Is Cheap Life Insurance a Compromise?

Cheap Life Insurance

Some consumers argue that selecting a product simply on the basis of its cheap price inevitably involves some form of compromise - usually with respect to the quality or reliability of the product concerned. Cheap life insurance, however, is an exception to any such rule, for a number of overriding reasons:

• Life cover is one of those relatively rare consumer items that has fallen in price, in real terms, over the past decade or so. If a product is universally cheap to buy, therefore, it is hard to argue that the consumer is making any kind of compromise, in terms of value for money, if paying relatively little for the item;

• Fierce competition in the market place helps to ensure that life policies remain price-sensitive. Providers are encouraged to compete for sales in terms of price, therefore, but without the luxury of skimping on quality or reliability;

• The very simple and straight forward principles on which life assurance is based makes it really quite difficult, in any event, for the insurer to compromise quality or reliability. Life insurance covers just one risk - the death of the policy holder - and the assured benefit is either paid, or it is not. If an insurer fails to pay the benefits on valid claims, the insurance business is hardly likely to survive. Reliability - or the "quality" of the cover - is a difficult matter over which it is even possible to compromise;

• A great many life insurance policies these days are sold via the internet. In order to help consumers find their way among the seemingly endless number of providers and products, specialists life insurance websites have grown up that can help meet particular consumer's particular needs. These websites have also played an important part in keeping cheap life insurance to the forefront of the market place.

Choice not compromise

The wide range of life insurance products on the market helps to ensure that consumers are given an ever-increasing degree of choice in the cover that best suits their needs rather than needing to compromise in any way in the cover they choose.

Some of the more obvious, basic choices, for example, are likely to be between:

• Standard term life cover - "standard", here, in terms of its being the longest established, but also because it represents probably the most basic, simple and straight forward varieties of term life insurance. The policy holder pays a monthly premium and if he or she should die within a given period (the insured term), the insurer pay out an assured, lump-sum benefit;

• Reducing term life insurance - a variant on the standard product recognises that on many long-term debts (a repayment mortgage, for example), the balance of the outstanding borrowing declines over time. The Insured benefits are therefore written in a way that also reduce over time, in line with the repayment requirement;

• Increasing and index-linked term life insurance - although typically somewhat more expensive than either of the above, it is also possible to arrange cheap life insurance that reflects changes in the rate of inflation by index-linking the insured benefits or by increasing them by a given percentage each year.

David Thomson is Chief Executive of BestDealInsurance a completely independent specialist broker dedicated to providing their clients with the best insurance deal.

They offer great value life insurance as well as, critical illness and income protection, ensuring that their clients have the protection they need, without leaving a hole in their pocket.

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