Updated: November 20, 2019

Life Insurance Savings Plan

It's possible to buy a life insurance plan with your savings. Find out how to get the best policy this way in our guide

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Richard Angliss

Author: Richard Angliss - Finance Expert

Updated: November 20, 2019

Whether you’re saving up for your own future, or your family’s, it’s never too early to start looking into the options that are available.

life insurance savings plan can benefit you while you’re alive, and your loved ones after you’ve gone. So, is it a good idea in your circumstances?

One of the biggest concerns people have when it comes to their personal finances is how their spouse, partner, children and dependents will cope in their absence, which is where life insurance comes in.

There are different types of life insurance and in this article we’ll be looking at what life insurance savings plans are available in the UK and where you can get the right advice on them.

If you’re keen to make a proactive decision about your life insurance policy and want an element of investment or savings plan attached, speak to one of the experts we work with.

Call 0808 189 0463 or make a quick online enquiry to get started. The advisors we work with are all experts in their field. They are all fully independent with access to insurance providers across the whole UK.

They are regulated by the Financial Conduct Authority which means they adhere to strict rules of conduct.

What is a life insurance savings plan?

In short, it’s a regular savings plan with life cover where you put away money each month into a savings and investments fund, normally for a set period of time.

You may also see these types of plan referred to as an ‘endowment policy’ or a ‘tax exempt savings plan’. These are also savings plans that have life insurance included within them.

With any of these arrangements, if you die during the term of your plan, your dependents will receive a tax-free lump sum payment. However, the amount they receive isn’t fixed, as explained below.

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How does a savings plan with life cover work?

First, you’ll need to set a time frame, so this could mean that you decide to save for a period of years, typically most experts would recommend a minimum of 10 years.

You’ll then need to make regular payments, usually monthly through Direct Debit. You can pay in up to £25 tax-free.

The money you invest is divided between:

The insurance company you buy your plan from may invest your money into a portfolio of investments such as shares, bonds and property and, depending on how these fare, at the end of your policy agreement you’ll receive a lump sum that reflects this.

If you want, you can also choose how your money is invested. Choose either:

  1. A ‘with profits’ basis where the insurance company decide where to invest your money
  2. A ‘unit-linked’ basis where you decide where it’s invested

In either case, at the end of the term, you’ll receive a lump sum payout and any bonuses that may have accrued.

Are there risks I should know about?

All types of investment have a risk attached to them because the value can change which means there is a possibility that you may not get back as much as you put it.

However, this type of life insurance policy offers a guaranteed minimum payment at the end of the term.

Generally speaking, your money will be looked after by an insurance company. The only reason there would be a problem is in the rare event the company went under, or if you had a unit-linked plan invested in stocks and shares and it was to perform poorly.

Before you make any form of financial investment it’s always recommended to discuss your options with an experienced financial advisor, like the ones we work with. Call 0808 189 0463 or make a quick online enquiry.

We’ll match you with an advisor experienced in advising on and arranging all kinds of life insurance. They’ll be happy to answer your questions and help you find a policy with the best available terms based on your own unique circumstances.

How can I take out life cover with a savings plan included?

If you’re interested in taking out a savings plan with life cover then you can take one out from an insurance or life assurance company or a friendly society.

They will assess your application on particular criteria before they give you a plan which will involve assessing:

  1. Your age
  2. Length of investment term
  3. Your state of health
  4. Lifestyle factors, such as whether you smoke or drink

All the above will be taken into account to decide the cost of premium you will have to pay to receive the desired level of cover.

It’s recommended that you speak with an independent financial advisor before committing to any life insurance plan.

They will run through all the implications such as advantages and disadvantages, your personal situation and will advise whether it’s the best solution for you.

Once you are clear on the benefits of the sort of policy you are interested in, an advisor will work to find the most competitively priced policy on your behalf, ensuring that you don’t end up overpaying for your life cover and that you get the right level of savings alongside.

Make an enquiry and we’ll match you with an advisor experienced in life insurance with savings. All of the experts we work with are independent with access to insurance providers across the whole UK.

Are there any costs involved with a saving policy with life cover?

You may find that there are additional costs involved and it’s recommended that you know what these are before you commit, to ensure that can afford them.

Usually they will include the following:

  • Administration fees paid to the policy provider
  • Charges that apply if you receive any bonuses during your contract term
  • Switching – if you decide to switch how your money is invested. For the first initial switch you won’t be charged but after one or two changes it’s likely you’ll have to pay a fee
  • Exit charges – if you decide to end a policy before the contract is up, you may face fines

Speak to an expert about savings policies with life insurance

Decisions about your financial future shouldn’t be taken lightly, always make sure you’re well informed first. The best way to do this is by speaking to a professional financial advisor.

Call us on 0808 189 0463 or make an enquiry for a free, no-obligation chat. We’ll match you with one of the independent experts we work with. They will be happy to answer all your questions and help you find life insurance with savings plan which suits your budget, needs and circumstances.

Ask A Quick Question

We can help! We know everyone's circumstances are different, that's why we work with brokers who are experts in life insurance. Ask us a question and we'll get the best expert to help.

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Richard Angliss

Richard Angliss

Finance Expert

About the author

Richard Angliss has made a career in financial services which stretches over 40 years.

His early career was spent learning about the various financial products and applying them to prudent advice, working for one of the largest life assurance and investment firms. After that he joined the financial services arm of a very well-known firm providing independent advice to their 8 million customers.

For the last 20 years he has been involved in building software solutions that help Advisers and clients work together to achieve good financial outcomes and helping to set up three independent advisory firms. He also has written many articles for financial services publications and provided commentary for newspaper journalists.

At an early stage in his career he realised the great satisfaction that comes with being able to help people achieve their goals and protect their families. “Regulation of financial services has hugely impacted on ensuring people get appropriate advice. The issue these days is access to that advice and just as importantly regular reviews to make sure that everything stays on track”.

With the growing development of online resources such as Online Money Advisor he sees a great future for people to access advice to make their pension and investment work harder for them.  Plus, of course, to ensure they have insurance products in place that will be required when unforeseen events happen.

He knows getting that balance right is crucial to prudent financial planning and the wellbeing of individuals and their families.

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FCA Disclaimer

*Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms that are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.

Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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