Single Life Insurance Policies UK

Life insurance is often discussed in the context of families and couples, protecting partners and children from financial hardship. But what if you’re single? Or what if your financial situation is distinctly different from your partner's? This is where a single life insurance policy becomes not just relevant, but essential.

For many, the idea of life insurance is tied to having dependents. While this is a primary driver, it’s a narrow view of what personal protection can achieve. A single policy is a versatile financial tool designed to protect one person, offering a tailored solution that joint policies simply cannot match in certain situations. It provides a dedicated payout upon death, ensuring your specific financial wishes are met, whether that’s clearing debts, leaving a legacy, or protecting a business.

This guide will explore the ins and outs of single life insurance policies in the UK, demonstrating why taking out cover just for yourself is often the smartest financial decision you can make.

When taking out cover just for yourself makes sense

The decision between a single and a joint life insurance policy is one of the first you'll make. While a joint policy, which covers two people and usually pays out on the first death, can seem simpler and slightly cheaper, it lacks flexibility. A single policy, by contrast, is designed for an individual. It pays out on their death, and the cover is entirely independent of anyone else.

This independence is precisely why single policies are the superior choice in a surprisingly wide range of circumstances. It’s not just for single people; it's for anyone who wants a financial safety net that is tailored, specific, and unambiguous. Let's delve into the scenarios where a single policy isn't just an option, but the most logical and effective solution.

What Exactly is a Single Life Insurance Policy?

At its core, a single life insurance policy is straightforward: it’s an insurance contract that covers one person. You pay a monthly premium to an insurer, and in return, they agree to pay out a pre-agreed cash lump sum if you pass away during the policy's term.

This lump sum, known as the 'sum assured', is paid to your chosen beneficiaries – the people or organisation you want to receive the money.

The primary alternative is a 'joint life' policy. These are common among couples and typically operate on a 'first death' basis. This means the policy pays out once when the first of the two people covered dies, and then the policy ends. This leaves the surviving partner without any life cover.

For true financial resilience, two separate single policies often provide far greater protection. If both partners have their own single policy, a payout can be claimed on each death, providing a safety net for the surviving partner and then, subsequently, for their children or other beneficiaries.

Single Life vs. Joint Life Policies: A Head-to-Head Comparison

As the table shows, the initial cost saving of a joint policy can be a false economy, especially when you consider the lack of cover for the surviving partner after a claim.

Key Scenarios Where a Single Policy Shines

Choosing a single life policy isn't just a technical decision; it's a strategic one based on your unique life circumstances. Here are the most common situations where a single policy is the clear winner.

1. You're Single and Financially Independent

Even if you don't have a partner or children who depend on your income, you likely have financial responsibilities and wishes that will live on after you.

• Covering Funeral Costs: The cost of dying continues to rise. The SunLife Cost of Dying Report 2024 found that the average cost of a basic funeral in the UK is now £4,141. A single life policy can provide a simple, tax-free lump sum to cover these expenses, relieving your family of a significant financial burden at an already difficult time.
• Clearing Personal Debts: Do you have a personal loan, car finance, or outstanding credit card balances? These debts don't necessarily die with you. A single policy can pay them off, preventing creditors from making a claim against your estate (your property, savings, and other assets).
• Leaving a Legacy: You might want to leave a financial gift to a favourite niece or nephew, support a sibling, or make a meaningful donation to a charity close to your heart. A single life policy is a powerful and cost-effective way to create a legacy.
• Locking in Low Premiums: The younger and healthier you are when you take out life insurance, the cheaper your premiums will be. By securing a policy now, you lock in that low rate for the entire term, even if your health changes later in life.

2. Couples with Different Needs or Circumstances

It's rare for two partners to be identical in terms of their health, income, and financial protection needs. This is where the "one-size-fits-all" approach of a joint policy falls short. Two single policies offer unparalleled flexibility.

Consider this example:

• Alex (35) is a non-smoker in excellent health, earning £60,000 as a graphic designer. He has a £250,000 mortgage.
• Ben (40) is a smoker with a history of high blood pressure, earning £40,000 as a teacher.

A joint policy would have to be priced based on the higher risk profile (Ben's age, smoking status, and health). This means Alex would effectively be paying more because of Ben's circumstances.

