Decreasing Life Assurance....add child?

Woggle

Hiya,

My wife and I have joint, decreasing life assurance with terminal illness benefit. I've been reading the policy recently and noticed something called Guaranteed Insurability Option available to increase the sum assured on particular circumstances including the birth of a child.

We have our first child due in early February and wondered whether it would be worth increasing the sum assured? Could you shed some light on why we might want to do this and any recommended amount to increase by?

Many thanks

dunstonh

You tend to activate the guaranteed insurabilty options if you have become uninsurable yourself for some reason.

I cant see any reason why you would want to increase a decreasing term assurance on the basis of childbirth for any other reason. If you are still healthy and insurable then a level term assurance or family income benefit would make more sense.

turkolina

who is the insurance with?

feisty1

Woggle: Do u mean for the child to be insured?

Woggle

Hiya,

Insurance is with Legal and General. No, not for the child to be insured but to cover the other half with an extra amount outside of paying off our mortgage.

turkolina

Well this is something I can talk confidently about because if i was not on maternity leave, it would be me dealing with your application.

You correctly state that you can increase for the birth of a child or if it is twins you can increase two times on the same application.

You can only increase for a maximum of a third of your policy.. Therefore if your policy is for £150k you can increase by 50k and 50k is the maximum you can increase by on each occasion.

You can also increase your policy for house move (for a property that you will live in). Marraige, civil partnership and adoption.

The reason the option is available is normally when someone has ill health or this is when it should ideally be used. The option does not entitle you to cheaper rates infact the rates are not online rates and in effect are higher.. The question you need to ask yourself is are yourself or your wife suffering from an illness since the original policy which would make a new life assurance difficult to obtain or would it be rated.. If the answer is no then you would be better applying for extra life assurance or looking at all your life assurances with your financial adviser.

If the above answer is yes then you would be good to increase your policy as no medical questions are asked at all !

I think thats about it..

Any questions just let me know..