Article on: Smarter Cover Life Insurance
Smart Insurance Life Reviews 2024
Smart People often make smart choices when getting a ‘Smarter Insurance’ deal – It makes good sense to regularly review your finances & life insurance in these difficult Pandemic 2020’s
- Have a Mortgage, Family or your own Business ?
- Then “Be Money Smart” and Protect those 3 Key Things in Life that matter to you most
- Get Professional Broker advice & see what are their smart insurance life cover tips & hints
- Pre-existing Health issues or Family Health History? Don’t worry let us try & still help you out
- In this article, we will look at your various smart life insurance choices & the types available
Smart Insure | Compare online Broker Deals from leading Uk Life Insurers
What’s the Smart Insurance amount to pay?
This is a good question, and one we are often asked as Life Insurance Brokers.
With rising monthly household bills & pressed family budgets in these Pandemic 2020’s, most people are naturally looking to save money + be money smart or savvy. This is understandable.
Life Insurance prices often start from as low as £5pm via Leading UK Insurers. However, we will go onto examine how sometimes going cheap….is NOT the smart move & maybe costly in the long run.
But let’s turn the question around and ask instead the advice of Money Savings Expert via its well known founder Martin Lewis.
What is Martin Lewis’ Smarter Insurance best advice then?
The Money Saving Expert (MSE) Martin Lewis is one smart man. He was appointed both OBE & CBE in the Queen’s honours list.
He has become the ‘go to person’ for all things financial & so his insurance advice and guidance is often followed by many people.
For Martin Lewis on Life Insurance, his smarter over insurance advice is for a good rule of thumb use the ‘THE 10 x RULE’.
His basic MSE cover formula is to therefore aim to cover ’10 x the Annual income of the highest earner or main breadwinner – until any kids have finished full-time education.
Using that principle, if you earned £29,500pa gross, he says you should maybe consider insuring yourself (after any mortgage, loans & debts are repaid) for @ £295,000 life insurance (ie; 10 x the annual gross income).
Interestingly, he recommends just insuring your gross income of £29,500pa – but not get complicated with calculating net after tax incomes.
Following on from this basic MSE example formula above, if you then worked for the next 34 years until retirement, you could potentially earn over £1 million gross ie; £29,500pa x 34 years = £1 million [or more with any future inflation wage rises].
Apart from losing a loved one, this real hidden income threat is what could be lost if the main breadwinner died prematurely.
As such, unlike the 10 x £29,500 gross salary insurance example – you could instead protect your family with either;
- Income = £2,458pm or £29,500pa family income benefit lifecover policy
- Lump sum = £1 million level term life insurance policy [if invested @2.95% = £29,500pa]
- Or a mixture of the 2 policy types over the next 34 years – all dependant on your family circumstances.
Neither takes into account repaying any mortgages, loans or debts.
- You can decide wether you want the cover to be level or inflation linked
- Single plan | 2 x seperate plans | Joint life insurance 1’st claim | Lump Sums or Family Income Benefits options
So, as Financial Advisers we are not saying this Martin Lewis formula of 10 x salary is therefore a 100% one size fits all ie; not applicable for everyone’s own personal family or business situation.
You may also feel this is either not enough cover, or perhaps too much for your own circumstances, if trying to be money savvy on your life insurance decisions.
So, I would re-summarize the Martin Lewis smart insurance protection formula as follows…
That is to ideally ‘Protect 3 Things’…
- LUMP SUM > Repay any mortgage & debts, final expenses costs
- INCOME > Help to cover all your monthly bills
- LUMP SUM > Back up Plan for holidays, education, emergencies
Our ‘smart life insurance’ formula is naturally dependant on wether you are married or cohabiting, have young or old dependants, retired or both working still. Have sufficient backup already in any investments & savings.
Ultimately, the ideal life insurance amounts to cover are also down to your budget. This calculation could also be made harder due to any pre-existing health history or lifestyle issues, meaning possibly higher ‘rated insurance premium’ costs. Contact us for personalized advice.