With two single policies:

• Alex's Policy: He can get a large amount of cover for a very competitive premium due to his age and health. He might choose a decreasing term policy to cover the mortgage and a smaller level term policy to provide for Ben.
• Ben's Policy: His premiums will be higher, but his policy can be tailored to his specific needs and affordability. He might take out a smaller amount of cover.

This approach is more efficient and ensures each person has the right level of protection. If they were to separate, they would simply keep their own policies. If one were to pass away, the survivor would still have their own valuable cover in place.

3. For Business Owners, Directors, and the Self-Employed

If you run your own business, your personal and professional finances are often intertwined. Single life policies are the foundation of crucial business protection strategies.

• Key Person Insurance: Is there one person whose death or critical illness would devastate your business's profitability? This could be a top salesperson, a technical genius, or you, the founder. A Key Person policy is a single life (or critical illness) policy taken out by the business on that key individual. If they pass away, the business receives the payout to cover lost profits, recruit a replacement, or clear business debts.
• Executive Income Protection: For company directors, this is a must-have. It's an income protection policy paid for by the business as an allowable expense. If you're unable to work due to illness or injury, it pays a regular income, protecting both you and the business.
• Relevant Life Cover: This is a tax-efficient single life insurance policy for directors and employees. The business pays the premiums, but the payout goes directly to the employee's family, free from Inheritance Tax. It's a highly valued benefit for small companies that aren't large enough to set up a full group life scheme.
• Protection for the Self-Employed: If you're a freelancer or sole trader, you have no employer sick pay to fall back on. A single Income Protection policy is arguably the most important cover you can own, ensuring your bills are paid if you're too ill or injured to work. The UK has around 4.3 million self-employed workers, many of whom are just one illness away from financial crisis.

At WeCovr, we specialise in helping business owners navigate these options, ensuring both their family and their business are protected.

4. Covering Inheritance Tax (IHT)

Inheritance Tax can take a 40% bite out of your estate above the current threshold. With rising property values, more and more families are being caught in the IHT net. HMRC collected a record £7.5 billion in IHT receipts in the 2023/24 tax year.

A single Whole of Life insurance policy is the classic solution.

• It's a policy that runs for your entire life and guarantees a payout.
• You calculate your potential IHT liability and take out a policy for that amount.
• Crucially, the policy must be written in trust.

When written in trust, the payout goes directly to your beneficiaries and does not form part of your estate. They can then use this money to pay the IHT bill, leaving the rest of your legacy intact for them to inherit.

A related product is Gift Inter Vivos insurance. If you gift a large sum of money or an asset, it can still be subject to IHT if you die within seven years. This policy is a type of term assurance that covers this seven-year period, paying out to cover the potential tax bill if you die.

Types of Single Life Insurance and Protection Policies

"Life Insurance" is a broad term. There are several different types of single policies, each designed for a specific purpose. Understanding the differences is key to choosing the right one.

But financial protection doesn't stop at life cover. To be truly resilient, you must also protect your health and your income.

Beyond Life Cover: Protecting Your Health and Income

A single policy approach allows you to build a comprehensive, personalised protection portfolio.

Critical Illness Cover (CIC)

This policy pays out a tax-free lump sum if you are diagnosed with one of a list of specified serious illnesses, such as some types of cancer, heart attack, or stroke.

The financial impact of a serious illness can be devastating. You may need to stop working, pay for private treatment, or make modifications to your home. According to Cancer Research UK, 50% of people diagnosed with cancer now survive for 10 years or more. CIC provides the financial breathing space to focus on recovery without worrying about money. You can buy it as a standalone policy or combined with life insurance.

Income Protection (IP)

Often called the "bedrock" of financial planning, Income Protection pays a regular monthly income if you are unable to work due to any illness or injury.

• It typically covers up to 60-70% of your gross salary.
• Payouts continue until you can return to work, the policy term ends, or you retire.
• With a record 2.8 million people in the UK off work due to long-term sickness (ONS, Feb 2024), the need for a personal safety net has never been greater.

For anyone who is self-employed, a freelancer, or has limited sick pay from their employer, Income Protection is non-negotiable.

Personal Sick Pay

This is a term often used for short-term income protection policies. While a full IP policy can have a waiting period (deferred period) of several months before it pays out, a Personal Sick Pay policy is designed to kick in much faster, perhaps after just one week. It's an ideal solution for tradespeople, nurses, and electricians who are paid weekly and have no financial buffer if they're unable to work.

