The Best Life Insurance Policies for 2022
We’ve ranked and reviewed the best life insurance policies in the UK for 2022 to find you the best deal.
The 10 best life insurers
- Direct Line - Life Insurance
- Aviva - Life Insurance
- Legal & General - Life Insurance
- LV= - Life Insurance
- Scottish Widows - Whole of Life Cover
- Vitality - Whole of Life Insurance
- AIG Life - Whole of Life Insurance
- Zurich - Whole of Life Cover
- Royal London - Pegasus Whole of Life Insurance
- Aegon - Whole of Life Cover
How we created our list of the best life insurance policies
When it comes to finding the right life insurance for you, it can sometimes be a hard task. Luckily, there are a few signs you can look out for when it comes to finding a good policy.
We outlined a set of requirements that we felt all our insurers had to hit for their policies. We’ve only included insurers that:
- Cover for any pre-existing medical conditions or no medical needed upon applying for the policy.
- Optional mortgage cover or included as standard.
- Funeral plans to be included as an optional extra.
What is life insurance?
Life insurance — sometimes known as life cover or life assurance — is an insurance policy contract between yourself and an insurance provider.
Life insurance is a way to ensure that your loved ones will be financially secure if the worst should happen and you are no longer around to provide for them. It can also help minimise the financial impact and burden that your death can have on your family such as funeral costs.
Arranging a policy can give you peace of mind and provide much-needed financial security for your family.
What is the difference between life insurance and life assurance?
Often, you’ll hear people interchange between “life insurance” and “life assurance”, as if they mean the same thing. They do, as a matter of fact, mean slightly different things, so it’s important to be aware of the differences.
How does life insurance work?
Most life insurance policies are designed to pay out a cash sum to your loved ones if you die during your policy.
To start your insurance policy you’ll first choose the amount of cover you need and how long you’ll need it for. Through this, you’ll then pay regular premiums on a monthly or annual basis.
As with every insurance policy, it’s best to read the terms and conditions as every provider has its own set of policy conditions and exclusions. For example, if death occurs through suicide, a drug overdose, or a “risky or reckless act”, a lot of providers will refuse to payout.
It is always best to take the time to read through your policy documents and ask your chosen life insurance company for clarification if there's anything you don't fully understand.
How much life insurance do I need?
The amount of life insurance that you’ll need will differ from person to person, and there are many factors that go into deciding which life insurance policy is best for you. However, there are several key questions that you’ll need to ask yourself in order to determine the right amount of cover for you:
- How many people are financially dependent on you? — Including your children, spouse or partner.
- How much would your death impact them? — Would they be financially stable enough to continue their lives in the same way if you weren’t here?
- Do you have a mortgage that needs to be covered? — It’s important to make sure that all bills can be paid.
- Do you or your family have other debts? — Your family will still be chased if you or they have any outstanding debts that need to be paid.
- Do you have savings that your family could use? — Do you have enough money saved up that your family could use in the event of your death? How long would they be able to survive off of this?
- Are there any future spending costs you need to account for? — E.g private education for your children or university costs.
- What death-in-service benefits does your employer offer? — If your employer does offer death-in-service benefits, it’s best to check in your employment contract to be sure.
A simple rule of thumb is to cover 10 times the main breadwinner’s income, but of course, that’s just a guide and everyone’s situation is different. Ten times a salary might sound a lot, but inflation can eat into the value of any payout.
If you’re interested in protecting your income, read our guide to the best income protection insurance to help find the best deal.
As life insurance quotes can vary dramatically depending on the amount you want to cover, it’s important that you always use the same details — of how much cover and how long for — when you get a quote to compare life insurance companies.
What’s the average cost of life insurance?
On average, life insurance costs between £7.33 - £11.09 a month, based on quotes we received in January 2022 for a 35-year-old non-smoker with a clean medical history who has chosen a level term life insurance policy.
If you’re over 50 or suffer from a serious medical condition, it is possible that you may pay more for your life insurance. If you opt to add critical illness cover to your policy, this will increase the cost of cover, sometimes by a similar amount to the life policy.
It’s important to remember that your life insurance policy will depend entirely on several factors that can influence the cost of your premiums. These factors include:
- Lifestyle — If you lead an unhealthy lifestyle, this can increase your premiums drastically. Factors such as whether you smoke, are a heavy drinker or are overweight can shorten your life expectancy and your premiums will be typically higher to reflect this.
- Health — If you have any pre-existing medical conditions, this can increase the price you’ll pay. Some serious or more chronic medical conditions can also influence the price of your premium.