3 Ways to ‘Smarter Insurance’ Deals
The online life insurance marketplace is such that often buying what appears to be the cheapest may not be the smarter insurance choice. It sometimes could work out the most expensive, in more ways than one.
So let’s look firstly at the 3 ways to smarter life insurance deals
1] Execution Only Insurance Sales
MSE suggest the cheapest budget life insurance cover option is often via an online ‘execution only‘ discount broker. Here, you must pay a Fee to the Discount Broker to access their services ie; It’s not free a service.
However, note if trying to maybe get a smart life insurance then it also means you won’t get any advice to speak about ie; No comeback if what was chosen by yourself, direct via any financial services website, was maybe appropriate to your ongoing situation.
For example, you take out level term life insurance with guaranteed age costed premiums, thinking as the life cover is level, then so are the premiums. Or you don’t advise the Insurers of a familial history link of raised blood pressure or cholesterol, as you don’t think its relevant. Neither of these are a smart insurance move.
2] Non-Advised Insurance Guidance
Then there are also other life insurance sales companies they mention who may operate as FCA regulated brokers but via non-advised sales‘. Now, this part gets abit more confusing when trying to operate smarter.
Although you are now speaking to someone this time about your life insurance quotes, actually again you won’t be getting any advice. You only just get information & guidance from their Sales Staff for you (not them) to make a more informed decision on the policies available you have then chosen to take out ie; No real comeback if your chosen plan was later found inappropriate to your longer term needs.
For example, you take out a fixed period level term policy to cover your interest only mortgage.
There are plenty of large Life Insurance Brokers online offering ‘information guidance only.’ eg; Protect Line & Reassured, mainly do business via non-advised sales operations.
3] Smarter Cover Insurance & Get Advice
Finally, there are ‘advised brokers or financial advisers’, who as the name implies give advice. A Qualified Financial Adviser will fully assess your own personal situation, then document this to you in your demands & needs report. They will advise you after their research why they recommended that particular Insurers plans & benefits. They can also do a quick insurance review of any existing cover, to see if you could get a better deal or just keep the policy going.
They can either cover & address every aspect of protection needs or alternatively just look at a few particular areas eg; you just wanted to discuss both your family life insurance & income sickness protection shortfalls for now. Later down the line, budget permitting, your adviser could then re-look into any highlighted critical illness shortfalls.
Final thought points
If you do contact any of these broker companies before you buy, make sure you’re clear on whether you’re getting execution only ‘no advice’, ‘advice’ or just ‘information insurance guidance’.
We leave that thought with you, which of the above 3 services maybe more appropriate to you & your family. Which is the smart life insurance choice for you?
Generally, any broker commission cost of services are paid direct from the Insurers. So for you as the customer, your best reviews on smart insurance deals are usually the same for either a ‘fully advised’ or ‘non advised’ guidance purchase.
‘5 Smart Life Insurance Tips & Need to Knows’
1] Health & Age Based Insurance, Low Start Guaranteed?
A comparison or direct website shows a cheap ‘smart insurance life’ cover premium & you see the word ‘guaranteed’ noted by all premiums.
You may assume all these life insurance plans quoted as guaranteed are all the same? WRONG.
Some UK Insurers offer Age Based or Low Start policies where it says their premiums are ‘guaranteed’ hidden within their T&C’s. However, the only thing that’s guaranteed is that the price will go up annually or regularly in line with an Insurers guaranteed age-based formula. eg; ‘Smart Insurance UK’ offer this age-based whole of life plan. This means the older you are, then the more expensive the life insurance cover gets each year.
This maybe therefore NOT a smarter life insurance decision, as in this instance it could work out the most expensive policy in the end, against a level premium plan. What perhaps started off as say £20pm – could end being £100pm in the future.
