How to find the cheapest life cover deal
Life cover comes in three main forms – ‘level’ term assurance, ‘decreasing’ term assurance and ‘family income benefit’.
Level term assurance will pay a fixed sum on the death of the first policyholder, typically husband or wife.
Decreasing term assurance is typically taken out alongside a repayment mortgage and is designed to pay off the outstanding loan on the first death.
Family income benefit does not pay a lump sum, but a predetermined income for a fixed period.
Cover is surprisingly cheap, especially if you are under 30, a nonsmoker and healthy.
Highclere Financial Services in Hemel Hempstead, Hertfordshire, says a couple, both aged 30 and non-smokers who require £100,000 of cover over 35 years, would pay between £13.50 (Aviva) and £18.23 (Bupa) a month.
For a couple, both aged 50 and requiring £100,000 cover for 15 years, monthly premiums would rise sharply, ranging from £82.67 (Ageas) to £158.86 (Skandia Life).
Decreasing cover is cheaper. For our 30-year-olds, the monthly cost ranges from £9.64 (Aviva) to £14.11 (Bupa) while for the 50-year-olds it varies from £25.42 (Friends Provident) to £33.65 (Bupa).
For our 30-yearolds in search of replacement income, a 25-year policy providing £20,000 of annual income (taxfree) would cost between £18.83 (Scottish Provident) and Bright Grey (£27.01) a month.
Cover can be bought cheapest online, but in most cases it makes sense to buy via an adviser, who can advise on the amount of cover you require as well as help with a claim or problem with the policy.
In terms of the amount of cover required, Alan Lakey of Highclere says that as a minimum any sum insured should be sufficient to cover all debts (credit cards and personal loans as well as mortgage).
It is also important to replace lost income, which is why Lakey often sells life cover in conjunction with family income benefit.
‘Last week I arranged a package for a couple in their early 20s that embraced decreasing term assurance for a £175,000 mortgage over 35 years, critical illness cover and a 25-year £12,000 family income benefit plan,’ he says. ‘The monthly cost was just over £65, a small price to pay for such peace of mind.’
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