- Age — Typically, the older you are, the more expensive your policy will be. As you get older, you’re at a higher risk of developing a medical condition that can affect your life expectancy. Someone who is 35 will pay significantly less than someone who is 65.
- Occupation — If you work in a job that could be considered more dangerous, you may end up paying more as compared to someone who works in a lower risk job.
- Family medical history — If your family has a history of serious medical conditions, this could impact the price you’ll pay as your insurer may say that you’re at a greater risk of suffering from the same condition.
- Length of cover — If you opt for a policy that has a longer term, you’re likely to pay more than choosing a policy with a shorter term.
- Amount of cover — As is the case with most policies, you’ll decide how much you’d like to be covered for. Usually, the higher the cover, the higher your premiums will be.
Most life insurance premiums are fixed so your monthly premium is likely to never increase. Life insurers should tell you how long it will take for you to pay as much in premiums as the policy will payout when you die.
What are the different types of life insurance policies?
Instead of looking for the cheapest life insurance that you can find, it’s important to work out which type of life insurance will be right for you and your needs. There are many different types of insurance policies that you can take, with everything from term life insurance, to over 50’s and critical illness cover.
Term life insurance
Term life insurance can offer the best value for those who are looking for cheap life insurance. It insures you for the term of the policy, paying out if you die before the policy ends. If you don’t die before your policy ends, the premiums you’ve paid will not be returned.
There are two main types of term insurance — level term life insurance and decreasing term life insurance policies.
Level term life insurance
Level term insurance is where your insurer will pay out a fixed sum if you die within the terms agreed in your policy. This fixed sum must have been agreed upon when the policy was taken out.
Those who are named as the beneficiaries of your policy can receive a specific sum of money, which can help plan for a time when you may no longer be around. Level term insurance is a good option for when you want to cover a specific amount of money which can help pay off any outstanding debts that you may have when you die such as an interest-only mortgage.
In the UK, comparison websites often use level term life insurance as the basis for producing life insurance quotes, but it’s sometimes not always the best route to keeping costs down.
Decreasing term life insurance
With a decreasing term life insurance policy, the amount of cover will decrease over time, although your premiums are usually fixed and will remain the same for the duration of your policy.
The type of life insurance is often used to cover debts that will reduce over time. This includes a repayment mortgage where the outstanding balance will gradually get smaller over time. Often, a mortgage lender will insist that you either have or take out a life insurance policy with your mortgage.
If you are looking for cheap life insurance then, provided you understand that your cover will decrease over time, decreasing term life insurance can be a good idea as it is often significantly less expensive than level-term cover. As well as mortgage cover, this type of policy is also useful for inheritance tax planning purposes.
How much does term life insurance cost?
As with any type of insurance policy, the costs can vary because factors such as your age, the size of the policy, your medical history and lifestyle factors can have a significant impact on how much you’ll pay. In general, however, your life insurance policy will begin to rise in cost with age.
According to ActiveQuote, in January 2022, for a level term policy, you can pay between £7.33 - £11.09 per month for a 35-year-old male who has a clean medical history and is a non-smoker. For a decreasing term life insurance policy, ActiveQuote quoted that it will cost between £6.69 - £9.36 per month.
Over 50s life insurance
Sometimes known as Over 50s life cover or lifelong protection, over 50s life insurance is a specific type of policy that is designed for those aged 50-80 years old. Instead of the usual health questionnaires, medical questions and assessments, everyone aged between 50 to 80 is guaranteed to be accepted.
Typically, Over 50s life insurance can also be known as ‘whole of life’ cover, which essentially means that it’ll last your lifetime. But, this type of life insurance also has a qualifying period — which is often 12 or 24 months — which means if you die during this initial period, you’ll only have any premiums paid returned to you; your family won’t receive the cash lump sum.
How much does over 50s life insurance cost?
According to ActiveQuote, the cost of Over 50s life insurance can start from just £5 a month, depending on the level of cover that you require and factors such as your age and whether you’re a smoker or not.
Whole of life insurance
A whole of life insurance policy guarantees that your family will get a payout when you die. It’ll provide cover for the whole of your life and you’ll pay a premium each month, and in return, the policy will pay out a lump sum.
With whole of life policies, your chosen insurance provider will invest your premiums into a life fund that then spreads its investments across the stock market, bonds, property and cash.
An important thing to remember is that if the fund’s investments perform poorly and the provider is concerned that there is not enough money in the pot to cover everyone’s payouts, you may be asked to increase your premiums — despite the fact that the cover you receive stays the same.
How much does whole of life insurance cost?
