When looking for life insurance to protect your family, a mortgage or just to leave some money behind to take care of any costs that may arise after your death, your bank may be the first place you think of, but banks are often tied to just one life insurance company and so seldom provide the best and cheapest life insurance.
In this article, we take a close look at Lloyds bank life insurance, explaining the policies it offers and how the prices compare. We'll also share an alternative way to buy your life insurance where you can get up to £100 cashback.
Who is Lloyds bank life insurance
Lloyds bank life insurance is provided by Scottish Widows which is part of the Lloyds Banking Group Plc. Lloyds Bank plc is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under registration number 119278. Scottish Widows paid 98% of its life insurance claims in 2020. Lloyds Scottish Widows Plan & Protect life cover is rated 2 stars by Defaqto which means that the products are of below-average quality.
Lloyds life insurance summary
|Policy Type||Level term life insurance|
|Amount of cover available:||Up to £250,000 online or £500,000 otherwise|
|Terms available:||Minimum of 5 years and a maximum of the number of years that will take you to age 70|
|Coverage:||Single life policies only|
|Premiums:||Fixed monthly premiums|
|Terminal illness included?||No|
|Minimum age at entry||18|
|Maximum age at entry||60|
|Maximum age at expiry||70|
|Includes:||Death benefit only|
|Exclusions:||No payment if death is caused by suicide within the first 6 months after the policy was started and premiums are non-refundable|
Types of life insurance available with Lloyds Bank
Lloyds bank customers who are registered for online banking and have access to the Lloyds banking app can get a life insurance quote and buy life insurance directly online or over the phone. It is worth pointing out that the products that can be bought online via the app are limited and so you may have to be referred to a specialist life insurance broker that the bank has partnered with in order to access the full range of personal protection products.
Lloyds level term life insurance
Level term life insurance is the only type of life insurance that you can buy directly with Lloyds bank without speaking to an adviser or to a specialist broker.
How does level term life insurance work?
Level term life insurance covers the insured person for a set number of years and only pays out if that person dies within the years of the policy cover. The amount of cover remains the same throughout the term of the life insurance policy and the monthly premiums are also fixed so they don't change over the years that you're covered.
Lloyds bank does tell its customers about other types of personal insurance such as decreasing life insurance and critical illness cover but outsources its customers to a specialist broker for these products, meaning customers can only buy the most basic life insurance directly with Lloyds bank.
Lloyds mortgage life insurance
Lloyds mortgage life insurance is not available to buy online and can only be bought through Lloyds' recommended life insurance specialist company.
Mortgage life insurance is also a type of term life insurance which means it covers you for a set number of years, doesn't accumulate any value but pays out if you die within the years of the policy. It safeguards your home against being repossessed and sold to retrieve the money that you borrowed against it.
How does mortgage life insurance work?
Mortgage life insurance which can also be called decreasing term life insurance if it is set to reduce with your mortgage balance covers your life in case you die before your mortgage is repaid. It pays a lump sum of money that can be used to either pay off a portion of the outstanding balance of your mortgage or pay it off entirely depending on the amount of cover you take.
Level mortgage life insurance - the amount that the insurance pays out doesn’t change so the amount of cover you start with is what will pay out regardless of when you make a claim within the policy term so it can be used to protect an interest-only or repayment type of mortgage. If you choose to buy a level mortgage life insurance to cover a repayment mortgage, you may be covered for more than you need as time goes on.
Decreasing mortgage life insurance - the amount that this life insurance pays out reduces in line with how a repayment mortgage balance would reduce so it is only suitable for covering you if you have this type of mortgage. This type of mortgage life insurance is usually cheaper than a level one.
Lloyds critical illness insurance
As with its life insurance policy, Lloyds critical illness insurance is also provided by Scottish Widows, however, it is referred to as Body Cover. Lloyds Body Cover insurance can be bought online if you are a customer with access to the Lloyds banking app.
