When buying life insurance it can be hard to know where to start, especially if you haven't bought it before. Your bank may be the most obvious place to start your search but banks may not provide the best and cheapest life insurance options. In this article, I examine HSBC bank's life insurance, critical illness insurance and income protection cover policies to see how they stack up against alternatives in the market.
I will also share details on how to compare the best life insurance policies and prices across the market without any obligation to buy but you'll get up to £100 cashback if you do.
Who is HSBC life insurance UK?
HSBC Life (UK) Limited is part of the HSBC Group that has more than 40 million customers worldwide and is a subsidiary of HSBC Bank plc founded in the UK in 1988. HSBC is one of the largest global banking and financial services organisations and provides basic life insurance solutions through HSBC bank and some more comprehensive personal insurance plans through the bank's financial advisers and selected intermediaries and brokers.
HSBC Life (UK) Limited is authorised by the Prudential Regulation Authority and regulated by both, the Financial Conduct Authority as well as the Prudential Regulation Authority under the Financial Services Register number 133435. It is also a member of the Association of British Insurers.
In 2021, HSBC paid 99% of life insurance claims and 95.5% of critical illness insurance claims.
What life insurance products does HSBC offer?
HSBC life insurance offers a good range of life insurance products that are term-based products meaning that they cover you for a set number of years and gather no value during that time - they simply pay out if death or illness happens within the years that you are covered.
Existing HSBC life insurance policyholders may be covered in a different way as some historical life insurance policies are underwritten by different insurance companies.
To read about the different types of life insurance and how they work, do read our article "Types of life insurance explained".
Products available to buy through the HSBC mobile app or online
Products available to buy through an HSBC adviser
Term life insurance products are the most commonly bought as they provide insurance to cover your mortgage and debts or provide for your family if you die whilst they are dependent on you.
Products not available to buy with HSBC
HSBC life insurance - how it works
There are two types of life insurance that you can buy with HSBC bank; level life insurance and decreasing life insurance. You can buy up to £2,000,000 of life cover through HSBC with a minimum term of 5 years and a maximum term to take you to age 80. The monthly premiums for HSBC life insurance are fixed for the duration of the cover.
Terminal illness benefit is included with life cover through HSBC which means an early death claim can be made if you become terminally ill and are appropriately assessed to have less than 12 months to live.
HSBC level life insurance
The simplest type of life insurance is a level term life insurance which is available to HSBC banking customers (for joint policies, only one person needs to have an HSBC bank account).
A level term life insurance policy pays a lump sum of money if you die within the term of the cover - the amount of the payout is always the same.
HSBC decreasing life insurance
HSBC's decreasing life insurance covers you for an amount that decreases each month in line with an outstanding repayment mortgage balance assuming an interest rate of no more than 7%. It will adequately cover the outstanding balance of a repayment mortgage so long as the cover amount and outstanding balance match the term and amount of cover.
HSBC critical illness cover - how it works
HSBC's critical illness insurance provides a lump sum payout if you are diagnosed with one of the conditions that are listed in the policy terms and conditions. Essentially, it provides you with a sum of money that can be used to pay off or pay down your mortgage if you suffer a fairly life-changing illness.
Critical illness insurance can be added to life insurance so that the policy pays a lump sum in the event of either death or diagnosis of one of the covered illnesses. The premiums for this type of cover are fixed for the duration of the policy.
HSBC critical illness insurance - what are you covered for?
HSBC critical illness insurance covers 35 different serious illnesses as well as children's critical illness cover. The conditions that are covered include:
- Cancer - excluding less advanced cases
- Benign brain tumour
- Heart attack
- Major organ transplant
- Multiple sclerosis
- Parkinson's disease
HSBC critical illness insurance - what are you not covered for?
While HSBC provides a reasonably comprehensive critical illness insurance policy, there are some conditions that you can't claim for with HSBC but could with other products.
Here are some of the conditions that are not covered by HSBC's critical illness cover that can be covered elsewhere:
- Aplastic Anaemia
- Loss of independent existence
- Chronic lung disease
- Ulcerative colitis
- Early-stage cancers
Most notably HSBC doesn't cover partial payments for critical illness. A number of critical illness policies that you can buy elsewhere will pay a partial amount if you are diagnosed with a less serious illness. For example, you could receive a partial payment if you were diagnosed with an early-stage cancer which wouldn't be covered for full payment because it doesn't meet the definition of payment that says that the cancer has to be invasive and spreading. It could also cover conditions like partial loss of sight, coronary angioplasty and heart abnormalities.
