Life insurance is a type of protection policy that pays out a cash lump sum or series of regular payments to your loved ones when you die. It can help them cope with the financial impact of losing you, such as paying off the mortgage, covering living expenses, or funding your children’s education. But how do you choose the best life insurance companies UK? There are many factors to consider, such as the type of cover, the amount of cover, the cost of premiums, the claims process, and the customer service.
In this guide, we will review the top 10 best life insurance companies UK for 2023, based on independent research and customer ratings. We will also explain how life insurance works, what types of policies are available, and what to look for when buying life insurance.
What is Life Insurance and How Does It Work?
Life insurance is a contract between you and an insurance company. You agree to pay a monthly or annual premium in exchange for a guaranteed payout if you die during the term of the policy.
The payout can be either a fixed amount (known as level cover) or a decreasing amount (known as decreasing cover). Level cover pays out the same amount regardless of when you die, while decreasing cover pays out less over time, usually in line with your outstanding debts.
You can also add critical illness cover to your life insurance policy, which pays out if you are diagnosed with one of the specified conditions, such as cancer, heart attack, or stroke. This can help you cover medical bills, adapt your home, or replace your income if you are unable to work.
Life insurance policies can last for a fixed period (known as term insurance) or for your whole life (known as whole-of-life insurance). Term insurance is cheaper and more common, as it only covers you for a specific time frame, such as 10, 20, or 30 years. Whole-of-life insurance is more expensive and less common, as it covers you until you die, whenever that may be.
The main benefits of life insurance are:
- It provides financial security and peace of mind for your family and dependents when you die.
- It can help them pay off any debts or liabilities that you leave behind, such as a mortgage, loan, or credit card.
- It can help them maintain their standard of living and cover their essential expenses, such as rent, bills, food, or childcare.
- It can help them achieve their long-term goals and aspirations, such as education, travel, or retirement.
- It can help them cope with the emotional and practical challenges of losing you, such as funeral costs, bereavement support, or legal advice.
The main drawbacks of life insurance are:
- It can be expensive and unaffordable for some people, especially if they have a high-risk profile or a long-term policy.
- It can be complicated and confusing to understand and compare different types of policies and providers.
- It can be difficult and stressful to make a claim and deal with the bureaucracy and paperwork involved.
- It can be subject to exclusions and limitations that may prevent or reduce the payout in some circumstances.
What are the Different Types of Life Insurance Policies?
There are several types of life insurance policies to choose from, depending on your personal circumstances and preferences. Here are some of the most popular ones:
Term insurance:
This is the simplest and most affordable type of life insurance. It pays out if you die within a set period, such as 10 or 20 years. You can choose between level or decreasing cover, depending on whether you want a fixed or reducing payout.
Increasing term insurance:
This is similar to term insurance, but the payout increases over time to keep up with inflation. This means that your beneficiaries will receive more money in real terms if you die later in the term. However, this also means that your premiums will increase over time.
Whole-of-life insurance:
This is the most comprehensive and expensive type of life insurance. It pays out whenever you die, regardless of how long you live. You can choose between level or increasing cover, depending on whether you want a fixed or rising payout. However, you have to pay premiums for as long as you live or until a certain age.
Over 50s life insurance:
This is a type of whole-of-life insurance that is designed for people aged 50 and over. It does not require any medical questions or exams, so it is easy to get accepted. However, it usually has a low payout and a high premium compared to other types of life insurance. It also has a waiting period of one or two years before it pays out if you die from natural causes.
Each type of life insurance policy has its own advantages and disadvantages, so you need to weigh them carefully and choose the one that suits your needs and budget. You can use online comparison tools or speak to an independent broker to help you with this.
How to Compare Life Insurance Quotes and Providers
When looking for the best life insurance company for your needs, there are several factors to consider. Here are some of the most important ones:
The type and amount of cover:
You need to decide what type of policy suits your needs and how much cover you want. This depends on your personal circumstances, such as your age, health, income, debts, dependents, and goals. A general rule of thumb is to get enough cover to replace your income for 10 times your annual salary or pay off your mortgage and other debts.