According to ActiveQuote, policies can start from just £5 a month. However, a variety of factors will affect the cost of your whole life insurance policy, including:
- Your age
- Whether or not you smoke
- Your health and medical history
- The number of people on your policy
- The amount you wish to payout when you die
Essentially, the higher the risk of you dying young, the higher the premium you will pay. Similarly, women often pay less with whole of life insurance policies as they tend to live longer than men.
When you’re applying for a life insurance policy, you may sometimes be offered the option to add extras to your policy.
Critical illness cover
Many people decide to take out critical illness cover at the same time they take out their life insurance. Critical illness cover will put aside a portion of your payout that you could use if you suffer a predetermined critical illness, become terminally ill or suffer from a serious illness.
If you suffer from any of these, then your policy will automatically end as soon as it happens.
Life insurance with critical illness cover can vary widely in terms of which conditions are covered, with some far more comprehensive than others. The average policy covers around 35 illnesses, while the most comprehensive might cover over 150, some of these being:
- Certain forms of cancer
- Heart attacks
- Alzheimer’s disease
- Parkinson’s disease
- Multiple Sclerosis
- Organ Failure
It’s important that you look closely at the list of conditions as some forms of cancer are not included because they’re easy to treat and most people should recover.
While it’s not the brightest of topics, it’s important to consider how your family would pay for your funeral in the event that you would pass away. You can easily add funeral cover to your life insurance policy — some policies even have it already included.
Life insurance with funeral cover
Whole life insurance policies will pay out an agreed amount on your death to cover the costs of your funeral. Many people even take out policies simply to cover the cost of their funeral.
However, it’s important to remember that there is likely to be a delay between your death and your life insurance paying out.
Some people prefer to opt for a pre-paid funeral plan that is often marketed on the basis of “freezing the costs” of a funeral. Put simply, a funeral plan allows you to pay upfront for your funeral so your relatives don’t have to cover the costs themselves.
This can also bring you peace of mind, knowing that you’ve paid for your funeral in full in advance.
Read our guide to the best funeral plans to see how much you can pay a month.
Pay out of your estate
If you are planning on using your savings to cover funeral costs make sure the money is held in a joint account that your family can easily access after your death. The best account to use is a joint account where the surviving joint owner immediately takes over sole account ownership and can continue to withdraw money without assets being frozen.
Free parent life cover
Some insurance companies offer free life insurance for new parents, this means that they will give you a certain amount of money if you pass away before your child is of a certain age. This means that you won’t have to pay a premium or any excess and the cover will usually last for one year from when you are accepted onto the policy.
Both you and your partner can apply, meaning you are both covered if something happens to you.
Other insurance policies
There are also other life insurance policies to consider when you take out a policy. This can include:
- Terminal illness cover — This cover can payout early if you’re diagnosed with a terminal illness, from which you’ll die within an estimated and limited time period.
- Joint life insurance — When you take out your life insurance policy, you can choose between a single policy or a joint policy for couples. If you and your partner are both taking out a policy at the same time, it can sometimes be cheaper to opt for a joint policy instead.
While sometimes these optional extras can raise the price of your insurance, sometimes it’s better to be prepared for the unexpected.
Medical conditions and life insurance
Any life insurance quote will depend heavily on the information you supply as well as your medical information. Customers who have diabetes, for example, will likely have a more expensive policy that may be complicated to arrange.
Life insurance may sometimes be harder to find if you suffer from a long-term or serious health problem.
Lifestyle and life insurance
While medical conditions and terminal illnesses are the most difficult issues to resolve, lifestyle choices can also significantly affect your premiums.
Problems such as cirrhosis — which is caused by heavy drinking — can leave you paying over the odds for your insurance. However, being overweight or smoking can drastically increase the cost of your life cover. And it’s not just smoking: vaping can also increase the costs of your policy as companies consider vaping to be just as serious as smoking.
It’s important that you don’t hide the truth about your lifestyle choices and insurers don’t have to pay out if an applicant has hidden an important detail when applying for cover.
Life insurance exclusions
Some life insurance companies will exclude certain people from their cover as they are considered to be too high of a risk to insure. Some of the reasons insurers may turn down your application include:
- You work in a “high risk” job
- You regularly take part in “high risk” leisure activities
- You suffer from serious health problems such as cancer or diabetes
- You’re a heavy smoker
Some life insurance policies also state that they will not pay out if death occurs under the following circumstances:
- Drug or alcohol misuse
- Involvement in war or terrorism
- Suicide or self-inflicted injuries
- Gross negligence or a similarly reckless act