More and more people are buying life insurance online and the

numbers seem to be doubling every two years. The reasons are

clear. Prices are lower on the Internet and life insurance is

fundamentally a simple insurance product.

Despite the underlying simplicity of life insurance, most web

sites channel their online clients through a telephone based

help and advice service manned by experienced personnel. They

represent your safety net so if a little technical knowledge is

called for, help is at hand.

But it’s always a good idea to have a few Top Tips in your back

pocket when you’re shopping online for life insurance. They’ll

help you ask the right questions and find the best policy.

1. Always have your Life Insurance policy “Written in Trust”.

This means that in the event of a claim, the money goes

directly and immediately to the person(s) you nominate when you

first take the policy out. It also avoids all possibility of

your estate having to pay Inheritance Tax on the proceeds of

your policy and that could represent a 40% tax saving !

All you have to do is tell the online brokerage organising your

policy that you want your policy “Written in Trust” and the

names of the people who the life insurance company pay in the

event of a claim. They will then sort it all out for you. The

extra good news is that this service is invariably free of

charge. So it’s a win win situation and there aren’t many of

those around these days !

2. In the early years a Reviewable Life Insurance Policy will

be cheaper but a Guaranteed Policy will work out a better buy

in the longer term.

With a “Guaranteed Policy” the insurance company guarantees

never to increase your policy’s premium.

With a “Reviewable Policy” you agree that your insurance

company can review the cost of your policy at regular

intervals. But don’t be kidded – in our experience a “review”

is just another word for a price increase. After all, who’s

ever heard of an insurance company passing up a chance to

charge you more! The review intervals are usually between 2 to

5 years but this does vary between insurance companies. You

will find the details of the review intervals on the documents

sent to you before you accept the insurance – these are called

The Key Features Documents.

So, comparing otherwise like for like policies, in the early

years the premiums for a “Reviewable Policy” will undoubtedly

be lower than the premiums for a “Guaranteed Policy”.

Thereafter, the premiums for a Reviewable Policy increase

eventually catching up with and overtaking, the premium for a

“Guaranteed Policy”.

In our experience, you can expect the monthly premiums for a

Reviewable Policy to exceed those of a Guaranteed policy in

about 7 to 10 years and then within the following 10 years,

more than double again. If your budget is currently tight then

by all means choose a Reviewable Policy - after all your salary

may increase in coming years and ease the strain. On the other

hand, if the premiums for a Guaranteed Policy are affordable,

we think they represent your best buy.

A footnote. Many insurance companies have stopped offering

“Guaranteed” rates for standalone critical illness insurance

policies. This because they have experienced much higher claim

rates than they initially expected. However, you may still find

a Guaranteed life insurance policy that also provides critical

illness cover. As we have explained, “Guaranteed” rates are

especially good value and if you can get a quote for a

Guaranteed life policy that includes critical illness cover,

you may have a real bargain.

3. Thinking about a Joint Life Insurance Policy?

A Joint Life Insurance policy is usually written on a first

death basis. This means that the policy will pay out on the

death of the first policyholder, subject to the policy being in

force at the time. This leaves the second person uninsured and

older. Older people can struggle to get life insurance at an

affordable premium, so rather than a Joint Policy consider

taking out separate policies now. Overall it will work out a

little dearer - but you get twice the cover and double the

peace of mind.

4. Taking out a Life Insurance Policy? Now would be an ideal

time to include Critical Illness cover.

Are you likely to need Critical Illness Insurance in the

future? Yes? Then consider adding it now to the life insurance

policy you’re arranging. Why? There are three reasons.

Firstly, a Life Insurance policy combined with Critical Illness

cover will work out significantly cheaper than buying two

separate policies. Secondly, as we have already explained in

the footnote to Tip 2, you may be able to buy a combined Life

and Critical Illness policy with a guaranteed premium. That

could be a real bargain. Finally, premiums for critical illness

cover increase rapidly as you get older – so the sooner you take

it out, the cheaper it will be.

5. Don’t confuse Terminal Illness cover with Critical Illness

cover.

There’s world of difference between Terminal Illness and

Critical Illness cover so it’s important to understand the

difference.

Terminal Illness cover pays out the insured lump sum if a

Medical Doctor diagnoses you with an illness from which the

Doctor expects you to die within 12 months. Most good life

policies automatically include Terminal Illness cover at no

extra cost. It’s basically an early, and welcome policy payout.

A Critical Illness policy pays out the insured lump sum if you

are diagnosed with one of a wide range chronic illness and

there is no life expectancy criteria. Indeed, with many of the

insured illnesses you could expect to survive for many years.

For example: certain cancers, heart disease, stroke, multiple

sclerosis, loss of speech, sight or hearing, onset of

Parkinsons or Alzheimers disease, third degree burns etc. Say

you were an engineer aged 40 and you lost your sight. A

Critical Illness policy would pay out immediately and that

money could well be vital in helping you and your family

through many difficult financial years ahead. If you just had

Terminal Illness cover there’d be no chance of a payout.

So as you can see, Critical Illness cover is far more

comprehensive than simple Terminal Illness cover and for that

reason critical illness cover always costs you extra.