Life Insurance

What is level term life assurance?

It's a fancy name, but the simplest type of life insurance around. In a nutshell...

It pays out a LEVEL amount to your dependants
if you die within a FIXED TERM

As you've no doubt spotted, there are two key terms:

• "Fixed term": You only get a payout if you die within the stated term, eg, 18 years.
• "Level": The payout you get doesn't vary, it's always at a set amount.

So, level term assurance guarantees a lump sum payout upon death within a fixed time, eg, £150,000 if you die within the next 18 years. It's the one policy you hope won't pay out!

Should I bother getting life insurance?

That depends on you. If you're a single person with no dependants, then you're far better off focusing on your own finances. For everyone else, ask yourself:

"What would happen financially to the people around me if I died?"

If the answer is there'd be little financial impact, then you probably don't need a policy. But if paying the bills, the mortgage, bringing up kids, food shopping and more would be a struggle, this is a cheap way to solve that.

Don't confuse with MORTGAGE TERM or WHOLE OF LIFE insurance

It's easy to confuse with other similar policies. So here's a quick list of things it isn't:

• Mortgage term assuranceThis is bought to pay off your mortgage in case you die. It's also sometimes called 'decreasing term assurance' as the amount it pays out decreases as your mortgage decreases. For more on this, read the Mortgage Life Insurance guide.
• Whole-of-life insuranceThis is an open-ended investment based policy mainly used for inheritance  taxplanning. It runs out when you die, rather than after a fixed time.

  Why is it 'assurance', not 'insurance'?

  If you are wondering why it's life "assurance" not "insurance", that's because assurance is for something that is certain to happen. Insurance is where there is only a risk of it happening... and death is assured.
  
  Though some call this "insurance" too, as there's no guarantee you'll die within the term.

  Life assurance DOs and DONTs

  If you've decided you do want life assurance, make sure you get the right amount of cover and the correct type of policy. We've put together the DOs and DON'Ts you need to heed.

  DO carefully consider what you can pay in and need out ...

  DON'T assume joint cover is the same as two singles - get quotes for both

  DO live a healthier life, it makes things cheaper

  DO answer questions accurately - insurers' must ask what they need to know.

  DO quit smoking - and requote.

  DON'T over- or under-cover yourself

  DO understand how you're protected if the insurer goes bust

  DON'T get sucked into critical illness policies without good advice

  DO consider writing in trust

  DON'T think you're stuck with old, expensive insurance

  DO only get cover for as long as it's needed - and no longer

  
  

  
  
  
  

  Best buys: Use a cheap broker

  While some may be worried that cheaper isn't better, with level term assurance there's no investment element as the payout is fixed, and there's no argument over whether someone is dead! So this is a truly simple policy in most cases, provided you've disclosed adequately. So...
  It's simply a case of the cheaper, the better!
  Life insurance prices change every day, so there's no one best buy insurer, but there are best buy brokers. Brokers trawl life insurers to find the lowest priced policy for you, but they aren't all equal. Commercial relationships (who they include) and commission (how much they get paid) hugely impact what you pay.
  You can get policies much cheaper than going direct by using 'execution only' brokers where you pay a small upfront fee, and in return they give you the commission. However, if you're not sure what you're doing, or have a complex situation, it's important to consider paying for advice - it may lead to a saving in the long run.
  We surveyed 15 execution-only brokers for a range of quotes and here are the cheapest - check the top two then add the rest if you've time.

  Quick broker warnings... 

  Read these before using an 'execution only' broker

  
  
• Is your premium GUARANTEED or REVIEWABLE? Check your monthly payment isguaranteed and not reviewable. 'Reviewable' policy prices can intermittently change at the insurer's discretion. With a 'guaranteed' contract, your repayments are fixed.
• 'Execution only' means NO advice: 'Execution only' brokers just find you the cheapest price without giving any advice. If you'd like advice, to ensure you get the right cover (or have some comeback if it's not), read the Getting Advice section.
• Tell 'em about your health: All quotes are based on a healthy person and prices go up if you have any health issues. It's now insurers' responsibility to ask you what they need to know, but be upfront and honest about EVERYTHING or the cover is worthless.
• Always check ALL the T&Cs: Make sure the policy meets your needs before you buy. Ask questions, questions, questions if it is not clear.
• Is the company reputable? If you haven't had feedback from elsewhere, ask in theMSE forum.

  Top life insurance brokers

  Take care to use only the links we've provided, as some more expensive companies pose on Google using very similar names.

  

  Cavendish Online

  Top pick on price for years, this site has consistently offered low quotes and pioneered giving up its commission in return for a one-off £35 fee.

  Results include a 'fee' and 'fee-free' option. In the fee option, Cavendish Online rebates all of the commission it gets from the policy provider (the insurer). In the fee-free option, it keeps a portion of the commission and rebates the rest. The latter may be cheaper for lower payouts or short term policies.

  Another thing to note; if your policy is declined, increased or deferred, due to health or lifestyle reasons, you'll either be offered another policy or a full refund of the fee.

  Link: Cavendish Online

  

  Moneyworld

  This firm of independent financial advisers often matches Cavendish on price and has a lower fee of £25 - though Cavendish's long history of great feedback just edges it ahead.

  It also offers 'fee' and 'fee-free' options by completing an online quotation form.

  If for any reason you do not want to proceed, are declined or rated, you'll receive a full refund of the fee on request.

  Link: Moneyworld

  For absolute belt and braces, you can add a couple more of the smaller brokers, which charge around £30 and, depending on your circumstances, can rival the two above...

  Money Minder | Commission Free Life Cover

  However, they're newer to our guide, so we haven't been able to get as much feedback on service and reliability (please tell us in the Level Term Insurance forum discussion).

  Others included in the comparison: Asda Life, Beagle Street, Brightlight Insurance, Confused.com, Direct Life, Life Assure Online, Life Search, PayingTooMuch.com, PruProtect, TheIdol.com, TQ Protect.
  
  

  ...PLUS check the ones they miss

  There are a couple of life insurers that don't get looked at by online brokers. It's worth doing these separately to see if they can undercut your cheapest broker quote.