To discuss the various critical illness policies you can buy and what they cover, you should speak with an independent specialist life insurance adviser*.
HSBC income cover - how it works
HSBC income cover provides protection against periods of incapacity to work where you suffer a loss of income. Income cover which is commonly called income protection insurance or sick pay insurance pays you a monthly benefit if you are unable to work beyond an agreed waiting period.
- 2-year cover option - the benefit will be paid for up to 2 years per claim
- Full-term cover option - the benefit will be paid until incapacity ends or up until the end of the plan
- 50% of pre-tax earnings can be covered up to £50,000 per annum
- Choice of 4, 8, 13, 26 or 52 weeks initial waiting period
- Rehabilitation / Proportionate benefit included to top up an income that may be reduced after reducing hours or type of work due to incapacity
HSBC whole of life insurance
At the time of writing, HSBC does not provide whole of life insurance. If you require a life insurance policy that is designed to cover you for your whole life, you should read our article "Whole of life insurance - what you need to know"
HSBC terminal illness benefit
Terminal illness benefit is included with HSBC's life cover and critical illness cover. It provides policyholders with a benefit that allows them to claim an early death payment if they were to be diagnosed with a terminal illness, assuming that the illness is not curable and a medical consultant and HSBC's chief medical officer agrees that death is likely to happen within 12 months. This is a fairly standard benefit provided by most good insurers.
Who is HSBC life insurance suitable for?
It depends on whether you are buying HSBC's life insurance online or whether you're willing to speak to the protection advisers. The online life insurance options are limited and offer little more than a simple lump sum life insurance solution. That being said, this could suit you if you just want a set amount of money to pay out to your dependents, should you die.
However, speaking with the protection adviser will open up more options and you'll be able to get some tailored guidance as to which types and amounts of life insurance, critical illness cover and income cover would be suitable for you.
Who is HSBC life insurance not suitable for?
HSBC life insurance may not suit you if you wish to buy life insurance that will pay out when you die regardless of when that happens. HSBC offers only term life insurance products which means that all policies have an end date and as such, they can only cover you for a set number of years.
HSBC life insurance calculator
As with many banks, HSBC provides an online tool that helps you work out how much life insurance or illness protection they actually need. HSBC's life insurance calculator uses the following information to calculate your life insurance:
- Yours and your partner's income
- Children and their ages
- Mortgage balance
- University fees planned
- How long you wish to be covered for
Using the above information, HSBC will calculate how much life insurance is suitable for your circumstances. Although life insurance calculators can get you thinking about the necessary factors that will affect how much life insurance you need, the recommendation is only an indication and doesn't consider your unique circumstances, priorities and concerns.
To get a much more tailored recommendation for the amount and duration of your life insurance, you should speak to a life insurance specialist* who will talk you through this with no obligation to proceed.
HSBC life insurance summary
|Policy Type||Level term life insurance & Decreasing term life insurance|
|Amount of cover available:||Up to £2,000,000|
|Terms available:||Minimum of 5 years and a maximum of the number of years that will take you to age 80|
|Coverage:||Single and joint life options|
|Premiums:||Fixed monthly premiums|
|Interest rate for decrease:||Decreasing cover reduces in line with a repayment mortgage with an interest rate of up to 7%|
|Terminal illness included?||Yes - payable if the illness is incurable and death within 12 months is likely in the opinion of the attending consultant and HSBC's Chief Medical Officer|
|Qualifying rules:||Available for UK residents who hold an HSBC current or savings account|
|Minimum age at entry||17|
|Maximum age at entry||69|
|Maximum age at expiry||80|
|Includes:||Free accidental death benefit up to £250,000 for up to 90 days whilst your application is processed|
|Exclusions:||No payment if death is caused by suicide within the first 12 months after the policy was started|
How much does HSBC life insurance cost?
