Sainsbury’s Life Insurance has revealed research showing that the monthly market average life insurance premium in the UK has fallen for the second consecutive year. This represents a competitive market attempting to increase sales in a sluggish economy.

The analysis shows that premiums for all customer profiles have fallen, and there is a significant gap in price between the most competitive and most expensive policies. As with most things in life, this means that it pays to shop around and some customers are paying far more than they need to.

For example, with level term insurance policies the analysis revealed that, on average, an annual saving of £91.54 could be made, which translates to a 42 per cent price difference between the most competitive and most expensive premium.

For customers looking for a policy that includes critical illness cover, consumers could save around £213 on their annual premium, which is 31 per cent of a difference between the lowest and highest premium.

In addition, giving up smoking remains one of the most significant actions consumers can take to reduce the cost of their cover, with the typical premium for non-smokers costing 41 per cent less than for smokers.

Industry analysts have pointed out that the fact life insurance premiums continue to be competitively priced is great news for consumers. But this research clearly shows that in order to get the best level of life insurance cover for your family at a competitive price, it’s vital to shop around and compare policies on a like-for-like basis.

This will seem like stating the obvious to many people yet some customer still buy the first policy they come across without considering the alternatives. With household incomes remaining static for another year, costly mistakes such as these can have serious negative consequences.

Having critical illness cover can mean the difference between continuing to live the life you’ve carved out for you and your family, or having to make big sacrifices, for example even forfeiting the family home, should you become ill and be unable to work.

With cover becoming more competitive, now is a good time to ensure you’ve protected your family in the event of illness, or death. Customers should always shop around to see what is on offer at what price before making any decisions and, if unsure, should seek independent financial advice.

A comprehensive study has found that British consumers feel the insurance industry lags behind others in how it addresses their needs and have given their strongest hint that greater simplicity would be welcomed.

Ernst & Young surveyed 24,000 life and non-life insurance customers across 23 countries, including 2,000 in the UK.

Compared to their international counterparts, British customers find life insurance products too complicated and are willing to switch to providers who are more transparent and communicate better.

Interestingly, Brits are more demanding in their expectations of customer service and rewards for loyalty than consumers from other countries. But there is evidence that customers trust the industry and are willing to pay extra for a recognised stable brand.

Despite being some of the most proactive in educating themselves about the type of products available, Brits still find them too complex. Well over a third of consumers surveyed in the UK found the life and pensions products on the market too complicated and confirmed they would like to see simple and more transparent products.

More than a quarter of consumers in every region surveyed said that they would reconsider switching provider if they could guarantee more transparency on the products and better communication about product performance.

For life and investment product switching the UK matches the global average – around 10% of those surveyed have changed their provider in the last five years, but in the UK this number is set to double with 20% of consumers considering switching provider in the next five years.

While price was the top reason for changing non-life insurance provider (70%), life and pensions providers were primarily dropped for not being able to meet the changing needs of consumers.

Most consumers across the globe believe the insurance industry is trailing in rewarding customer loyalty and general customer service, but this trend is particularly marked in the UK.

The vast majority (84%) of life and pensions customers (and 88% of non-life customers) who had an opinion agreed that insurers trail other industries in rewarding customer loyalty.
This compared to 65-75% of consumers globally.

And three quarters (75%) of life and pensions customers (83% of non-life customers) who had an opinion agreed that service levels in insurance lagged other industries, compared to 60-70% of consumers globally.

This was highlighted by 55% of UK life and pensions consumers saying they were not contacted by their insurer when the policy approached renewal.

Fortunately, customers still trust the industry and satisfaction levels were high, with the UK market scoring 7.3/10 in satisfaction, while 30% of consumers in the UK were also willing to pay a premium for a financially stable brand.

Industry analysts believe that the expectations of consumers are constantly evolving and driven by online information and the rise of customer service standards in other industries. The UK has led the way in the move online, and some of the frustrations being voiced by UK consumers about levels of service, reward for loyalty and lack of transparency around products will be useful for other mature markets to learn from.