The cost of premiums:
You need to compare how much different providers charge for the same type of policy and amount of cover. This depends on various factors, such as your age, health, lifestyle, occupation, and family history. You can use online comparison tools or speak to an independent broker to get quotes from multiple providers.
The claims process:
You need to check how easy and fast it is to make a claim with different providers. You want a provider that has a high claim payout rate and a low claim rejection rate. You also want a provider that has a simple and transparent claim process and offers support and guidance throughout.
The customer service:
You need to check how well different providers treat their customers. You want a provider that has a high customer satisfaction rate and a low complaint rate. You also want a provider that has a friendly and helpful staff, a clear and fair policy wording, and a flexible and responsive service.
Comparing life insurance quotes and providers can be time-consuming and overwhelming, but it is worth it to find the best deal for your needs. You can use online comparison tools or speak to an independent broker to help you with this.
Top 10 Best Life Insurance Companies UK for 2023
Based on our expert in-depth research, we have ranked the top 10 life insurance companies in the UK for 2023, according to their customer ratings and historic claims payout data. Here is our list, along with a brief overview of each provider:
Liverpool Victoria:
Liverpool Victoria, also known as LV=, is the leading mutual life and general insurance company in the UK. It has been providing life insurance for over 175 years and has over 1.3 million customers. It offers both level and decreasing term insurance, with optional critical illness cover. It has a high claim payout rate of 99% and a high customer satisfaction rate of 4.8 out of 5 stars on Trustpilot.
Aviva:
Aviva is the largest life and general insurance company in the UK and Ireland. It has over 19 million customers and over 22,000 employees. It offers both level and decreasing term insurance, with optional critical illness cover. It has a high claim payout rate of 98.9% and a high customer satisfaction rate of 4.5 out of 5 stars on Trustpilot.
Royal London:
Royal London is the largest mutual life and pensions company in the UK. It has over 8.8 million customers and over 4,000 employees. It offers both level and decreasing term insurance, with optional critical illness cover. It has a high claim payout rate of 99.7% and a high customer satisfaction rate of 4.6 out of 5 stars on Trustpilot.
VitalityLife:
VitalityLife is a specialist life insurance company that rewards its customers for living healthier lives. It has over 1 million customers and over 1,000 employees. It offers both level and decreasing term insurance, with optional critical illness cover. It has a high claim payout rate of 99% and a high customer satisfaction rate of 4.3 out of 5 stars on Trustpilot.
Legal and General:
Legal and General is one of the oldest and most established life and general insurance companies in the UK. It has over 10 million customers and over 7,000 employees. It offers both level and decreasing term insurance, with optional critical illness cover. It has a high claim payout rate of 97% and a high customer satisfaction rate of 4 out of 5 stars on Trustpilot.
Zurich:
Zurich is one of the largest global life and general insurance companies, with operations in over 170 countries. It has over 9 million customers and over 50,000 employees worldwide. It offers both level and decreasing term insurance, with optional critical illness cover. It has a high claim payout rate of 99% and a high customer satisfaction rate of 4 out of 5 stars on Trustpilot.
AIG:
AIG is one of the world’s leading life and general insurance companies, with operations in over 80 countries. It has over 18 million customers and over 45,000 employees worldwide. It offers both level and decreasing term insurance, with optional critical illness cover. It has a high claim payout rate of 96% and a high customer satisfaction rate of 4 out of 5 stars on Trustpilot.
Scottish Widows:
Scottish Widows is one of the oldest and most trusted life and pensions companies in the UK. It has over 6 million customers and over 3,000 employees. It offers both level and decreasing term insurance, with optional critical illness cover. It has a high claim payout rate of 99% and a high customer satisfaction rate of 3.9 out of 5 stars on Trustpilot.
