Tesco Life Insurance

I have always shied away from the idea of life insurance. I am not quite sure why. Probably because I don’t like to entertain the idea of myself or anybody I love dying. Unfortunately though, death is inevitable for all of us at some stage or other and although most of us will live to old age, some of us might sadly be cut off in our prime. I should know, as my mother died when she was barely older than I am now, leaving a husband and 3 dependant children.

So, how would you cope financially if your partner died? Or how would he or she cope without you? Until I had my daughter, I had it all planned. Working full time, I could afford the mortgage on my own, or I could easily sell up and move in with friends or even get a lodger. My husband thought much the same way. Having a child has changed things somewhat. If either of us were to become single parents, we would probably not be able to work full-time. And even if we could, we would want our child to spend as much time as possible with the remaining parent. Selling up and moving in with friends would probably not be an option and having a lodger is less practical when you have kids. Also, having lost a loved one would be bad enough without any added financial pressures.

We have always had mortgage life cover, so that the mortgage is paid off if either of us were to die during the mortgage term - I think most mortgage lenders insist on this these days. However, we both recently decided that it would be sensible to cover ourselves further. So we started to investigate the cost of life insurance.

There are various different types of life insurance policies. The object of this opinion is not to go into the ins and outs of different policy types - I am not in the least bit qualified to do so, so I will just outline the policy we chose. The type we decided to go for is called term assurance. Basically, you pick a term that is suitable for you (ie 20 years) and if you die within this time period, the insurance pays out. We wanted joint cover, so that if either of us died within the term, it would pay out.

After choosing the policy type we had to decide how much cover we needed. This was a difficult one. How do you know how much money you will need to live on in the event of loosing your partner? Unless you are prepared to sit down and work out your projected outgoings and income some way off in the future (some insurance websites provide tools to help you do this), I think the best you can do is just think of a figure that you feel would give you a good safety cushion. I plumped for £100,000. Afterall, £100,000 is much better than the £0 we would get if we weren’t insured. One thing to note is that whatever figure you decide on, you need to remember that as years go on, the amount you would be able to buy with this figure would decrease due to inflation.

The first thing I noticed when searching for a suitable policy was that they were nowhere near as expensive as I had expected. Bearing in mind that my husband and I are no spring chickens and are fast approaching middle age, I was expecting to have to pay out a fair wack each month for such cover. In reality, it appeared that we would not have to pay much more than £10 a month for our insurance.

My first port of call as always, was the internet. I did a google search for life insurance and followed a few links, getting quotes from a few different companies. I added to this the trusty, but very slow, directline.co.uk. I say trusty as, until now, I have always found them to be the cheapest insurance company for my circumstances and have a number of policies with them already.

The last site I visited was the Tesco Finance site. I am already comfortable with the idea of using my local supermarket for financial products as well as my bread and milk. I have a credit card with them, which has proved a good choice in spite of a few teething troubles. The Tesco site allows you to get a quote online, after putting in a few simple personal details, such as date of birth, whether you smoke or not and how much alcohol you drink. After typing in your cover amount and required term, the premium is calculated. As this site is fairly quick and easy to use, you can try out a few different cover amounts and terms to see what difference it would make to your premium.

My premium for £100,000 worth of cover for 20 years came out at £11.40. This cover is not provided by Tesco themselves but by Norwich Union Insurance. This premium is guaranteed to stay the same for the next 20 years and will pay out this amount if one of us were to die tomorrow or in 19 years time. It will also pay out if either of us are diagnosed with a terminal illness within this time period. This gives us the added security of knowing that we would be able to make ends meet under these circumstances.

I found the Tesco premium to be cheaper than any other quote I received, including, surprisingly, a quote from Norwich Union themselves. It appears that you get a 16% discount for arranging your insurance through Tesco rather than going to Norwich Union directly, which is a little odd, but hey, who’s complaining! The other quotes I received, based on exactly the same criteria are shown below:

Norwich Union £12.51 (includes 10% discount for buying online)
Legal and General £13.59
Direct Line £11.57

Granted, the Direct Line policy is only 17p a month more expensive than the Tesco premium - but 17p a month over 20 years adds up to £40.80 - enough for 13 and a half Big Brunches at my local Tesco cafe! Also, I was further persuaded by the offer of £15 worth of clubcard points after 3 months of premiums.

The application process was straightforward. I completed the forms online, providing details of any health problems and giving our GP’s name and address. I am not aware that they approached our GP, but I suppose they may do this in some circumstances. Part of the completed form had to be printed out, signed and sent to Tesco Personal Finance. A short while later I received a letter from Norwich Union stating that our application was being processed. In the meantime, they put in place some temporary cover in the event of accidental death. It wasn’t long before we received the policy document and the process was complete.

Just a couple of further things to note; I was interested to find out how much the premium would be if we were both smokers. The premium more than doubled to £25.29. So, if you smoke it would be a good incentive to give up if you want life insurance! Also, the Direct Line website asks you whether or not your parents are still alive and if not what their cause of death was. I completed two quick quotes, one stating that both of my parents were alive and well and the other stating, truthfully, that my mother died at 40 of heart disease. The premiums came out the same, which surprised me.

Finally, one tip, courtesy of my financial advisor (ifa-online.net). If you already have mortgage life insurance and are thinking of taking out separate term assurance, it is worth combining the two. Your one policy premium will be cheaper than two single policies. Also, mortgage cover decreases as the term of your mortgage decreases. So if you were to die towards the end of your mortgage, your partner would not get much money from the policy, in fact they would receive enough to pay off the remaining mortgage balance. However, term assurance provides a constant sum of money whenever you die, so even if you were to die during the last month of your mortgage, your partner would receive an amount equivalent to the original value of your mortgage. Consequently, I have cancelled my Direct Line Mortgage cover and extended my Tesco policy to cover the mortgage also.

In conclusion, I was very impressed with Tesco Personal Finance throughout this experience. I telephoned their helpline on a couple of occasions to clarify a number of points and they were extremely helpful. I just hope we will never need to find out how quickly they settle a claim!