HSBC life insurance, critical illness cover and income cover policies are priced based on the following factors:
- Smoking habits
Your age and whether you have smoked in the last 12 months are enough to determine the quotation price of your insurance. Once you have your quote and you're happy to proceed with an application, your medical, lifestyle and occupational information will be required and this can change the initial quote price.
If you have past or current health details to disclose or if your work/hobbies put you at greater risk of injury then you should speak to a life insurance specialist* to determine which insurance provider will offer you the best rates - they can provide this information before you start completing lengthy application forms that may result in an increased price or even be declined.
HSBC life insurance cost comparison
I have looked at the cost of life insurance with HSBC to see how it compares with the cheapest prices that I could find in the market for equivalent products. Below are the cost comparisons for level and decreasing life insurance policies based on a 25 and a 45 year old person, also looking at the difference between smoker's and non-smoker's premiums.
HSBC price comparison for £150,000 of level term life insurance over 20 years
|Age||Smoker Status||HSBC monthly price||Cheapest monthly price we could find|
HSBC price comparison for £250,000 of level term life insurance over 20 years
|Age||Smoker Status||HSBC monthly price||Cheapest monthly price we could find|
HSBC price comparison for £150,000 of decreasing term life insurance over 20 years
|Age||Smoker Status||HSBC Monthly Price||Cheapest Monthly Price we could find|
HSBC price comparison for £250,000 of decreasing term life insurance over 20 years
|Age||Smoker Status||HSBC Monthly Price||Cheapest Monthly Price we could find|
Is HSBC life insurance worth it?
In most cases, we were able to find a cheaper alternative to HSBC life insurance and so it would be wise to shop around in order to get the best life insurance deal for you. HSBC provides a reasonable level of critical illness cover but other policies could provide security against a larger variety of conditions and ailments. Also, HSBC does not provide access to many of the additional benefits offered by other insurers such as access to virtual GP services, mental health support, second medical opinions and even discounts for wellbeing services such as gyms, health retreats and so on. There is a vast amount of value that can be found in life insurance options these days and you wouldn't necessarily pay any more than you would do with HSBC to access this.
HSBC life insurance reviews
HSBC Life (UK)'s 'life protection' and 'life cover' products are rated 3 stars by Defaqto meaning that the quality of the products is average while the 'starter life' product is rated only 1 star by Defaqto making it a low offering. The TrustPilot reviews for HSBC life insurance cannot be separated from the general reviews for HSBC banking which received 1.3 out of 5.0 stars from almost 6,000 reviews.
HSBC life insurance pros and cons
- Simple life insurance at a reasonable price
- Strength of brand name
- £75 John Lewis or Argos e-Gift card (offer ends 04/08/2022)
- No access to added-value services such as virtual GP access
- Limited options to buy online or with the HSBC app
- You have to remain an HSBC banking customer to continue your cover
Alternative to HSBC bank life insurance
HSBC customers searching for life insurance would be wise to look beyond their bank. Although HSBC offers a reasonable suite of personal insurance products, there are many more products available.
Purchasing life insurance, critical illness cover and income protection can be extremely simple but the route you choose to buy it can limit your options. This is especially true if you have ever had any health concerns; have a slightly larger than average build or your occupation requires physical fitness. The way that your health and lifestyle are priced once you apply for personal insurance varies hugely between different life insurance providers and speaking to a life insurance specialist can help you avoid lengthy applications that could return unaffordable premiums or worse still, decline your cover altogether.
An independent life insurance specialist has expert knowledge of the market and understands the underwriting guidelines used by each insurance company. Underwriting guidelines are what insurance companies use to assess your application. They can decide to increase the initial price that was quoted to you; limit the benefit you can claim or even decline your application altogether. The specialist adviser will start by understanding your personal circumstances, helping you choose the right types of cover to suit your needs. They'll then search the market for the best price and product based on your health and other factors upfront. You'll save time because they will make recommendations based on all of your information so there are no surprises after you apply.
At Money to the Masses, we have vetted the services of a specialist life insurance advice company* where you'll be able to complete a one-stop-shop using experts. They'll even help you to nominate your preferred beneficiaries. You're under no obligation to go through with the recommendation they make to you but if you do then you can get up to £100 cashback as a Money to the Masses reader.
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