Building your protection plan is like building a house. Income Protection is the foundation, Critical Illness Cover forms the walls, and Life Insurance is the roof. At WeCovr, we can help you compare all these options from leading UK insurers to build a plan that's right for you.

The Vital Importance of Writing Your Policy in Trust

This is one of the most crucial yet overlooked aspects of life insurance. A trust is a simple legal arrangement that separates the ownership of your policy from your personal estate.

When you place your single life policy into a trust, you (the settlor) appoint trustees (people you trust, like a family member or solicitor) to manage the policy. You also name the beneficiaries (the people who will receive the money).

The benefits are immense:

1. Avoids Probate: Normally, a life insurance payout forms part of your estate, which has to go through a legal process called probate. This can take months, or even years. A policy in trust is paid directly to the trustees, who can then distribute it to your beneficiaries almost immediately.
2. Avoids Inheritance Tax: Because the policy is no longer part of your estate, the payout is not subject to a 40% IHT charge. This ensures your loved ones receive the full amount intended.
3. Gives You Control: You specify exactly who gets the money and when. This is particularly useful in complex family situations.

Setting up a trust is usually free and involves filling out a simple form provided by the insurer. It’s a small piece of admin that makes a huge difference.

How Your Health, Job, and Lifestyle Affect Your Premiums

Insurers are in the business of risk. To calculate your premium, they perform an 'underwriting' process to assess how likely they are to have to pay out a claim. The key factors they consider for a single life policy are:

• Age: The younger you are, the cheaper the cover.
• Health: They will ask about your medical history, your family's medical history, and any pre-existing conditions.
• Smoker Status: Smokers or recent vapers will always pay significantly more than non-smokers, often double.
• Alcohol Consumption: Your weekly unit consumption will be reviewed.
• Occupation: A desk-based job is low risk. Working at heights or with hazardous materials is high risk and will increase your premium.
• Hobbies: A passion for knitting is fine. A passion for mountaineering or scuba diving will likely add a 'loading' to your premium.
• Body Mass Index (BMI): Your height and weight are used to calculate your BMI, which is a key indicator of your general health.

Take Control of Your Health and Your Premiums

While some factors like age are fixed, others are within your control. Improving your health can have a direct impact on the cost of your insurance. Quitting smoking is the single biggest change you can make, but improving your diet and fitness also helps.

At WeCovr, we believe in supporting our clients' overall wellbeing. That's why we provide our customers with complimentary access to CalorieHero, our AI-powered calorie and nutrition tracking app. It's a simple way to take positive steps towards a healthier lifestyle, which not only benefits your wellbeing but can also lead to more favourable insurance terms in the long run. It's just one of the ways we go above and beyond for our clients.

Example Premiums: Smoker vs. Non-Smoker

To illustrate the difference, let's look at an example for a 35-year-old seeking £250,000 of level term cover over 25 years.

These are illustrative quotes and the actual premium will depend on your individual circumstances.

The smoker pays almost double for the exact same amount of cover. This difference adds up to over £3,600 over the life of the policy.

The WeCovr Advantage: Finding Your Perfect Single Policy

Navigating the world of life insurance, critical illness cover, and income protection can feel overwhelming. The terminology is complex, and the stakes are high. That's where we come in.

As expert, independent insurance brokers, we work for you, not the insurance companies. Our role is to understand your unique situation and then search the entire UK market to find the single policies that provide the best cover at the most competitive price.

Here's how we help:

• Expert Advice: We demystify the jargon and explain your options in plain English.
• Whole-of-Market Access: We compare quotes from all the major UK insurers, as well as smaller specialists you might not find on a comparison site.
• Application Support: We help you complete the application forms accurately, ensuring full disclosure to avoid any issues at the claim stage.
• Trust Writing Service: We guide you through the simple process of placing your policy in trust, ensuring your payout is fast, efficient, and tax-free.
• Ongoing Support: We're here for you for the life of your policy, ready to help with any reviews or queries.

Choosing a single life insurance policy is a powerful step towards securing your financial future, on your own terms. It provides a bespoke solution that protects what matters most to you, whether that's a mortgage, your business, or the legacy you want to leave behind.