AA life insurance review [2024]

Originating in car breakdown cover, the AA had expanded into life insurance offering policies through established insurer Legal & General.

The AA no longer provide life insurance to new customers.

But not to worry, you can still compare Legal & General life insurance quotes through Reassured.

Why not contact us today and we can get started to help you find your perfect life cover?

Although their product is no longer available, we still review the AA life insurance to help you make comparison with other providers, on your journey to find the right life insurance for you.

Continue reading for the full verdict...

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Existing AA life insurance customer?

If you are an existing AA customer and have a query regarding your policy with Legal & General, then you can call 0370 010 4080.

Term-based life insurance policies from the AA

The AA offered both level term and decreasing term life insurance cover.

Level term life insurance started from £6-per-month but could’ve cost significantly more, dependant on a variety of factors, including your smoking status, age and health.

This type of life insurance involved paying a monthly premium for the duration of the policy term. If you were to pass away during the set term, a fixed pay out would be made to your beneficiaries.

The AA offered decreasing term life insurance cover too, which also started from £6-per-month but again was dependent on your personal wellbeing and habits.

Like with level term, these policies involve paying a monthly premium and if you died during the term, provided a lump sum pay out to your loved ones.

Life Insurance Calculator

Calculate how much life insurance you may need by filling in the costs you’d like your policy to cover.

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£137,934 is the estimated mortgage debt per household in the UK.

The purchase of a home is likely to be the largest financial commitment any of us will make in our lifetime. Your life insurance should cover your remaining mortgage balance to allow your loved ones to stay in the family home should anything happen to you.

Source: Moneynerd.co.uk
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The average monthly household budget in the UK is £2,548 (that’s £30,576 per year), which is spent on transport, food & drink, utilities (gas, electricity, water etc), clothing, council tax and leisure activities.

With energy prices hitting a record high and the cost of living rising sharply in the UK, you may wish to factor in utility bills and family living expenses into your cover.

Source: Nimblefins.co.uk
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The average personal debt of UK adults has risen to £34,566 (not including mortgage debt), with credit cards, personal loans and overdrafts being the most common forms of debt.

Factoring in any debts into your life insurance cover means that, if they need to be paid back from your estate after your passing, your loved ones won’t miss out financially.

Source: Money.co.uk
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According to SunLife, the average cost of a funeral in the UK is £3,953 (with the overall cost of dying at £9,200).

Funeral costs have increased by 116% since 2004 and are a significant cost which should be factored into the amount of life insurance you secure.

Source: SunLife.co.uk
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When factoring in cover for your children, you may wish to calculate the amount based on how long it is until they reach financial independence.

This could include childcare (£7,000 per year for part-time care), school expenses (£1,519 per school year for uniforms, lunches, stationary etc), as well as an additional sum for further education (this could be a contribution of up to £5,000 per year).

Sources: Daynurseries.co.uk, Primarytimes.co.uk & Savethestudent.org
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2 in 5 adults say they are relying on an inheritance to fund their retirement.

Factoring in an inheritance to your sum assured could allow loved ones to live a more financially comfortable life. Alternatively, you could leave a cash gift to a charity of your choosing.

Source: Moneyage.co.uk
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If you’re lucky enough to have your own savings or are part of the 30% of UK residents who already have a life insurance policy in place, this can provide financial protection for loved ones.

By entering your current cover, savings or death in service amount you can reduce the sum assured you require.

Source: Scottishbusinessnews.net
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Decreasing term is ideal for helping to cover a repayment mortgage as unlike level term the pay out amount decreases over time. This means the lump sum could be set to mirror the remaining balance of a mortgage. Generally, this is a more cost-effective policy option.

The AA provided free life cover between the exchange of contracts and completion of your purchase if you’re in the process of buying a property.

All term policies were available with optional premium protection, where the AA committed to paying the premiums if the policyholder experienced non-self-inflicted injury or illness which prevented them from working for six weeks or more.

This would have continued until the policyholder was deemed medically able to return to work, however, this waiver of premium option did come at an additional cost.