Aegon:
Aegon is one of the world’s leading life and pensions companies, with operations in over 20 countries. It has over 26 million customers and over 25,000 employees worldwide. It offers both level and decreasing term insurance, with optional critical illness cover. It has a high claim payout rate of 98% and a high customer satisfaction rate of 3.8 out of 5 stars on Trustpilot.
Nationwide:
Nationwide is the largest building society in the UK, offering various financial products including life insurance. It has over 15 million customers and over 18,000 employees. It offers both level and decreasing term insurance, with optional critical illness cover. It has a high claim payout rate of 99% and a high customer satisfaction rate of 3.7 out of 5 stars on Trustpilot.
Each provider has its own strengths and weaknesses, so you need to compare them carefully and choose the one that suits your needs and budget best.
What Does Life Insurance Cover?
Life insurance covers the risk of death due to any cause, except for some exclusions that vary depending on the provider and the policy. Some of the common exclusions are:
- Suicide or self-inflicted injury within the first 12 or 24 months of the policy
- Death due to war, terrorism, civil unrest, or criminal activity
- Death due to drug or alcohol abuse, or reckless behaviour
- Death due to pre-existing medical conditions that were not disclosed or covered by the policy
Some life insurance policies may also cover the risk of terminal illness, which means that you are diagnosed with a condition that is expected to cause death within 12 months. In this case, the policy may pay out the full amount before you die, so that you can use it for your final expenses or other purposes.
How Much Does Life Insurance Cost?
The cost of life insurance depends on various factors, such as:
The type and amount of cover:
The more cover you want, the more you have to pay. Likewise, the longer the term or the more comprehensive the policy, the more you have to pay.
Your age and health:
The older or less healthy you are, the more you have to pay. This is because you are more likely to die sooner and make a claim.
Your lifestyle and occupation:
The more risky your lifestyle or occupation is, the more you have to pay. This is because you are more likely to die from an accident or injury.
Your family history and medical history:
The more likely you are to inherit or develop a serious illness, the more you have to pay. This is because you are more likely to die from a disease or condition.
Your gender and smoker status:
The more likely you are to die earlier than average, the more you have to pay. This is based on statistical data that shows that men tend to die younger than women, and smokers tend to die younger than non-smokers.
The cost of life insurance can vary significantly between different providers and policies, so it is important to compare quotes from multiple sources before buying. You can use online comparison tools or speak to an independent broker to get the best deal for your needs.
How to Buy Life Insurance
Buying life insurance can be a simple and straightforward process if you follow these steps:
- Decide how much cover you need and for how long. You can use online calculators or speak to a financial adviser to help you with this.
- Compare quotes from different providers and policies. You can use online comparison tools or speak to an independent broker to help you with this.
- Choose the provider and policy that suits your needs and budget. You can apply online, over the phone, or by post.
- Fill in the application form and answer some questions about your personal details, health, lifestyle, occupation, family history, and medical history. You may also need to provide some documents, such as your ID, proof of income, or medical reports.
- Wait for the provider to assess your application and offer you a premium. They may also ask you for further information or tests, such as a blood test or a medical exam.
- Accept the offer and pay the premium. You will then receive your policy documents and confirmation of cover.
- Review your policy regularly and update it if your circumstances change. You may be able to increase or decrease your cover, add or remove features, or switch providers without losing any benefits.
Buying life insurance can be a smart and responsible decision that can protect your family and dependents from financial hardship when you die. However, it can also be a complex and confusing process that requires careful research and comparison. That is why we have created this guide to help you find the best life insurance company for your needs.
Conclusion
Life insurance is a valuable protection policy that can give you peace of mind and financial security for your loved ones when you die. It can help them cope with the loss of your income, pay off your debts, or fund your legacy.
However, choosing the best life insurance company for your needs can be challenging, as there are many factors to consider and many options to choose from. That is why we have created this guide to help you compare the top 10 life insurance companies in the UK for 2023, based on their customer ratings and historic claims payout data.
We hope that this guide has helped you understand how life insurance works, what types of policies are available, what to look for when buying life insurance, and how to buy life insurance. We also hope that this guide has helped you find the best life insurance company for your needs.