AOB,
Not sure if its any help, but I'm learning too and had exactly the same questions. I spoke to both my mortgage endowment and life insurances (Legal and General, and Scottish Prov respectively).
The mortgage people confirmed that there were no exceptions with regard to hobby flying, which they classed as anything unrewarded financially, and under 100 hours per year. Scot Prov said they also had no problem under the same terms, and are writing to confirm it, as their terms and exceptions are slightly more vague.
From what I understand, most insurance companies allow flying as a hobby, as long as its less that a certain number of hours, and at worst, put a slight premium on to allow for it.
Hope that's of use. IPZ