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Tips for Choosing a Life Insurance Company

More than 150 insurance companies offer thousands of life insurance products in the UK.

Choosing the right company and right product from this bewildering choice is challenging. Fortunately, there are some common sense guidelines that will help you narrow the field to a more manageable selection of companies and products.

Looking at the Cost
The UK life insurance business is highly competitive, but the industry tries to avoid price competition whenever possible. Instead, companies attempt to make their products sufficiently different from their competitors so that price is less of a factor in product selection.

However, there are ways you can keep your premium rates to a minimum without affecting the quality of your cover.

Consider Term Life Insurance - Term Life Insurance is the cheapest form of life cover available and premiums are very competitive.
Shop around - in particular, if you know exactly what type of cover you require and don't need advice, you can reduce your premiums by applying through a discount life insurance broker such as Life Saver. These broker's discount the insurance companies standard premiums by rebating the majority of the commission paid to them as an agent for the company. This reduces your monthly payments below the premium you would pay by applying direct to the insurance company.
Stop smoking - premium rates for smokers are 30-40% higher than for non-smokers. If you can or are thinking of quitting you will save hundreds on your premiums over the term of the policy.
Only pay for the cover you need - If you are looking for term insurance and critical illness, you can make big savings by buying a combined policy. These only pay out one lump sum rather than the two that separate policies would pay, if you suffer a critical illness and then die.

Obviously, the cost of monthly premiums is going to be a major factor in your choice of insurer but, it should not be your only consideration.

Product Quality
There can be major differences between UK life insurance policies so it is important that you compare like with like and check the small print. This is particularly important if you are including extra's such as Critical Illness Cover. Always read the Key Facts document carefully and look for some of the following benefits:

Are the premiums Guaranteed? This means the premiums are guaranteed to remain the same throughout the term of your policy. This is opposed to `Reviewable´ premiums which, as the name suggests, are reviewed usually every 5 years and can increase dramatically.
Check that the policy has terminal illness benefit included. This is a valuable extra which is now included in most Term Life Insurance policies for free and will pay the life insurance amount early if you suffer a terminal illness.
Can the policy be written in trust? This will avoid any delay in the money going to your dependants and the risk of inheritance tax being charged on the benefit.
Can waiver of premium benefit be included in your plan. This is a valuable extra which, if you become too ill to work for a number of months, will ensure your cover continues without you having to pay the premiums.
A valuable feature of some policies is counselling for your family if you die?

Claims History
No matter how good the policy it will all be for nothing if your insurer is difficult or obstructive if you should have to make a claim.The industry pays out over £166 million a day in pension and life insurance claims and all insurers have procedures in place to process claims on their policies.

Before taking out a policy it is advisable to contact your prospective insurer and ask about their claims history. Note their willingness to provide this information and the attitude promoted by their response. Do they look for reasons to pay claims or excuses to avoid them?

Financial Strength
When selecting or evaluating a UK life insurance company, a logical place to begin is by reviewing the ratings given by major insurance company rating services such as Standard & Poors and AM Best. In a rating, the rating company or agency expresses its opinion of the life insurance companies financial condition.

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