Like the majority of policies, AA life insurance included free terminal illness cover, meaning that if you were diagnosed with a terminal illness and expected to die within 12 months, you could access the funds early.

At Reassured, we can help you arrange term-based life insurance, whether increasing or decreasing, and all our policies come with terminal illness cover as standard.

Life Insurance products Cover starts from Fixed premiums Additional benefits AA member benefits
Level Life Insurance £6 a month Icon green tick Icon green tick Icon green tick
Decreasing Life Insurance £6 a month Icon green tick Icon green tick Icon green tick

Source: www.theaa.com/life-insurance

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Critical illness cover (CIC) with the AA

Critical illness cover was available for all AA policyholders aged between 18 and 54, although this would incur an extra cost which would be added to your premium.

CIC provides a tax-free lump sum to policyholders diagnosed with a serious, yet non-life threatening, illness.

Through Reassured, all policies with Legal & General can be arranged with critical illness cover for an additional cost.

However, as the cost of CIC and the illnesses covered differ between different insurers, it is still important to compare quotes to ensure you are finding the right cover at the right price for you.

Contact our award-winning team at Reassured today for free quote comparison.

Over 50s plans from the AA

Starting from £5-per-month, the AA also offered an over 50s plan, available to UK residents between the ages of 50 and 80.

This type of policy offered guaranteed acceptance to those within this age range without the requirement for any medical information.

The upper age limit of 80 was lower than the average over 50s plan upper limit of 85.

However, unlike many life insurance policies which require a policy to be in effect for a 24-month period before a payout would be made, the AA only required your policy to have been in effect for 12 months.

This meant that if you died after 12 months, a full lump sum of the insured amount would be made to the beneficiaries upon death.

If death occurred before this 12-month eligibility period, the sum of the premiums paid would be reimbursed, unless death occurs due to an accident in which case the full pay out sum would be made.

Like a lot of over 50s plans, once you reach the age of 90, premium payments ceased but your cover would remain in place until you died.

At Reassured, we compare over 50s plans quotes to help you find a good deal.

Get in touch today to receive your free quote comparison service.

Over 50's Life Insurance products Cover starts from Fixed premiums Funeral benefit option AA member benefits
Increasing plan From £5 a month (dependant on age) Icon ruby cross Icon green tick Icon green tick
Fixed plan From £5 a month (dependant on age) Icon green tick Icon green tick Icon green tick

Source: www.theaa.com/life-insurance

Increasing & fixed over 50 plans

AA life insurance offered both increasing and fixed over 50s plans.

Increasing plans are designed to protect your sum assured from inflation.

Each year your sum assured would be reviewed in line with changes to the Retail Price Index (RPI). This figure is then adjusted accordingly and your premiums altered to reflect this new level of cover.

With a fixed plan the sum assured remained the same and your premiums would not change. However, after a year you’d be provided with the option to reduce your monthly premiums for a lower level of cover if required.

With both types of plan, like all over 50s plans, there’s the possibility that more would have been paid into the policy than the lump sum which is paid out.

To avoid a diminishing ‘real terms’ pay out, the AA offered an increasing coverage option where the premiums and the sum assured increased by +5% each year the policy is in effect.

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Funeral benefit

A funeral benefit option was available with all over 50s plans. This allowed you to put the cash lump sum towards the cost of your funeral and receive an additional £300 bonus.

All of the AA over 50s plans came with a funeral benefit option. This meant that after you’re gone, rather than the cash lump sum being paid to your loved ones, it’d be charged directly to funeral plan provider Dignity to arrange your funeral.

Evoking this option would also mean that upon your death, your funeral fund would receive a £300 bonus to further help towards the cost of your funeral.

If the cash sum and £300 bonus are not enough to cover the cost of your funeral, your estate and loved ones would be required to make up the difference.

If the amount within your plan plus £300 bonus exceeds the cost of your funeral, this excess would be added to the value of your estate, although may be subject to inheritance tax.

Single or joint policy

With the AA, it was possible to take out either a single or joint life insurance policy depending on who it is you were looking to cover.

