What Is the Best Life Insurance Policy in the UK?

Mark Benson

Mark Benson

Money Savings Advice Best life insurance policy?

When looking for the best life insurance for your particular situation, there are many factors to take into consideration. Issues such as age, medical conditions, lifestyle and affordability are just some of the things to consider.

While the Internet has opened up the life insurance industry in the UK, what may be deemed the best life insurance policy for one person may not be relevant to your situation.

We will now take a look at the many different factors to consider when looking for the best life insurance policy - your requirements, your finances and your situation.

You tend to find that the larger life insurance companies offer a full range of life insurance services while some of the smaller companies tend to be focused on niche areas of the market.

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Who Are the Best Term Life Insurance Companies?

The UK life insurance market is very competitive, and we see new entrants on a regular basis. That said, when it comes to the best term life insurance company surveys, the same names appear time and time again.

We are talking about the likes of LV, Scottish Widows, Nationwide Building Society, Legal and General, Sainsbury’s Bank, Barclays, Nationwide, AA, Royal London and Aviva. Insurance companies are continually tweaking and updating their insurance packages; therefore, many other names will come into consideration.

What Is Term Life Insurance Cover?

Term life insurance cover is one of the most popular types of life insurance which covers a specific period. For example, you may have an interest-only mortgage with 15 years remaining at which point the capital will need to be repaid.

In this scenario, it would make sense to take out a 15-year term life insurance policy structured to payout enough money on death to repay the outstanding mortgage. It is important to note that term life cover is only paid out if you die during the specified term.

Who Are the Best Over 50 Life Insurance Companies?

The over 50 life insurance sector is extremely competitive and set to expand in the years to come with an ageing population and longer life expectancy.

Some of the more frequently mentioned insurance companies providing good over 50 life insurance cover include Smart Insurance, Legal and General, Sainsbury’s Bank, AA, Post Office Money, Sun Life, Royal London, Aviva, Santander and LV. Again, this list can change from time to time with many other well-known insurance companies just outside of the current top 10.

What Is Over 50 Life Insurance?

Over 50 life insurance is available to those aged between 50 and 80 and will remain active while the premiums are paid. This is more akin to a whole of life insurance policy as opposed to a term insurance policy.

When you reach 90 years of age, you are not required to pay any additional premiums, although life cover and terminal illness cover will continue for the rest of your life.

Who Is the Best Whole of Life Insurance Companies?

Whole of life insurance cover is the most expensive type of life insurance but is more relevant than term insurance for some scenarios. Some of the best whole of life insurance companies in the UK include NFU-AIG, Royal London, Legal and General, Vitality, Scottish Widows, Aegon, Zürich, AIG Life and LV.

Like the majority of insurance markets in the UK, individual company offerings are changing on a regular basis, and there are many more well-known insurance companies offering attractive life cover packages. As and when you are ready to take out life insurance, you should search the Internet and speak to advisers to find the best offers for your scenario.

What Is Whole of Life Insurance?

As the term whole of life insurance indicates, this type of insurance is open-ended and live as long as you continue to pay your premiums. While term insurance is traditionally used to support specific financial liabilities for a predetermined period of time, whole of life insurance is often taken out to cover funeral costs and support dependents, partners, family and friends left behind. It is the most expensive type of life insurance available but offers the most comprehensive cover.

Should I Take Advice on Life Insurance?

When seeking the best life insurance in the UK, it can be difficult to know where to look, who to consider and which plans to offer the best value for money. This is an industry that is extremely flexible and accommodating of specific scenarios.

What may be the best insurance policy for your partner may not necessarily be the best insurance policy for you. We all have different lifestyles, we are all susceptible to different medical conditions, and there is also a difference between life expectancy for men and women. So, it is important to take advice on the best life insurance policy for your situation.

Should We Take Joint Life Insurance Cover?

Many people assume that joint life insurance cover and two individual life insurance policies are in effect one and the same. This is not true. Joint life insurance cover sees two individuals named on the policy, but payment will only be made on the first person to die.

After this, the policy will be closed and no payment made on the death of the second named person. The situation with individual life insurance policies is different because they offer individual life insurance and potentially two payouts.