There are also some Insurers like Vitality Life, that offer Healthy Living Assessed plans through regular exercise & health reviews. These plans reward you if you maintain a regular healthy lifestyle.
However, although this is naturally a good thing, your premiums could go up as well as down ie; if you don’t regularly engage with their Healthy Living programme or are unable to, your monthly premiums may then increase.
Fixed Guaranteed Premiums are ideally the way to go only if you prefer to operate on a fixed budget & don’t want to be regularly re-assessed. The devil is in the plan details.
2] Premium Waiver | Smart Insure
Waiver of premium is one smart life insurance review feature that many people often ignore.
It helps protect your insurance cover or ‘waive’ your premiums if your income is threatened through hospitalisation, accident or illness due to say cancer, heart attack or stroke.
In this instance, the Insurers help pay your premiums in your recovery to ensure & insure your insurance policy is not cancelled & your valuable protection cover terms remains.
On some cheap life insurance plans, premium waiver is either not available or only after a 6 months wait (which is a long time if you have a reduced income).
For some Insurers plans, waiver of premium is actually inclusive, rather than paid for. This often ignored feature could be a game changer for some when doing smart insurance reviews?
3] Critical Illness vs Terminal Illness Insurance
You thinking you are going to make a ‘smart insurance’ move & save money on your existing life insurance policy, as the premiums sound expensive against what your friends advise they pay.
Your policy however includes critical illness benefit (which sounds like the same as terminal illness benefit)? You look online & see much cheaper premiums for a life insurance (with FREE terminal illness) which you think has the same meaning.
So you go ahead and cancel your old critical illness plan. Only upon being diagnosed with a cancer, heart attack, MS or stroke do you then sadly find out that your old critical illness plan may then have actually paid out.
Your new life insurance plan may only payout if you are diagnosed terminally ill ie; incurable illness so have less than 12 months to live, so you receive no payment.
Unfortunately, as brokers we say people often can misunderstand insurers jargon terminology.
Note: To include critical illness coverage onto your policy is on average 4 x the costs of life insurance. Terminal illness is usually included automatically free.
4] Smarter Insurance Disclosure
Life insurance agents are sometimes asked….How will the Insurers even know if I just have the odd cigarette a week or maybe occasionally vape, when their ‘smoking rate premiums’ are that much more expensive – if I tell them I don’t ?
What happens if I didn’t tell the Insurer anyway about having a familial disease (what ever that means) as they are asking about me, not anyone else? “We just need to get a good life insurance deal issued asap, as we are going away”.
”I am a bloke so don’t usually bother seeing my doctor if I had a health issue, I just get on with it…but I am sure everything is all okay, so I don’t need to worry’.
The Insurers may not necessarily request any medical nurse tests or even write to your GP upfront, to query your underwritten insurance application when you apply.
However, they will probably do so if an insurance claim comes in, to fully assess the validity of your situation re a claim.
Note; Most Insurers should always send you a copy application (by e-mail or hard copy) of what you initially disclosed, for you to then carefully recheck. If you think anything is wrong, then you need to advise them asap.
The original death certificate once requested by the Insurers may then highlight that it was caused by ‘smoking related factors.’ Alternatively, it may point to the fact that a heart attack from someone at such an early age in their early 40’s was likely due to their ‘hereditary health history’ issue of familial heart disease.
The last thing your family & dependants would ever want, at their worst moments, is to have to be told by the Insurer the your death claim is now sadly invalid. That the information you gave at the time was found inaccurate ie; misrepresentation.
Remember, if you were paying £27pm to ‘correctly insure’ or just £17pm ‘maybe incorrectly’ for £300,000 life insurance, then which is the smarter insurance move? Who has the GREATER RISK ?
The Life Insurance Company who may have to pay out a £300,000 death claim …..or your Family because they unfortunately didn’t !!!
5] Mis-representation | Not Smarter Insurance
What is misrepresentation then in insurance re non disclosure? Your insurer has treated you unfairly you feel by not meeting your claim.
