy’ | 2 x seperate protect insurance plans | or Joint life insurance 1’st claim
However, as Financial Advisers we are not saying this ‘Money Saving Expert formula’ 10 x salary life insurance is therefore a 100% one size fits all scenario…
ie; This life insurance formula is not applicable for everyone’s own personal situation. You may already have some ‘cheap life insurance’ cover via work death on service benefit or sickpay income cover– but is that enough?
Apart from losing a loved one, this real hidden income threat is what could be lost if the main breadwinner died prematurely. Or gives you an idea if someone was off long term ill – the potential income loss.
Cheap Life Insurance Policy
Why do people always look for a cheap life Insurance policy….rather than the right amount of life insurance?
Any protection insurance is designed to financially help those cope with their day to day money worries & stress that may happen when off work sick or losing a loved one. We all have to pay bills.
For many families, their ideal insurance protection policy = Peace of Mind at their worst possible time.
So does ‘cheap life insurance’ = the right amount of life insurance? Or does a ‘cheap life insurance in uk’ really just mean = the wrong amounts of life insurance?
As Life Insurance Agents in an ideal world – we suggest instead this simple formula.
- LUMP SUM > Repay any mortgage & debts, cover funeral costs
- INCOME > Help cover your monthly bills
- LUMP SUM > Back up for holidays, education, emergencies
In other words, think Quality of Cover levels…..not just the ‘cheapest life insurance’.
Main Types of ‘Cheaper Life Insurance’
As UK Life Insurance Brokers, we deal with many of the main types of cheaper and affordable life insurance policies In the UK protection marketplace.
In this article, we will therefore look at the following 6 types of cheap life insurance policies to help both protect insure your family or business.
We will then examine some of the pro’s & con’s of these various cheap life insurance cover.
- Term Insurance (Family Life & Business Life)
- Whole of Life Assurance
- Over 50’s
- Mortgage Protection Insurance
- Critical Illness Cover
- Income Protection Insurance
* Level Term Insurance
- Level Term ‘Protection Insurance’ are simple plans to operate
- If you die within that set ‘term’, your family will get the set life insurance lump sums or family income benefits payment
- Cover is ‘underwritten’ meaning Insurers will ask you medical & lifestyle questions before offering terms
- A cheap life insurance term death insurance will cover for a fixed period of time or ‘term’. eg; 25/35/50 years
- You could set up cheap term life insurance to when any child is independant, upto retirement, or even upto age 90
- Could set up as a top up plan to any work death on service cover
- Often includes free terminal illness which means an advanced death claim as incurable
- Because it runs for a set term, it maybe an affordable family cheap life insurance cover
- Medical evidence may be required & a medical examination for based amounts of cover or those with health issues
Conclusion: Often a cheap life insurance policy BUT you may live out that nominated term
* Whole of Life Assurance
- Whole of life assurance is unique in the Life Insurance marketplace.
- It guarantees it will pay out a lump sum whenever you die or diagnosed terminally ill.
- It has no set or fixed time frame unlike term life protect insurance.
- You are covered even if you live to 250 years old !
- Help toward Final Expenses costs ie; Typically sold via Over 50’s plans
- Insure against possible Inheritance Tax IHT liabilities
- Continuous No Future Health Issues coverage for life insurance
- Medical evidence may be required & a medical examination for based amounts of cover or those with health issues
Conclusion: Continuous lifecover therefore NOT life insurance cheapest quotes as it will always payout
Affordable Life Insurance Policies
* Cheap Life Insurance for Over 50
- Marketed as cheap life insurance no exam cover
- There are usually no in depth medical & lifestyle questions to qualify
- Smoking status asked so affects cheap life insurance for over 50’s
- However, usually has a 1/2 year exclusion period
- Accidental death on cheap life insurance no exam policies during exclusion period
- Cheap life insurance over 50 often sold with free gifts
- Help towards covering Final Expenses costs
- Often Insurers may stop taking premium after age 90
- Cheap life insurance over 50 usually limited total premiums allowable
Conclusion: Cheap life insurance over 50 IF bad or poor health lifestyle issues
* Mortgage Protection Insurance
- Decreasing mortgage protection will reduce over the mortgage term but the premiums remain level
- It may help to protect insure and repay your personal or business mortgage, loan or other debt
- You can set the % at which the plan reduces at outset to balance where that amount owing will also reduce over the term
- For example; If your bank loan rate is fixed at say 7% for 15 years, then so could the life policy interest rate
- However, once the mortgage protection is setup – then so is the loan rate policy reductions fixed at which it reduces
- The lower the % rate then the ‘cheaper life insurance’ premiums – so be careful to insure sufficient coverage
- Level term policy may suit if you have an interest-only mortgage ie; the amount owing stays the same