The combined premiums for the two individual policies will be, all things being equal, higher than for the joint life insurance policy where only one payout can ever be made.

Will My Whole of Life Insurance Premiums Increase?

When looking for the best whole of life insurance policies, it is important to look at the small print. Many companies will guarantee no premium increases for the first ten years, but you could leave yourself open to increases after this period is over. In some cases, the increase in premiums could make whole of life insurance too expensive and you may need to change your plans.

What Will Affect My Whole of Life Insurance Premiums?

As with any type of life insurance, there are numerous issues that will affect your whole of life insurance premiums such as:-

  • Age
  • Health
  • Drinking habits
  • Smoking habits
  • Lifestyle

It is worth noting that some whole of life insurance companies will stop taking premiums at a specific age, often 90 years of age, but they will still continue to provide life insurance. This is a factor that not many people are aware of.

What Are the Main Drawbacks of Whole of Life Insurance Policies?

The main issue when looking at the whole of life insurance policies is the fact that if you take out a policy when you are fairly young, you could end up paying more in premiums than you receive in death.

Even if your premiums do not exceed the insurance payment on your death, the longer you live, the more this will eat into your eventual insurance payment. The relatively high premiums associated with the whole of life insurance compared to term life insurance can be too much for many people.

Do Whole of Life Insurance Policies Help With Inheritance Tax Planning?

Whole life insurance policies can be very useful in terms of tax planning and in particular inheritance tax planning. If for example, you might leave a significant inheritance tax liability upon your death, then it may be worthwhile taking out a whole of life insurance policy.

As the whole of life insurance payment would be sent to the beneficiary, it would not count as part of your estate upon death and the calculation of inheritance tax. However, all of life insurance policies should be considered in the wider context of your financial planning.

Should Life Insurance Be Part of My Long-Term Financial Planning?

While we have covered the whole of life insurance policies with regards to inheritance tax planning, there is also a place for term insurance where for example, you are looking to repay mortgage debts on your death.

It is therefore very important that life insurance is discussed and considered when reviewing your finances - hopefully on an annual basis. Many people treat insurance policies separately from their overall finances which doesn’t make sense. Yes, they are a perfect way to ensure that your loved ones are provided for on your death, but they can also prove to be a very useful tax planning tool.

Are Life Insurance Payouts Free of Tax?

Yes. While there may be some fairly unique scenarios where a taxable event may occur with life insurance payout, most related with companies and trusts, under normal circumstances you should not pay tax on any life insurance payout. However, it is worth asking the question when you sit down to discuss which policies to consider.

Money Savings Advice Tip

The best life insurance policy is subjective and based on your personal circumstances. We would recommend speaking to a life insurance specialist and getting a whole market quote enabling you to decide.

Can I Cash in My Life Insurance Policy?

Many people believe that their life insurance policy has a cash value and can, therefore, be cashed in at any moment. Unfortunately, this is not a type of savings plan and is only there to provide cover in the event of your death at which point payment will be made to your beneficiary.

There may be an early payment in the event of a terminal illness, but an insurance policy has no transferable value.


In order to find the best insurance policy for your situation and your finances, it is worthwhile taking professional advice at the earliest opportunity. Ploughing through the Internet, looking at all of the best buys may give you an idea of what is on offer, but this is a very fluid and fast-moving market with new offers emerging on a daily basis.

How Can Money Savings Advice Help You With Life Insurance?

Here at Money Savings Advice, we have partnered with some of the UK’s leading Life Insurance brokers. They have already helped thousands of people get the best Life Insurance cover and they can do the same for you.

Choosing an independent adviser means they won’t recommend a scheme unless they are sure it is in your best interests. Their advice is also regulated by the FCA, which gives you an additional layer of protection.

If you would like to speak to one of these brokers who can provide you with a ‘whole market quote’ then click on the below and answer the very simple questions.


Money Savings Advice Author Mark Benson

Mark Benson

Mark has been writing professionally for over ten years for the financial sector. Having started in the financial world as a stock-broker in central London and then moving to equities trader Mark is one of our senior financial writers who has a vast knowledge of multiple financial sectors.

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