It is often possible to buy life insurance through your bank because most banks and buildings societies will have life insurance partners. This means that your bank don’t necessarily offer life insurance, but they will have an insurer that they are affiliated with.
There are a number of points to consider here and think about when asking should I take out life insurance with my bank. Most of us either have a relationship with our banks or we will trust them because it’s a brand that we’re used to seeing and automatically link to financial services and financial planning.
You might also be sent emails, text messages and reminders that tell you how to buy life insurance with your bank. You could even have a mortgage with your bank, meaning mortgage life insurance will likely have been recommended to you when applying.
In this section we look at whether it is beneficial to buy a policy through your bank and anything you need to think about.
Does my bank offer life insurance?
In reality, most banks don’t actually offer life insurance themselves and will often refer those enquiries to a partner or affiliate.
Your bank might offer its own life insurance which is rare, but generally that will be a different section of the business. There are a select few banks that offers their own insurance policies, but you will generally not get anything different to any other customer.
Is life insurance different or better through my bank?
Life insurance works to protect your loved ones and is the same cover, regardless of where you purchase your policy or who you buy it through.
No matter who you purchase your policy through:
- You pay your monthly payments (premiums) to keep your cover in place
- You need to read the terms and conditions of your policy carefully (to understand your cover and avoid any invalid claims)
- Your loved ones or other beneficiaries will receive a cash lump sum payment at point of claim, which can offer much needed financial support
- You will generally have the option of either term life insurance (family protection, your amount of cover never changes) or mortgage life insurance (mortgage protection, your cover amount decreases as you repay your mortgage)
There may be some subtle differences between some of the benefits and policy add-ons that you will be offered, such as:
- Waiver of premium option
- Enhanced Critical Illness Cover
- Critical Illness Cover for Children
- Indexation option
Some banks are not able to offer additional benefits because they don’t offer advice or have the options available to them. This can be especially true for banks that only have one life insurance partner, rather than a full panel of insurers.
Is life insurance cheaper with my bank?
It’s difficult to say whether life insurance will be cheaper when you buy cover through your bank. Some banks may offer cheaper life insurance premiums for certain individuals, but it’s always worth shopping around.
Some people might be able to get cheaper life cover through their banks through:
- Customer loyalty schemes
- Offers or incentives
- Rewards schemes
Generally, life insurance is the same or a similar price through an insurance broker or aggregators. The main reason why you might be able to get cover cheaper by shopping around is simply more choice and wider variety of options.
Which life insurance provider is my bank partnered with?
Most banks will offer life insurance through one insurance provider which is called a single-tie arrangement. This is generally easier for the banks because they don’t have to worry about knowing multiple insurers or giving advice.
This can make it easier as there will be less confusion, but it will mean that options will be very limited.
Here is a list of the main banks and their life insurance partners:
Bank or Building Society
|Bank or Building Society
|Life insurance provider
|Legal & General
|Lloyds Banking Group
|Legal & General
As you can clearly see from the list above, these are some of the biggest brands in the banking and life insurance industry. However, the choices are very limited and there are no real specialist life insurance companies on the list.
One of the biggest drawbacks here is where someone might apply for life cover through their bank, and their application is declined because of a medical condition.
Many people are often then put off applying with another insurer or speaking to a specialist. This then leaves the persons family uninsured and unprotected if anything happens to them.
What are the alternatives to buying life insurance through my bank?
If you’ve ever typed ‘life insurance’ in to a Google search then you’ll see just how many options there are.
You can literally buy a policy from almost anywhere these days, which can also make things even more confusing. It’s also good, because it means that the life insurance market is very competitive and prices have dropped over the past several years.
Some of the main alternatives to buying life insurance through your bank are:
- Speak to a life insurance specialist – there are hundreds, if not thousands of life insurance specialists in the UK offering expert professional advice. Most of them will offer cover from a panel of major insurers, or even all insurers (whole of market)
- Apply direct with an insurer – you can also apply to an insurance provider direct either online or over the telephone. Most major insurance companies will offer this facility but not all, so you might find options are limited, and you’ll have few alternatives
- Online through an aggregator – this is increasingly becoming a popular way to buy life insurance and can be more convenient to some people. You should make sure that you know what cover you’re looking for because you won’t get any advice or guidance
The best options for you might be different to someone else so this isn’t a one-size fits all solution. The right choice for you can depend on the type of insurance you need, especially if you have any other factors that could affect your application (e.g. your age and medical history).
You should do what you’re comfortable with doing and make sure that you choose the right option for you.
Life insurance is an important policy that can be extremely critical to your family’s financial future if required. Make sure that you get the right advice or guidance if you’re not sure about what you need to protect your children.