Life Insurance/Assurance

newlywed

Just had some very bad news and it started me thinking about needing life insurance/level term assurance.

I want to make sure that if anything happened any debts would be cleared and more importantly that OH would have money left to sort a funeral and help him out for some time so that he wouldn't have money as an extra worry at that time.

We don't have a mortgage at all and are unlikely to.

But I have no idea how many years I ought to choose for a policy (I'm mid-30's) or how much the total policy should be for?

I can't really think straight after today's bad news but want to get this sorted as soon as possible, can anyone give me any advice please?

stephenni1971

can anyone give me any advice please?

What you will get from this forum will be ideas and suggestions, but please don't take any of it as advice....

Anyhow, a few points for you to think about -

If there debts are in your name only, then in the unfortunate event anything happened to you then your OH would not be liable for them.

In terms of what amount you need cover for, it depends what you want for your OH - enough for living expenses for a few years?, enough to buy a house?, enough to live on for the rest of his life?

As for the term, you state that your debts should be cleared in 4 years, so you could in theory take a very short term policy to cover that immediate need.

Bear in mind however that many couples once married find it a good idea to have some sort of financial protect on both of them so that in the event of anything happening the other partner will be able to survive financially.

It might be a good idea sitting down with an Independent Financial Adviser who will be able to recommend the best option to fulfill your own specific needs...

newlywed

Thanks, sorry I meant advice as to why you pick a certain amount of years for the policy or a certain amount.

I want him to be able to cover any necessary funeral fees, and not have to worry about how to pay all the bills as soon as I'm gone (not that I plan on going anywhere of course). He's self employed and we pay half the bills each and I'm not sure he'd cover it all by himself, and doubt he'd want to work the next day....

Can you have more than one life insurance?
Eg if I got a 10 year, death only one for a fixed sum and then with a separate company got a longer term death and critical illness cover?

I know he's not liable for my debts if/when I go but I thought that any insurance payout would go to the estate and then the debts be taken from that? Or do you specify who gets the benefit and then it doesn't count as part of any estate?

stephenni1971

Thanks, sorry I meant advice as to why you pick a certain amount of years for the policy or a certain amount.

Both the amount and the term vary hugely in line with personal needs and circumstance.

I want him to be able to cover any necessary funeral fees, and not have to worry about how to pay all the bills as soon as I'm gone

You could 'go' tomorrow, or in twenty years, or in forty years, however is determining the need for cover, it is generally higher when you are younger, with mortgage & children, and your need for cover reduces as 1. children grow up and leave home and 2. as mortgage is paid off.

He's self employed and we pay half the bills each

If this is the case then unless he is a very high earner, the event you losing your income would have an immediate and ongoing financial impact on him ( and vice versa ). Therefore it may be an idea to look at cover beyond your actual debts/funeral costs to provide him with some capital or income to offset this.

I cant stress enough that all the things you are discussing apply equally well to what would happen if your OH were to die before you - so look at options that provide cover for you both.

Can you have more than one life insurance?

You can have as many as you want with whoever you want ( within reason )

I know he's not liable for my debts if/when I go but I thought that any insurance payout would go to the estate and then the debts be taken from that? Or do you specify who gets the benefit and then it doesn't count as part of any estate?

Normally on death the proceeds of the policy go into your estate, and it has the responsibility of clearing your debts and finalising your affairs.

With the death benefit you do have the option to write the proceeds in TRUST, this is a legal framework where the policy would pay directly into the trust on death, not the estate, and it is then distributed according to how the trust was set up. This can be done direct with the insurance company who have standard trust forms but much better to go through your solicitor.

An IFA will be able to discuss all these matters with you in more detail.

newlywed

Thanks very much for answering my questions. It's helped make things a bit clearer for me.

Do all financial advisers charge for their time or do they just get commission from any policy you take?

stephenni1971

The accepted norm has been to work on a commission basis, but you will find an increasing number of advisers working on a fee basis, you need to decide which one is right for you.