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Life insurance - beginner questions
Hobo17
Posts: 163 Forumite
Hi all,
hopefully someone can point me in the right direction as I am fairly new to this topic. Since my father passed away recently i've been thinking that some sort of life insurance may be a good idea to assist my husband if I die and he is suddenly left without my my income. I'm guessing that it is better to take out a policy now as it will be cheaper than if i leave it until I am older.
We don't currently have a mortgage, we rent - so the money would be purely and simply a lump sum to assist him financially in any way he chose, if I died. He would also be the beneficiary of my pensions and work death in service scheme so would also receive some lump sum payouts from those. If we bought a house or for some other reason i decided later that more cover was needed, presumably it is possible for me to either increase my existing policy or take out another one in addition to the existing one?
For 100k of cover it looks like i will be paying around 10 pounds per month fixed over the term of the life insurance which seems like it will end when i am 65 or 70. This seems sufficient to cover any financial difficulties I might leave my husband in, I guess. Is there anything particular i need to take into account or haven't considered? I did look into policies that cover critical illness insurance as well although don't really understand the difference - surely a normal life insurance policy would pay out anyway if i died of a critical illness? is the only difference that critical illness pays out on diagnosis rather than death? It seems cheaper to take out a critical illness policy separately rather than a joint life assurance and critical illess one based on the quotes I was looking at.
hopefully someone can point me in the right direction as I am fairly new to this topic. Since my father passed away recently i've been thinking that some sort of life insurance may be a good idea to assist my husband if I die and he is suddenly left without my my income. I'm guessing that it is better to take out a policy now as it will be cheaper than if i leave it until I am older.
We don't currently have a mortgage, we rent - so the money would be purely and simply a lump sum to assist him financially in any way he chose, if I died. He would also be the beneficiary of my pensions and work death in service scheme so would also receive some lump sum payouts from those. If we bought a house or for some other reason i decided later that more cover was needed, presumably it is possible for me to either increase my existing policy or take out another one in addition to the existing one?
For 100k of cover it looks like i will be paying around 10 pounds per month fixed over the term of the life insurance which seems like it will end when i am 65 or 70. This seems sufficient to cover any financial difficulties I might leave my husband in, I guess. Is there anything particular i need to take into account or haven't considered? I did look into policies that cover critical illness insurance as well although don't really understand the difference - surely a normal life insurance policy would pay out anyway if i died of a critical illness? is the only difference that critical illness pays out on diagnosis rather than death? It seems cheaper to take out a critical illness policy separately rather than a joint life assurance and critical illess one based on the quotes I was looking at.
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Comments
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yes - life cover becomes more expensive as you get older, especially if there are any changes in your health
that said, the price of life cover has been falling for about the last 20 years and so for healthy people it has never been cheaper
your points are all valid and sensible, you may want to make sure your life cover is written in trust (to avoid delays and potential tax implications) and you may also want to consider other events that may lead to a loss of income - life cover is cheap for a reason - we are all living longer on average, but losing income through long term ill-health is more likely, products such as critical illness cover or income protection (PHI) may be worth considering as well
critical illness pays out upon diagnosis of an event - such as cancer, heart attack, stroke and so on, most policies cover around 35 conditions (tho some are over 100), these policies cost much more than life cover as the chances of paying out are more likely - half of all heart attacks are repeat heart attacks, for example, and around 60% of all critical illness claims arise from cancer, where many people now survive for 5-10yrs or more
and yes - it is cheaper to include life cover with critical illness - this is because the policy only pays out once - on the first event - i.e. if you sufferer a serious illness and claimed - the policy would not pay out again if you passed away five years later - if you need two payouts you would need separate policies0 -
Thanks, that's really helpful, particularly the part about writing the cover in trust. I will look into that part further.0
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