LIFE ASSURANCE QUERY - JOINT POLICY I THINK

walsh_3

MYSELF AND MY HUSBAND HAVE LIFE ASSURANCE POLICIES WITH GUARDIAN, WHICH INCLUDE CRITICAL ILL COVER, DESIGNED TO PAY OUT £115,000 FOR EACH OF US, IF ONE OR BOTH US DIES WITHIN NEXT 15 YEARS.

MY HUSBAND EARNS PROBABLY 3 TIMES WHAT I EARN SO I DON'T UNDERSTAND WHY WE ARE INSURED FOR SAME AMOUNT?

LOOKING BACK I THINK THIS WAS MAYBE DONE SO IT PAID OUT TWICE (ON EACH OF US) IF WE BOTH DIED AT THE SAME TIME.

IS THIS THE BEST WAY OF DOING IT?

WE PROBABLY PAY £45 PER MONTH BETWEEN US FOR THE INSURANCE AND CRITICAL ILLNESS COVER (MY HUSBAND IS A SMOKER). THIS SOUNDS QUITE HIGH - I PRESUME IT IS BECAUSE OF THE CRITICAL ILLNESS COVER?

I UNDERSTAND MARTIN DID A PROGRAMME/ARTICLE ABOUT PITFALLS OF CRITICAL ILLNESS COVER BUT I DIDN'T SEE IT.

dunstonh

MY HUSBAND EARNS PROBABLY 3 TIMES WHAT I EARN SO I DON'T UNDERSTAND WHY WE ARE INSURED FOR SAME AMOUNT?

If you were to die, would your husband still be able to work or would he look after children (if any).

If the policy is joint, then it is normal to have the same sum assured. If they are single life policies then the amounts are set at whatever you decide you are willing to pay for.

LOOKING BACK I THINK THIS WAS MAYBE DONE SO IT PAID OUT TWICE (ON EACH OF US) IF WE BOTH DIED AT THE SAME TIME.

IS THIS THE BEST WAY OF DOING IT?

You need to clarify if its joint or single life. You also need to decide if £115,000 is enough cover. Assuming 5% return, you would be looking at only £5750 p.a. income (assuming you would be needing an income in the event of your husband's death or he wants to stop work in the event of your death).

WE PROBABLY PAY £45 PER MONTH BETWEEN US FOR THE INSURANCE AND CRITICAL ILLNESS COVER (MY HUSBAND IS A SMOKER). THIS SOUNDS QUITE HIGH - I PRESUME IT IS BECAUSE OF THE CRITICAL ILLNESS COVER?

That premium sounds very acceptable although without knowing your dates of birth, its hard to say. Critical illness cover usually doubles your premium.

I UNDERSTAND MARTIN DID A PROGRAMME/ARTICLE ABOUT PITFALLS OF CRITICAL ILLNESS COVER BUT I DIDN'T SEE IT.

Dont know. However, critical illness cover does have quite a high claims rate and is nearly on par with life cover claims. The important thing is to make sure the policy covers you for the right things as different providers have different levels of cover. Also, there are budget critical illness levels of cover and comprehensive levels. Older plans (with guaranteed premium/cover) often have more benefits than modern plans, even if guaranteed and comprehensive. So although you may be able to get cheaper premiums now, the level of cover may not be as good.