In this article I’m going to be looking at the Life Insurance policies that Royal London, one of the largest insurers in the UK, has to offer; and how they measure up when it comes to paying out. How Good Is Royal London’s Life Insurance?
I am a great believer in shopping around when it comes to insurance policies, and Life Insurance in particular is one that you don’t want to be making any hasty decisions about – especially since it will affect those you love after you are gone. So, what do we know about Royal London?
Who Are Royal London?
The Royal London Mutual Insurance Society Limited, to give them their full name, are the largest mutual insurer in the UK, providing around 9 million policies and specialising in Life Insurance, Investment Management, and Pensions. Located in London, England, the company was founded in 1861 by two friends in a coffee shop, and was initially set up as a society dedicated to securing the financial security of its members.
Now if you’ve read my articles on Legal & General you’ll know that ‘mates meeting in a coffee shop’ seems to be a running theme when it comes to the birth of insurance companies, but before you give your friends a call and head off to Starbucks, let’s take a look and see if their idea has been a lucrative one.
Turnover And Profits
Of course it has. In 2019 Royal London reported profits before tax of £416m, with a turnover of £169bn – that’ll buy you a lot of lattes, but this is probably of less interest to you than how much they pay out….
In 2019 Royal London paid 99.7% of its protection claims, with more than £575m paid out to more than 119,361 customers. £378m of that was paid out in life and terminal illness claims, with an average of £103,000 per claim.
Impressive figures for sure, and it’s comforting to know that Royal London pays out on such a high percentage of life insurance claims – particularly as it’s something that you are depending on to support your family financially if you are no longer around.
But what makes Royal London different to all the other insurance companies when it comes to life insurance? Let’s take a look at the benefits of taking out a policy with them.
Royal London’s Life Insurance Benefits
Royal London offers several different types of Life Insurance cover to suit your specific needs, such as:
- Level Cover – With this type of policy You pay the same amount each month, and you get a pay out at the end – or rather your family does. You decide the term and pay out amount when you take out the policy, and that is then set for the length of the policy. It doesn’t matter if you die after the first day or in the last year of your policy, the pay out would be the same. This policy includes Terminal Illness cover at no extra cost. Bonus!
- Family Income Benefit – This type of insurance pays out a regular fixed sum of money to your loved ones, starting when you die, and continuing until the end of your policy. This is a handy way of ensuring that your family has an income to pay bills and maintain their lifestyle. As an example of how the policy works; if you have a 20 year policy and were to die 5 years into it, Royal London will pay out a regular income for the next 15 years, so if you die nearer the end of the policy then the total pay out is less than if you died earlier in the term. This policy also includes Terminal Illness cover at no extra cost. Thanks RL!
- Decreasing Cover – Yet another policy that offers free Terminal Illness cover, with this type of cover the clue’s in the name; the pay out amount you would receive decreases each year. By the time the policy ends you have reached zero. This type of cover is normally used to help pay off a repayment mortgage – a debt that reduces to zero as it’s paid off and, voila, you own your own home. The payments reduce in line with a repayment mortgage with a fixed interest rate, with the idea being that there’s always just enough cover to pay off the mortgage.
So that’s the main menu out of the way, but what about dessert? I’ve already highlighted the free Terminal Illness Cover that is offered with every Life Insurance Policy, but what are the other tasty benefits that Royal London has to offer?
- Serious Illness Benefit Option – For an extra monthly cost you can add this to your Life Insurance as extra protection for both you and your children (if they are over 30 days old). This will pay out if you are diagnosed with a specified illness and survive for 30 days. The cover ends once a claim is paid, but your Life Insurance cover continues.
- Payment Reductions – Royal London gives customers the option to reduce their monthly premiums to any amount they wish, subject to the minimum of £7 a month for Life Insurance. Obviously by reducing your payments your cover amount will reduce, but this can still be a handy option to have if financial hardship hits and you’d rather have some cover than no cover.
So in summary how good is Royal London’s life insurance? Well, Royal London certainly have it covered when it comes to Life Insurance to be fair, and your payments could be a lot cheaper than their name would suggest, so well worth a look if you’re in the market for a policy.
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