Regulators are increasingly focusing on protecting consumer interests, with major new rules being introduced in the EU and many other locations. Insurers that align themselves to a customer centric model will find the transition to the new regulatory environment less painful, and may gain competitive advantage.

Consumers are clearly looking for more contact and are keen for insurers to make it easier for them. Companies that can satisfy this demand will prosper while those stuck in the old ways of the past will fail.

The ‘This is Money’ website has this week been discussing the effect on life insurance premiums on certain lifestyle factors. While smoking has long been known to increase insurance costs, for obvious reasons, now obesity is coming under the same level of intense scrutiny.

Obesity is a huge health risk, linked with an increased chance of heart attack, cancer and diabetes. It is no surprise then that life, health and illness insurers are taking more interest in customers’ weight and setting premiums to reflect the greater medical risks associated with obesity.

In America, insurers routinely ask customers for their body mass index on application forms and British insurers are also turning to BMI as a key indicator. Women who take a size 18 dress are routinely hit with premium loadings, while for many men insurance alarm bells can start ringing once their waist hits 36 inches. In the worst cases, cover is declined altogether.

A BMI of 35 could see a 50 per cent increase in premiums while a BMI of 40 or more could see them double. Premiums last for the term of cover, so it is essential to get the right deal at the start.

According to the World Health Organisation, a healthy body weight is a BMI of between 18 and 25. It classes a BMI of 25 to 30 as overweight while more than 30 is obese. But BMI is not an exact science. There are several factors that will influence the numbers. These include ethnic origin and lifestyle. For example, sports enthusiasts with heavy muscle tissue can end up with a high BMI despite their good general fitness.

There is hope for those erroneously caught up by the broad strokes of the BMI test. Customers who shop around will usually cover her on standard terms, subject to a medical.

Insurers are even more sensitive to BMI for critical illness cover, which pays out a lump sum if you are diagnosed with a particular condition, or for income protection insurance that pays a regular monthly sum if you are too ill to work. Here, those with a BMI as low as 32 or 33 may be asked to go for a medical examination before they will be accepted for cover.

Insurers are particularly concerned about younger people who are overweight. There is more tolerance of ‘middle age spread’. Insurers will charge a 28-year-old with a BMI score of 34 an extra 50 per cent for life insurance, whereas a 48-year-old with the same BMI pays the standard rate for a person of their age.

Shopping for a life insurance policy can be a startlingly frank appraisal of your future health and wellbeing. Customers should look at a high BMI as a warning from the future. Taking steps to tackle the problem could bring down your life insurance premiums and help you lead a longer, happier life.

With the population now living longer than ever before, many of us will unfortunately suffer from or be diagnosed with a critical illness at some point in our lives. However, with the advances of medical science, more and more of us are now surviving these illnesses.

This is where Critical illness insurance becomes important because where life insurance covers you in case you die, it will not cover you should you, for example, have a heart attack, stroke, brain tumor or be diagnosed with cancer and survive. These illnesses can severely compromise your income and may force you out of work and remove your income all together.

Critical illness insurance is a product, designed to give you peace of mind through a lump sum cash payment if the policyholder is diagnosed with one of many illnesses listed on the policy. More illnesses are now covered than ever before.

The UK insurance market is very highly regulated for the protection of consumers. The standardisation of the claims definitions may serve many purposes including increased clarity of cover for policyholders and greater comparability of policies from different life offices. For example, in the UK the Association of British Insurers (ABI) has issued a Statement of Best Practise which includes a number of standard definitions for common critical illnesses.

With a critical illness cover policy in place, you will receive payments to settle any debts, mortgage etc and should you need any modifications applying to your home such as a stair lift etc then this can also be funded by your policy. This eases the financial burden of getting ill, reducing additional stress and allowing the patient to focus on getting better.

Many life insurance policies have the option of Critical illness cover at little extra cost so this is always worth considering when shopping for life insurance. If you already have a life insurance policy than you should enquire about critical illness insurance as you may be able to simply add it to your existing life insurance policy.