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Level Term Insurance Protect your family’s finances

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Level term life assurance is one of the cheapest ways to protect your family's income if the worst happens. About one child in 29 loses a parent before they've finished full-time education - but you can save £1,000s while still protecting them.

Life assurance premium prices have risen for everyone because of a new tax on insurers, and even further for women, owing to the EU gender directive. Yet if you compare policies across the market, you can still find a good deal to suit you.

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!

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.

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.

01

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

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

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.

02

...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.

Smart InsuranceSun Life

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Cheapest 'with advice' brokers

Getting advice costs more than 'execution only', in the form of a slightly increased premium each month (which goes as commission to the broker). However, while £2-10/month extra might not seem very much, over a 20-year term you'll be paying a lot for advice.

This could be worth it though, particularly for peace of mind if you have complicated circumstances, such as medical conditions, 'in trust' issues, want a waiver of premium (where you stop making monthly payments if you become seriously ill or disabled) or are after a critical illness, income protection policy or family income benefit.

Get quotes, then compare to the execution-only above. If you are happy paying that amount extra (work it out over the whole term) for advice, then go for it.

Cheapest advice

This is always a difficult one as, of course, if you're getting advice then you'll want it to be as good as possible. So you have to decide whether cheapest is best for yourself. There are two choices here:

  1. Online? Use a 'broker with advice'

    Some brokers will give advice too, and just charge a higher premium. Giving life insurance advice is a regulated activity which means brokers have to meet certain standards set by the regulator, the FCA, and you can complain if things go wrong.

    The biggest and most well-known brokers are Lifesearch and Cavendish Online, yet we also received good 'advised' quotes in the survey from MoneyMinder, TQ Protect and Life Assure Online*.

    Anyone giving advice also needs to achieve Competent Adviser Status by taking FCA-approved exams. Ask your broker what exams they've taken if you want to check their qualifications. You can also check if they're registered with the FCA by doing an individuals search.

  2. Face to face? Use an IFA

    Independent Financial Advisers cover life insurance, among other products, and may be able to see where it fits in with your other protection and wider money issues - and they will meet face-to-face.

    They are regulated and must pass exams on more subjects than brokers, though the costs vary on how you agree the fee with the IFA. For more and how to find an adviser, see the IFA guide. You can also check the FCA register by doing an individuals search.

Saving £1,000s vs going direct

A 45 year old non-smoker buying a £200,000 level term policy lasting 20 years would pay £34 direct to an insurer, £25 a month to a typical full commission provider but only £18 via the execution-only route - saving £2,600 over 20 years (but you've no comeback).

£200,000 level term assurance costs over 20 years
Direct from big name insurer
Full commission provider
Discount broker
Savings over full term
Monthly
Full term
Monthly
Full term
Monthly
Full term
30-year-old smoker
£19.50
£4,680
£14.50
£3,480
£10.75
£2,575
£2,105
30-year-old non-smoker
£13
£3,070
£10
£2,400
£7
£1,660
£1,410
45-year-old non-smoker
£34
£8,160
£25
£6,000
£18
£3,670
£2,590
45-year-old smoker
£70
£16,800
£53
£12,720
£40
£9,860
£6,940
Joint 2 x 35 smokers
£46
£11,040
£36
£8,640
£27
£6,480
£4,560
(A) Assumes person in good health, age given is age next birthday. Prices as at April 2013

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