Whilst a joint life insurance policy is likely to be cheaper than purchasing two singles, it'll only pay out once upon first death, leaving the remaining partner uncovered and seeking life insurance cover at an older age which is likely to result in significantly higher premiums.

£50 M&S gift voucher

Upon taking out term-based life insurance or an over 50s plan with the AA, all new customers would’ve received a £50 M&S gift card.

The gift card would’ve been received after the 4th month of your policy providing all payments have been kept up.

Because AA life insurance policies are provided through Legal & General, if you’ve previously had a policy with them and cancelled, you’d not be eligible for this offer.

Gift cards were limited to 2 per household in any 12-month period.

NB: Gift cards detailed within this post are only offered with life insurance policies provided by the AA and not those taken out through Reassured.

There are other life insurance providers that do still offer free gifts for new policyholders, however it is important first to choose the best life insurance for you, before being swayed by free gift incentives.

AA members

Existing AA members could have benefited from a 2% discount on the cost of their monthly premiums as well as receiving the £50 M&S gift card.

Existing members taking out an over 50s plan would’ve benefit from a £75 gift card as opposed to £50.

An AA member is defined as a holder of Breakdown Assistance with the AA. It doesn’t apply to anyone with any other type of cover with the AA, for example, home/car insurance.

However, monthly premiums differ significantly between insurers, therefore, it’s important to compare quotes to determine whether or not a further saving can be made by using a different insurer.

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Existing policyholders

As far as we could tell, taking out breakdown cover if you have an existing life insurance policy with the AA didn’t entitle you to any discount or benefits.

Pros & Cons of AA life insurance

Like the large majority of life insurance policies, the AA life insurance policies came with both pros and cons:

PROs

  • Free legal advice line
  • Optional waiver of premium
  • Terminal illness cover as standard
  • Critical illness cover available
  • Over 50s plan only had 12 month eligibility period as opposed to 24
  • Full pay out would be made if you died within the first 12 months of an over 50s plan if death is caused by accident
  • £300 bonus if you chose to use the sum assured to cover your funeral
  • £50 for new customers (£75 for existing AA members on over 50s plans)
  • 2% discount on premiums for existing AA members

CONs

  • Upper limit of over 50s plan was only 80
  • 4 month waiting period for gift card
  • Not eligible for gift card if you've previously cancelled an L&G policy
  • No benefits to taking out breakdown cover if you have an existing life insurance policy

The AA no longer provide life insurance (but we can help)

Whilst the AA no longer offer any form of life insurance to new customers, the good news is that insurance provider Legal & General still do.

At Reassured, we can help you compare quotes from not only Legal & General but from a range of insurers.

The cost of life insurance can vary significantly between each insurer, therefore it’s essential to compare quotes.

There are 3 main methods for carrying out this comparison:

  1. Carry out the research online yourself - although this can be very frustrating and often time-consuming
  2. Use a comparison website - though the number of insurers available will vary between sites and this may not offer you a tailored solution
  3. Contact an FCA-regulated broker - compares various cover options from a panel of insurers which can be tailored to suit your specific needs, offer a number of additional services and is usually fee-free

As mentioned, using an FCA-regulated life insurance broker, such as Reassured, would not only save you time and allow you to compare a selection of insurance providers and products, but they also offer an array of additional services (providing free quotes and without charging a fee!)

  • Our agents will guide you through the application process, filling in all the necessary documentation and helping to decipher any jargon
  • Should you wish to avoid or minimise inheritance tax on your pay out, Reassured offer a free trust guidance service with the majority of policies we arrange, helping your loved ones receive a faster pay out
  • Our dedicated impaired life insurance team have a good track record of helping applicants who have been declined in the past, find some form of cover

So before making any decision, why not get a comparison for a variety of options. Allowing you to make a fully informed decision on the best solution for you.

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Sources:

https://www.theaa.com/life-insurance/

All information regarding the AA's product offerings is taken from their website and is correct as of 18/05/2023. This is subject to change by the AA at any time

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