The Financial Services Ombudsman can if requested look into a misrepresentation claim. They will check if your Insurers questions were fair & accurate
For example; Have you smoked or used any type of cigarettes, tobacco products, nicotine replacements or vaped (wether or not these contains nicotine) in last 12 months ? Yes/No.
Note: There should be no ambiguity here ie; If you forget to advise you socially smoked a cigarette ‘only at weekends’ with friends = 52 per year is not a smartinsure move.
Would the Insurers have acted differently if given accurate information at the time of your application and been fair in the way they handled any misrepresentation re any non disclosure. You maybe not just cheating yourself but your family, business associates & dependants.
The smart insurance answer is always tell the truth, the whole truth & nothing but the truth… otherwise it may not payout !
‘Smart Insure’ | 2 Main Life Insurance Types
There are 2 main types of policies – for those looking to be smart insured: Life Insurance vs Life Assurance.
A Term ‘Life Insurance’ is a simple plan that pays out a cash sum if you die during the fixed time period your policy runs for. The life sum paid out upon death can stay level or increasing for family life cover or decreasing for mortgage protection. The premiums can remain level whether you are near the policy beginning or end. Most plans also include free ‘terminal illness’ cover.
You can choose options of a lump sum or family income benefit & also if you want your cover to be inflation proofed.
The longer the term insurance runs, then the more expensive it costs ie; 40 years term maybe double or more the premiums cost than 20 years, as the insurance risks are higher as you get older. You can take a term insurance plan upto age 90.
Conclusion: This is the smarter insurance route for those on a budget and only need life cover for a fixed term.
A Whole of ‘Life Assurance’ policy, always pays out whenever you die (as long as you’re kept up with monthly payments). For those on a limited budget, this maybe the more expensive compared to term insurance, as it will always payout.
Note: Over 50’s Lifecover asks no medical questions, so could always be a choice if you have bad health issues as smart life insurance deal.
Smartinsure Tip: Consider placing the policy into trust to help avoid probate or Inheritance Tax IHT issues.
Conclusion: This is the smart insured route for those who want life cover for an indefinite time frame.
Smarter Insurance Brokers FAQ
* Joint Life Insurance or Single Life Cover?
- A joint life 1’st death insurance pays out on the death claim on that 1’st policyholder. Then it ends
- Single life policy is setup on the sole life & death of a policyholder
- Joint life assurance 2’nd death pays on last death ie; usually used for Inheritance tax cover
- Insurers may often setup a joint life 1st death plan to repay a joint mortgage
- Family life Insurance cover may be setup either joint life 1’st death or 2 x single policies or ‘dual life’
Smart Insure TIP: 2 x separate life insurance are often more costly BUT they may payout twice
* What’s putting a ‘Policy in Trust’ mean?
- Putting the ‘policy into trust ‘can help to avoid both probate delays & Inheritance Tax IHT
- Ensures it should go direct to you nominated beneficiaries via the trustees & falls outside your estate
- Without a trust the policy could fall back into your estate
- This applies even if you have made a valid will or more importantly if you have not
- UK Inheritance tax is 40%. So for larger estates, any life cover payout is then reduced by this amount.
- Most Insurers do supply free a good range of generic insurance trusts, ideal for many client situations
Smart Insure TIP: UK Insurers can help setup a generic trust. For technical cases, seek legal advice
* What happens if my health changes after starting the policy?
- 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
- Some Insurers may request GP reports at the start to check any health details disclosed
- Likewise they may not. Please check your original T&C’s
- This information then stands now and in the future
Smart Insured TIP: Re-check your application & what you correctly disclosed to the Insurers
Smarter Insurance Conclusion
Speak to a Financial Adviser. Let them discuss your individual case circumstances & help you make smart life insurance reviews & decisions.
Article on ‘Smarter Insurance’ by Martyn Spencer Financial Adviser (2024)
‘Smarter Life Insurance’