- Medical evidence may be required & a medical examination for based amounts of cover or those with health issues
Conclusion: Life insurance cheap quotes for repayment mortgages BUT check % reductions okay if rates increase
* Critical Illness Cover
- Designed to protect you on a diagnosis & survival of a specified Critical / Serious illness
- Critical Illness policy benefits are currently paid out tax free upon a valid claim
- Statistically chances of a critical illness lifetime claim are much higher – so not cheap life insurance uk
- Insurers plan terms vary & may cover between 25 >100 different types of serious illness benefits
- Critical Illness coverage usually all include these main 3 claims:- Cancer, Heart Attack & Stroke
- Designed to pay out usually as a lump sum upon diagnosis of a specified dread disease
- Critical illness premiums may be fixed guaranteed or reviewable
- Medical evidence may be required & a medical examination for based amounts of cover or those with health issues
Conclusion: The chances of a critical illness claim are high so NOT life insurance cheap quotes
* Income Protection (PHI)
- Offers help to provide a tax free income upon accident, sickness or hospitalisation
- May have an initial waiting or deferred / waiting periods ie; 4/8/13/26/52 weeks
- Insurers Income protection can usually run upto state pension ages or upto age 70
- Offered as either budget cover with 12/24/60 months per claim or comprehensive full term per claim
- Cover may be based on maximum of say upto 70% of your pre-tax gross annual earnings
- Medical evidence may be required & a medical examination for based amounts of cover or those with health issues
Conclusion: Dovetail ‘cheap life insurance uk’ alongside Income Protection to protect you if off work sick or you died
Broker FAQ | ‘Cheap Life Insurance UK’
Cheap Life Insurance policy into Trust?
When a cheap life insurance policy isn’t written into trust, it will be paid to the executors of the deceased’s estate. If you have not made a will, this can then cause further complications with the life insurance monies.
These executors will handle the estate administration, known as probate in N Ireland, England, Wales and confirmation in Scotland. If not, the benefits will fall into your estate if you died prematurely.
Until probate is fully granted, no monies can be paid out to those named in the will. On average, this can take upto 6 months. By not placing the plan into trust may also swell up the total estate values, leading to potentially Inheritance Tax IHT issues.
So placing a policy in trust can help to ensure that the policy proceeds go to the correct beneficiaries you decide to nominate at that stage.
The correct trust can also help avoid possible probate delays & IHT costs. Ask the Insurers to kindly provide their available standard protect insurance policy trust form wordings & seek legal advice if unsure.
Importance of Disclosure re Claims?
All Insurers are in business to protect insure & payout. No matter how a cheap life insurance is, it is still based on your full disclosures at the time you take the original policy out (or those with health issues) ie; being 100% as honest & accurate as possible. It is not always easy to remember all your historic health details when applying.
The Consumer Insurance Act 2013 says you must not be acting careless, deliberate or reckless manner when applying. If so, it may not payout ! eg; If you have family history of diabetes or heart issues (even if you are okay currently) then you must tell them. Or, you forget to even advise you have a lifestyle issue because it does not currently cause you any health problems.
Should you make a claim, your Insurers will send you a claim form for you to complete. Once received back, they will usually contact your GP to confirm any health details disclosed.
They will then assess if your insurance claim is valid and cross check if you originally disclosed all the correct details – on your life insurance, income protection or critical illness claim. If you look at most Insurers recent claims payout, you will see that it is Good (but like most Insurers – not 100%).
What about health changes after taking the policy out?
Any health or lifestyle changes since, usually does not void your existing life insurance, if it wasn’t relevant at that time of initial underwritten insurance application.
For example, you have thyroid issues diagnosed several years afterwards. In this instance, the insurers should not classify the original application as non disclosure. It maybe the Insurers request GP reports when you originally apply, to check any health details disclosed. Likewise they may not.
So take care to doubly re-check on your application what you initially disclosed to the Insurers, as this information then stands now and in the future. Please check your original T&C’s.
Alternatively, if your own Insurers originally applied health rated terms re any insurance protection, then it can sometimes be worth reviewing your application to see if you can get a ‘cheaper life insurance’.
Note; If your health has improved and any symptoms are now under control. It could be we could get better terms via another Insurer? Contact us for Broker help
Article on ‘Cheap life insurance in UK’ by Martyn Spencer Financial Adviser (2024)
For reassurance re health for men & women – we review many of the best Life Insurers UK selling cheap Life Insurance in UK (inc NI)
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