Life assurance - necessity or luxury?

minniepoos_2

Hi all,

OH and myself have been having a major finance overhall - to cut a looooong story short we have CC debt of 35k+, and are moving everything/cutting out any extras etc to get it under control. Our CC snowball calculator says dfd in July 2018, but I want to do it quicker.
So...We have a mortgage and life assurance + critical illness cover to cover it. We also have a seperate life assurance policy for a couple of hundred thousand (i think - will check later). The big question is do we actually need it?

It's about £30 per month, which will shave the best part of a year off the CCs. If one of us were do die (heaven forbid) the mortgage would be covered. We'd still have the CC debt, and income would be halved, but without the mortgage to pay whoever was left would have more income to pay it off with. (what a bleak subject this is - sorry!).

Part of me says it would be tempting fate to cancel it, but it seems to be an expense we could do without. We only have it in the first place as my OH's relative married a financial adviser some years ago, and he made it his business to make money out of his new extended family!

We've been discussing it/agonising over it for almost a month now, so would really welcome some other opinions.

Please help!!!!

Soubrette

This is purely my own opinion:

I would definitely keep the mortgage protection if neither of you can afford to keep up the mortgage on your own.

First question - is this additional life cover insurance (just a straight if you die then a sum is paid out) or assurance (there is an element of investment to it)

Secondly - is the other life cover to actually cover anything? For example when I was a stay at home mum, my partner had a large term assurance running in his name until the girls were 18. This meant that if he were die then I would have a large lump sum to use instead of having to seek work straight away.

Sou

minniepoos_2

The additional cover only pays out if one of us dies. It's not for anything specific, we took it out about 8 years ago as OH's relations husband told us we should have it! (we were only early 20's and a wee bit naive i think!) We do have 1 child, but we both work (and both in jobs we could handle if left on our own). It would purely be "bonus" money.

Now I've started posting on here about it I have started to think we should keep it until the CCs have come down to perhaps the £20K mark, just to be a bit safer. But then we won't get the added benefit of not paying the premiums for the next however many months that will be!

I'm going round in circles!

I suppose as we never had an actual reason for it, other than we "should" have it, there is no real reason to keep it?

dunstonh

1 in 5 people will die before retirement. So you have to decide if the odds of that and the consequences of not having it are worth the risk or not.

I have come across spouses over the years who have ended up hating their deceased husbands for not making provision and end up losing the house or having to significantly change their lifestyle. Its down to you how you feel about it.

stephenni1971

The simple fact with a lot of insurances is you don't need to have ANY of it.

That said, I sleep better at night knowing that if anything were to happen to me, my 2 children would have enough not just to survive, but to have a good standard of living and hopefully set them up in life.

I could save £15 per month and have only the absolute minimum cover required but to me it's £15 well spent.

As dunstonh said above, when you see what can be left behind by someone who did not take the necessary cover - it can be devastating for the families involved.

Soubrette

So in effect it is covering your debts at the moment?

If this is the case then I would keep it. However, as soon as the debts are gone then I personally would cancel it.

For me insurance is all about covering eventualities that could cost me or my loved ones dearly.

So I would definitely not want to be losing my house for example, or in this instance, be stuck with debt repayments that would be hard for one person to afford.

If it's more a potential windfall and not covering anything in particular then I would get rid of it.

If you do want to keep it then you can always compare the cost of other insurance too and see if you are getting a good price for your cover - plus going through a cash back site might make it worthwhile to change (not saying it definitely will though as you are obviously older and so a higher risk to the insurance company )

Sou

minniepoos_2

Thanks everyone for your input here. We've agonised it loads more in light of what everyone has said, and I think we are going to keep it for now (although may shop around to see if there are any better deals - Thanks Sou). Until we reach our debt free goal it must be better to have this 'safety net' in case the worst does happen. Once we're back on track though it will be one of the first things we re-assess.

Thanks ever so much!

MP