Critical illness insurance or Body cover, as Lloyds calls it, pays you a lump sum if you are diagnosed with a serious illness that is listed on your policy terms and conditions. It can be invaluable as the lump sum of money can be used to bridge any gap in earnings, reduce debts, pay for childcare or even pay for private medical treatment.
It is important to point out that Lloyds Body Cover is a simpler and less comprehensive version of critical illness insurance available with Scottish Widows through specialist brokers and financial advisers. It does not include children's critical illness cover, which is sadly one of the top 5 reasons why people claim on their critical illness insurance and it is also limited to pay out just £5,000 if the policyholder is diagnosed with early-stage cancer, whereas a policy bought through an intermediary could pay up to £30,000 for the same diagnosis. If you are thinking about buying critical illness insurance, it is wise to compare different policies that are available across the market as the cost isn’t always an indicator of quality and we often find that more comprehensive policies can cost the same or even less than policies that give the policyholder fewer opportunities to claim.
You can read more about this type of insurance, how much it costs and where best to buy it in our article, “Critical illness insurance – what is it, and is it worth having?”
Does Lloyds life insurance include terminal illness cover?
No, the life insurance available to buy through Lloyds bank does not include terminal illness benefit. Terminal illness benefit is commonly included with most types of life insurance so that the insured person can make an early death claim if they become terminally ill where death is likely to happen within 12 months. Terminal illness benefit provides people covered by life insurance with a valuable option to claim their death benefit early in order to alleviate any financial stresses or make the last period of their lives more manageable.
How does Lloyds life insurance work?
Lloyds life insurance is provided by Scottish Widows and you can insure up to a maximum of £500,000 of cover on a term assurance basis. There is no whole of life insurance option that would cover you until you die, whenever that happens or any family income benefit option that would pay regular payments instead of a lump sum.
Who is Lloyds life insurance suitable for?
- Family protection - if you want simple life insurance that will pay a lump sum of money to your family if you die within a specific number of years then you can buy Lloyds level term life insurance.
- Mortgage protection - a level term mortgage life insurance can provide a lump sum of money if you die before your mortgage is paid off so that those you leave behind have the peace of mind that they will be able to continue living in the home without the burden of mortgage payments.
- Debt protection - any debts that would need to be paid if you died before repaying them can be covered by Lloyds level term life insurance.
Who is Lloyds life insurance not suited to?
- Funeral cover - Lloyds life insurance is not suitable for paying funeral costs as the timing of this need is unpredictable and Lloyds bank offers term life insurance that would be limited by the number of years that you choose to be covered for and death could happen outside of this.
- Funding a potential inheritance tax bill - if you wish to buy life insurance to cover the inheritance tax that would be payable against the value of your estate upon death, Lloyds term life insurance may not be suitable as your death may happen outside the term of the cover provided by this type of life insurance.
For anyone who wishes to buy life insurance that will pay out when you die, whenever that happens, you should consider a life insurance policy that has no end date and is often referred to as whole of life cover. You can read more about this type of life insurance in our articles "Which is the best over 50s life insurance?" and "Whole of life insurance - what you need to know"
Lloyds bank life insurance cover calculator
A life insurance calculator helps you to work out how much life insurance you may need based on your personal financial circumstances. Lloyds bank life insurance calculator is a helpful tool that asks for relevant financial information to determine how much money will be needed to support your family and/or pay any outstanding debts if you die. This includes information about:
- Your monthly expenses
- Your mortgage
- Other outstanding debts
- The amount of lump sum money you wish to leave for your family
The Lloyds life insurance calculator provides a good starting place for you to consider how much life insurance you may need but you should factor that it omits prompts to consider the value of your assets and potential future costs. The calculator does remind you that you're limited to buying £500,000 life cover with Lloyds bank as the tool may well calculate that you require more life insurance than this.
How much does Lloyds life insurance cost?
