Do I need life assurance?

pandora205

I'm in the fortunate position of having nearly paid off my mortgage and also have in service death benefits of three times my salary (which is fairly high) from my employers if I die before I retire. I haven't bothered with assurance during my current mortgage, as I know this would be covered, but I'm starting to think about what will happen when I retire in about ten years time.

I could afford to take out life assurance now but is there any point? I have some savings and my children are almost grown (15+) and their dad is financially secure too, so they would have some support if needed. So I know I don't need life assurance but should I have it? I'm fit and healthy by the way, so expecting to life a long life!

Thanks for any opinions

ACG

What about inheritence tax?
Would your kids have enough money to pay your IHT bill (Presuming you will have one) in order for to get their hands on your estate on your death?

I think the IHT threashold is £325k, so if your estate is valued over that, then your kids will have to find 40-50% (Currently 40% but talk of it increasing to 50%) of that figure BEFORE they can inherit your estate.

pandora205

Thanks - that's a thought as I would be over the threshold. I think I'd better investigate although there may be other ways of doing this than life assurance.

yelf

you write as though you are no longer with the father is this correct? (this would have a major affect on any help given).

The question is: if you dies would any one be in financial difficulty, and would you want to leave a legacy?

magpiecottage

You need a Will before you need Life Assurance.

Complete an "Expression of Wish" form and submit it to your pension scheme (HR organise this in most firms and hold the form in a sealed envelope which they only open if you die).

The death benefit will normally be paid at the discretion of the scheme trustees but this is to avoid inheritance tax on it, not so they can pay it to themselves or the dogs' home - so it would be available to pay any inheritance tax.

They may also pay a pension to your children whilst in full time education so making sure they are aware of their names and dates of birth makes sense.

That said, I hope you have many years drawing a pension from the scheme! You may not, then, have life cover to meet the inheritance tax but banks will normally lend to meet it because they know they will get the money back.

ZurichCustomer

Everyone who has any dependents (children or parents) should have life insurance and a will. The basic life insurance could be just enough to cover your funeral and the will will save your dependents probably a couple of thousand pounds.

pandora205

To clarify, I am a single parent. The children's father is financially secure but remarried and planning to emigrate (not really relevant to this). My pension is LGPS and my children are already named as beneficiaries. They would get a small pension if they are still in receipt of education (two are currently). I own my own property and the mortgage should be paid off in March 2011.

The children would be financially secure as they would inherit the proceeds from the sale of the house, plus savings (ISAs and AVCs mainly). If I die before I retire the children would also have the lump sum from LGPS. I was just wondering if I should take out a life assurance to cover me after I've retired, as my death in service benefits wouldnt continue then.

I started thinking about it as my ex (who is also in LGPS) is taking early retirement (57) and does not own a property. When I asked him about life assurance he said he had it through LGPS and I pointed out that this doesn't continue after you retire.