Cavendish Online Quote Help required

super_star_2

Like most unsavy people I took out my Level Term Assurance when I bought my mortage last year. Since reading Martins article about Level Term Assurance:

http://www.moneysavingexpert.com/cgi-bin/viewnews.cgi?newsid1062326514,64086,

Cavendish Online was recommeded along with emphasis "It’s a simple case of the cheaper the better!”.

I'm after a Level Term assurance for £95000 for 25 years.

Whilst gaining quotes online, I have the following questions with some of the criteria:

--> What does "include Pension term assurance" mean?

--> Do I need Pension term assurance? I just want a straight payout if I die.

--> Waiver of Premium - What does this mean?

--> Once the quotes were obtained could someone please clarify what the difference between gross and net is. Which amount is the amount I pay per month?

In addition has anyone used Cavendish? Has anyone successfully applied and recieved thier Level Term Assurance?

Appreciate all your help and advice

dunstonh

--> What does "include Pension term assurance" mean?

Pension term assurance is one of the types of life policies available. The most common types or policies are level term, decreasing term, pension term, pension decreasing term, renewable, convertible, whole of life and family income benefit.

PTA is life cover written under pension rules which allows it to gain tax relief on premiums. This can make it much cheaper than level term. However, some caution has to be taken with PTA as it can wreck primary/enhanced protection if you have that on your pensions and it has to be within your lifetime allowance. Being a pension policy (technically) it is written under a master trust.

--> Do I need Pension term assurance? I just want a straight payout if I die.

Pension term assurance gross premiums are usually a tad more expensive than level term. However, the net premiums are lower than level term. Higher rate relief is available as well.

--> Waiver of Premium - What does this mean?

If you are unable to work as a result of accident or sickness, the life company will pay your premiums after 6 months if you have this benefit.

--> Once the quotes were obtained could someone please clarify what the difference between gross and net is. Which amount is the amount I pay per month?

you pay net of basic rate tax but if you are a higher rate taxpayer, you can claim the extra relief via your tax return.

In addition has anyone used Cavendish? Has anyone successfully applied and recieved thier Level Term Assurance?

They don't have the cheapest gross premiums but because they discount more than anyone else (assuming you havent got existing relationships with an IFA that would discount to a similar level), they usually work out amongst the cheapest. As you are doing it on execution only basis, they will offer you no advice and will not recommend appropriate trusts. That is your job.

MortgageMamma

Your post above indicates your need for advice. there's no point having cover if you don;t know the ins and outs of what it does and does not do, and there may be far more suitable options should you speak to an advisor.

super_star_2

Thanks for all the advice.

How do I go about finding a financial advisor? Will the products offered by a whole of market financial advisor be as cheap of those offered by Cavendish Online?

All I want is Level Term assurance for 25 years for £95k.

dunstonh

How do I go about finding a financial advisor?

www.unbiased.co.uk is the UK database of IFAs. You can postcode search to get your nearest ones. ignore the options to filter the search. Especially the qualifications as that is highly flawed (over the years there have been 4 varients of qualification to be an IFA. If you select one qualification, it will not show those with the others even though they are the same but with a different name. Stupid I know!)

Will the products offered by a whole of market financial advisor be as cheap of those offered by Cavendish Online?

No (not impossible as many IFAs can beat Cavendish on gross premiums with no commission but no IFA is going to come to your home, research, recommend, write and report an implement the policy with a lifetime of liability for the advice given for just £35. If they had other business with you, then they may).

All I want is Level Term assurance for 25 years for £95k.

Does it need to be in trust (i.e. to reduce/avoid inheritance tax)? Is pension term assurance more appropriate for you because its cheaper if you qualify? Plus the master trust can be useful.

Many people take out level term assurance without realising that 40% of the sum assured could go to Gordon Brown. Whilst a tied adviser could be double Cavendish on pricing, an IFA/independent protection adviser may only be a pound or two more expensive. If a trust is required, the tax could be £38,000 in your case if not done correctly. Is that worth the pound or two a month you will save? Plus if you do qualify for pension term assurance, the adviser would utilise that. AND, a number of the pension term assurance providers only make their product available through advice and not quote portals. This includes two of the cheaper providers. This means Cavendish cannot offer these providers to you.

In summary, you can do it yourself and take the gamble you have done it right. Or you can get someone to do it for you and know it has been done right (and if not, they have a liability for life on the advice given).

plumb1_2

dunstonh wrote:

Does it need to be in trust (i.e. to reduce/avoid inheritance tax)? Is pension term assurance more appropriate for you because its cheaper if you qualify? Plus the master trust can be useful.

Many people take out level term assurance without realising that 40% of the sum assured could go to Gordon Brown. Whilst a tied adviser could be double Cavendish on pricing, an IFA/independent protection adviser may only be a pound or two more expensive. If a trust is required, the tax could be £38,000 in your case if not done correctly. Is that worth the pound or two a month you will save? Plus if you do qualify for pension term assurance

In summary, you can do it yourself and take the gamble you have done it right. Or you can get someone to do it for you and know it has been done right (and if not, they have a liability for life on the advice given).

I am also looking to take out a Life policy, I have read someware, that if your pension is below 1.5million, now and in the future, that you wouldn't pay tax on the insurance policy, is this correct.

I am under the impression that if your spouse was the benifactor they wouldn't pay tax anyway, under inheritance.

MortgageMamma

are you talking about pension term assurance?

dunstonh

I am under the impression that if your spouse was the benifactor they wouldn't pay tax anyway, under inheritance.

There is no IHT between spouses. However, if its for family protection, the policy could be placed in trust to the children with the partner as trustee. This would take the life policy totally out of the estate on second death which is where most people's IHT planning tends to go wrong.

plumb1_2

dunstonh wrote:

There is no IHT between spouses. However, if its for family protection, the policy could be placed in trust to the children with the partner as trustee. This would take the life policy totally out of the estate on second death which is where most people's IHT planning tends to go wrong.

So if i just want the wife to have the dosh, pension insurance is the way to go?

But if a decide the wife gets 70k, and 3 children( 26,21,14) get 10k each, and i put it into trust, with her as trustee, how would i go about setting this up, and is pension insurance they way?

Thanks for you help so far.