Lloyds life insurance and Body Cover insurance policies start from £5 per month but the actual cost of the insurance is determined using the following factors:
- The level of cover you choose
- The number of years you are covered for
- Your age when you apply
- Your smoking status
- Your health
- Your occupation
- Your lifestyle and hobbies
In the comparison tables below we take a look at the cost of £150,000 and £250,000 Lloyds life cover for both a smoker and non smoker. We have provided the costs for a 25 and 45 year old and also provided the cost of the cheapest policy we could find from the whole market.
Lloyds life insurance price comparison - Non Smoker
|Age||Lloyds - £150,000||Cheapest on the market - £150,000||Lloyds - £250,000||Cheapest on the market - £250,000|
*Lloyds life insurance does not include terminal illness benefit
Lloyds life insurance price comparison - Smoker
|Age||Lloyds - £150,000||Cheapest on the market - £150,000||Lloyds - £250,000||Cheapest on the market - £250,000|
^Lloyds life insurance does not include terminal illness benefit
Lloyds life insurance reviews
Lloyds is rated 1.5 out of 5.0 stars on independent customer review site TrustPilot, however this represents the ranking for the Lloyds bank overall, rather than its life insurance plans specifically. Lloyds life insurance has a 2 star Defaqto rating meaning there are better quality products available to customers.
Overall, Lloyds bank life insurance products are competitively priced however they present fewer opportunities for policyholders to claim compared with insurance provided by other banks and insurance companies. There are also better quality policies on the market for a similar cost. While the products and amount of cover you can buy online are limited, Lloyds does well to point its customers to a leading personal insurance broker should they need further advice.
Lloyds life insurance pros and cons
- Reputable and recognisable brand
- Life insurance and Body Cover starts at £5 per month
- Competitively priced
- Access to a specialist life insurance intermediary
- £100 Gift Card Tesco / Sainsburys / Asda (after £100 in premiums are paid)
- Products are rated poorly as they lack common benefits available with other similar offerings
- Trust pilot reviews reflect poor online and telephone customer service
- You cannot buy decreasing life insurance, family income benefit, whole of life insurance, over 50s life insurance or income protection insurance
Alternatives to Lloyds bank life insurance
It is common for customers to be drawn in by the ease of buying insurance with their bank and many buy products such as car insurance, travel insurance and home insurance from their banks because it can be done in a few clicks through their banking app. However, having reviewed Lloyds personal insurance available directly to customers, it is clear that the products available via this route may not always provide the best value.
Life insurance can seem quite straight forward and most people would assume that one life insurance is just the same as the next but features like Terminal illness benefit that allows you to make an early death claim or free access to virtual GP services included within your life insurance add a great deal of value. More and more, providers of life insurance and other personal insurance policies are enhancing the cover to allow policyholders to access services and benefits even when there is no claim to be made.
Lloyds life insurance products are basic and do not offer the value that we commonly see in other similar products in the market but despite this, Lloyds bank should be commended for creating a great alternative for its customers - a very easy route to speak with specialist life insurance advisers. Choosing to speak with the specialist life insurance intermediary that Lloyds has partnered with will give customers the opportunity to get access to expert advice that is free of charge and tailored for their specific needs and can recommend the types of life cover that are not available through Lloyds. Read our final summary below on how to speak to an independent specialist and receive up to £100 cashback when you take out a policy.
While Lloyds bank life insurance provides its customers with a simple way to buy life insurance through its app, the products are limited and there are cheaper ways to arrange life insurance. A good way to ensure you are getting the best life insurance policy for your circumstances and at the best price is to speak to an independent life insurance specialist*. Not only will you receive free, impartial advice, you'll receive help with the application forms, guidance if you ever need to claim and you'll also receive advice on how to ensure any potential payout would be free of any inheritance tax. Complete this simple form* to get a callback at a time that is convenient for you. You'll also receive up to £100 cashback should you decide to take out a policy.
If a link has an * beside it this means that it is an affiliated link. If you go via the link, Money to the Masses may receive a small fee which helps keep Money to the Masses free to use. This link can be used if you do not wish to help Money to the Masses and do not wish to qualify for the cashback referred to in the article