DeadHappy is a new pay-as-you-go life insurance plan designed for the digital age. Its product is underwritten by Covéa Life. Online only and D2C, the proposition is different from most other life products in that:
· It only asks four questions on the application form. DeadHappy reckons this usually takes about a minute to complete.
· Rather than use level premiums, premiums go up each year in line with the age risk, on the plan anniversary date. DeadHappy says the average increase is less than 5% a year.
· The plan is set up as ten year term insurance, with premiums (including the annual increase) guaranteed.
· Each year it can be extended to a new ten year period (effectively you start again), subject to underwriting.
· After the policy’s ten year term ends, it can be extended only if the customer wishes and DeadHappy agrees. The plan is freshly underwritten at that stage too.
· Suicide is excluded (for at least the first 12 months). The policy will also not pay out if the cause of death is diving (20 metres below the surface or more); flying (except as a regular fare paying passenger); racing (anything with an engine or on an ocean); climbing (mountains, cliff faces, rocks and big buildings); floating, and jumping. Death while on active military duty is also excluded.
· The website encourages customers to set out their deathwishes – listing who they want to leave money to and how much. DeadHappy will communicate this to whoever gets the money, who can then decide whether to carry out the deathwish. Deathwishes are therefore not legally enforceable (DeadHappy says ‘it’s something we are looking into though’).
The maximum sum insured is currently £350K.
Comment: This is very simple term life insurance, but presented in quite a different way. First, the website actually mentions the D word (death) and then it takes a humorous approach. For example, its exclusion for racing is explained thus: ‘Racing. Anything with an engine, or anything on an ocean. Stuff like pigeons, and anything with an egg and a spoon are all OK.’
It all makes life insurance seem simple, understandable and not as daunting as we can be when we’re being serious (which is often quite often…).
But, for a very simple concept, it can be quite hard to understand exactly how it works and means hopping around the website quite a bit. For example, the starting point is you take out a ten year term policy. Rather than use the conventional level premium system (which effectively overcharges you in the early years), premiums start lower but go up every year. That’s unusual but it’s been done before in the UK and some friendly societies still do it on long term income protection and it’s the norm of course on general insurance policies.
How much your premiums go up each year is guaranteed but… every year you can start a new ten year policy (useful because you always have at least nine years’ cover if bad health hits). It doesn’t spell it out, but if DeadHappy changes its premium rates in future, if you do that you presumably pay the new guaranteed rate for your new age and sum insured and not the current guaranteed rate. After the ten year period finishes, it’s up to DeadHappy whether it wants to allow you to continue, so here the model moves away from the conventional renewable term option we’re more familiar with too.
Then there’s the exclusions. These are well set out, in a jokey way, but look closely and a few questions arise. For example suicide is excluded for 12 months but ‘after that, it depends on circumstances, but we try and include it where we can’.
Also excluded is racing ‘anything with an engine’. So, my old mountain bike would be OK but my new e-mountain bike technically has an engine so is that covered?
Finally, a lot is made of Deathwishes – indeed this is the starting point to getting cover. However, a deathwish cannot be enforced and DeadHappy does not offer trusts (instead they point you towards a lawyer) so problems could arise if you do die. So you have to rely on your will or the laws of intestacy, both of which rank above any deathwish.
But some of this is nitpicking so, does the approach make sense overall? For those who just want cheap life cover now as a stop-gap – yes, it can do. However, the initial cost rises each year then, after ten years (originally it was five years but this has now been increased), the cover has to be started again. That should not be a problem for most young people but may be as they get older – when longer term cover may be wanted but fewer people can expect to still be accepted at standard rates.
Plus points: Life insurance that is almost fun; Should attract people who otherwise would not look at life insurance; Not afraid to mention the D word; Takes a witty and lighthearted approach that is refreshing; Inexpensive – at least initially.
Not so plus points: Short term cover; Has to be renewed after ten years – and is effectively then re-underwritten; Replacing every year makes sense as it guarantees at least nine years continuing cover but it is re-underwritten each time (albeit for most, that should be quick and easy); Quite a lot of exclusions; No trust facility; Deathwishes are not legally binding; It’s difficult to find out exactly how the policy works in detail; D2C only.
Rating (max 10): Overall: 7. Bronze.
Tags: Term; DeadHappy