Any help or advice on life assurance please??!

mrskaz

Hi there, my dh and I are currently re-mortgaging with our bank, they also set up an appointment for us to see about getting some life assurance with them. The appointment was last night. My dh went on his own as I had to stay at home and look after our two children who have the lurgy at the mo. So, off he went and I must say that neither one of us know anything at all about getting life assurance, we dont know how much is the norm or exactly what it entails (highly embarrassing-but there you go!).

So, the first thing the advisor asks my dh is how much did we want to pay per month for our cover? He then went on to say how about say, £60 per month? In a very matter of fact tone, as if this was the usual (iykwim). My dh nearly fell off the chair at this point and told him that we just could not afford to pay out that kind of money per month. My dh then said he started talking about lots of different things that would be entailed in the policy but to be perfectly honest he was left totally bamboozled and could only remember him saying something about critical illness cover. The advisor said he would look for the best deal for us and that we should go back next week to sign for it.

No longer had dh got back home and told me about it, when the phone rang. It was the advisor saying that he had a deal for us which would cost £30 per month. My dh told him that we might not be going through with it as I was looking on the net to see if I could find something better for us, to which he replied 'oooh all I will say is that you must be very very careful about the deals you get from the net so be very wary' and that he still hoped to see us next week.

So! I've a couple of questions!
I've found a joint, Level term policy from Sainsburys (but from closer reading I gather its Legal & General). I am 30 dh is 35, both non smokers and in good health, the cover we want is £81000. They have quoted us £10.45 per month with terminal illness cover included.

This 'seems' perfectly suitable for us. Am I right in thinking we should just go for this one and save ourselves a heap, or should we pay the extra and go with our bank??
Also, what is the difference between 'Level Term' and 'Family Protection' as they both came up as the same premium amount-I just wondered what the difference was??

Any help or advice would be hugely appreciated, I feel so silly for not knowing about such matters....

Thanks in advance, a very emabarrassed Karen!

dunstonh

So, the first thing the advisor asks my dh is how much did we want to pay per month for our cover? He then went on to say how about say, £60 per month? In a very matter of fact tone, as if this was the usual (iykwim).

It wouldnt be unusual for a bank to quote that much and with CI, that is fairly average.

The advisor said he would look for the best deal for us and that we should go back next week to sign for it.

If a bank, its almost certainly a tied agent. He cant look for best deal as he isn't independent.

This 'seems' perfectly suitable for us. Am I right in thinking we should just go for this one and save ourselves a heap, or should we pay the extra and go with our bank??

Level term is not best suited for a repayment mortgage. Decreasing term assurance is. Also terminal illness cover is not the same as critical illness cover. Virtually all level terms now include terminal illness at no extra cost.

Also, what is the difference between 'Level Term' and 'Family Protection' as they both came up as the same premium amount-I just wondered what the difference was??

Level term is fixed lump sum payment on death. Family income benefit is a monthly income with no lump sum paid.

Any help or advice would be hugely appreciated, I feel so silly for not knowing about such matters....

Getting advice from banks is the only wrong thing you did. Banks are expensive, tied to one provider or marketing group and operate as a salesforce. Its not really an advisor you are seeing but a salesman.

Judi101

Basically level term does just that. If you take out £80,000 cover for the next 25 years if there is a claim within that time it will always pay out £80,000. Decreasing term cover goes down in line with your mortgage. This makes it cheaper but also less flexible. If for example in 10 years you remortgage and change the term you might have to cancel the decreasing term you originally took out and take out a new policy. You are older so it would be more expensive and could even have experienced health problems so they wont cover you. Level term is more expensive but can be more flexible. We took out a joint level term plan equal to the original amount of our mortgage running until our state retirement age of 65. That way if we remortgage we can just take out a top up policy for the added amount of the mortgage and (hopefully) we wont have any mortgage running past state retirement age of 65. Try comparing the cost of decreasing and level term covers. Sometimes they are not all that different.

I also agree with dunstonh. Terminal illness benefit is not critical illness benefit. Terminal illness benefit generally pays out if a doctor confirms you are going to die in say the next 12 months. Critical illness benefit will pay out the lump sum if, for example you have a heart attack. You can have the heart attack, claim the benefit, recover and then go back to work. It is much more expensive than pure death cover but that's because you have a much higher chance of claiming on critical illness benefit than pure death cover.

If you are looking at policies with critical illness benefits compare exactly what illnesses they cover you for - they are not all the same and some have a pretty restrictive list. Also alot of policies with critical illness now build in a reviewable premium - the premiums will be reviewed on the critical illness benefit in for example every 5 years. This is to ensure premiums cover claims and the policies keep up with medical advances. They wont penalise your personal health situation on the reviews but you could end up with an increased premium in 5 years if you get a policy with this on. As far as I believe you can still get non-reviewable policies.

Alot to think about but I hope this helps?

mrskaz

Thankyou very much! You have both been an enormous help to us, it was very kind of you and I appreciate it probably alot more than you realise )

Kind regards,
Karen.xx