Is Life Insurance More Than Just a Payout?

Many life insurance providers offer head-turning medical services and wellbeing perks. You might want to factor them in if you’re comparing providers, but how important are they when choosing life insurance?

Holly Bennett Published on 01 November 2022.
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Is Life Insurance More Than Just a Payout?

It’s hard not to be tempted by a freebie – especially if it comes with something you would buy anyway. So if you’re taking out life insurance, any benefits on top of cover you already need might convince you to pick one provider over another.

But should you take these perks on board when choosing cover? And how does getting what appears to be something for nothing influence our buying decisions?

Baked-in benefits aren’t the same as perks

Perks aren’t usually part of a policy. They’re different from locked-in policy benefits, such as free cover when you’re taking out life insurance to cover a mortgage and are in the final stages of buying a house, an advance funeral payment or early payout for terminal illness. These can form part of your cover and you might want to consider them when you’re comparing providers.

With extra services that aren't part of the contract, though – such as health tools run by third parties – it’s less clear cut how long you can use them for. So look for statements like ‘non-contractual benefits’, which mean that the insurer can remove or change them at any time.

The extras on offer

Plenty of the big insurers offer health extras bundled with their life insurance. These are often app-based, to support your health, fitness, nutrition and mental health. Annual health checks, second medical opinions, counselling, virtual physios and nurse or GP appointments, sometimes 24/7, might seem like strong reasons to choose that cover.

After all, not everyone seeks the help they need. A 2021 survey by Opinion Matters for Bupa Health Clinics found that 28% of people had ignored a health concern and not seen a medical professional. It’s possible that ease of access to services at the tap of a screen could make people more likely to address these concerns, especially with the backdrop of an NHS under pressure.

Of course, these aren’t a replacement for healthcare services or treatment in person. They’re a digital option for you, and sometimes your partner and children, but keep an eye out for restrictions, such as maximum number of appointments and age restrictions for specific services.

You might also see various member benefits, rewards and discounts to use with a partner. These include savings on cinema trips, gym membership, coffee rewards and cashback on your food shop. If you’re already looking for life insurance, these offers could help offset the cost of the policy if you were planning to spend this money anyway.

The power of freebies

Life insurance extras might make you feel good when addressing an otherwise sobering and emotional topic. They might also add something real to what is otherwise an intangible, long-term concept, called on only when the worst happens. Insurers know the power of offering something for nothing or, at least, at no obvious extra cost to consumers.

Dr Eva Krockow, assistant professor in psychology and researcher in decision making at the University of Leicester, explains what happens when we’re being offered something for nothing.

“Offering free services taps into a well-known human decision bias, which leads people to overvalue items or services obtained at zero financial cost. Psychology research has shown that unexpected freebies produce positive emotions, while also lowering expectations of the freebies in question. This means that people aren’t picky when something is offered for free. Hence, the mere mention of a complimentary wellbeing service is likely to get people interested in the associated insurance offer – no matter the service’s actual quality.”

Krockow also suggests asking yourself a couple of questions before committing to a policy. “Would you be choosing this life insurance if it wasn’t for the free rewards? How much use are you realistically going to get out of the rewards in question?”

With this in mind perks and non-contractual benefits are only worth considering if you’ll use them. Otherwise, you might end up with another app your smartphone recommends for deep sleep in a few months’ time.

It’s about the cover

With finances tight for so many and no sign of any let-up anytime soon, there may be sound reasons to take advantage of anything that’s free or at a discount. But in a similar vein, it makes sense to focus on the cover itself, and why you need it in the first place.

Jakob Strandgaard, policy adviser for health and protection at the Association of British Insurers, explains:

“When thinking about taking out cover, it is important to think about your individual circumstances, including who your financial dependants are, what kind of financial support they have now, and what support they may need in the future.

“Some policies offer additional benefits over and above the standard cover, however it is important to shop around and choose the policy that best suits your needs.”

You might have life insurance for decades. Perks can be a bonus, and discounts and wellbeing services can add value to a policy, but there is often no guarantee that they’ll last.

Enjoy them and use them, but the right cover at an affordable premium is what matters.

Image source: Getty Images

About the author:

Holly champions clear, jargon-free writing. She’s been creating finance content for leading organisations for over 10 years. Read more

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