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Death in service benefit v level term assurance
LoopyPrune
Posts: 205 Forumite
Im paying £7.55 to Scottish Widows for level term assurance on death only, taken out on a £34,000 mortgage. The company im with have closed the final salary pension scheme and have offered us a stakeholder and increased death in service as compensation. It works out at 4x my £25,000 annual salary paid to whoever I nominate i.e. my partner. Question is is it worth carrying on with the level term assurance when it would only ever pay out the remainder of my mortgage. Im thinking the £7.55 would be better spent going into this stakeholder where the company would match it plus with tax relief it could be worth £15 extra a month into my retirement pot.
Credit card and overdraft at 18. 2 loans and 3 storecards at 20. University education flushed down the toilet through debt at 22. Car finance at 23. Car repossessed at 24. Rock bottom at 25. Learnt my lesson 26-33. Now 34 with a mortgage on an affordable house, a car paid for with cash and a bank account in credit. I learnt the hard way.
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Question is is it worth carrying on with the level term assurance when it would only ever pay out the remainder of my mortgage.
Depends on what your financial needs are. If the Group life cover covers all your financial needs then you dont need any more. If it doesnt cover your financial needs then you still need it.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
I would guess that taking away all funeral costs (also a member of a union so would recieve some money for funeral) and completing the mortgage would still leave the missus a good £60,000 if I dropped down dead tomorrow:eek: I understand she also get whatevers built up in the stakeholder pot also around £5k atm. I would say that would give her a pretty good start as the everything we own is paid for and my only debt is any outstanding balance on credit cards which would die with me yes? So I would say yes it should meet financial needs. Although not having to pay the mortgage off with the 100k would also be nice I just feel the money would be better spent.Credit card and overdraft at 18. 2 loans and 3 storecards at 20. University education flushed down the toilet through debt at 22. Car finance at 23. Car repossessed at 24. Rock bottom at 25. Learnt my lesson 26-33. Now 34 with a mortgage on an affordable house, a car paid for with cash and a bank account in credit. I learnt the hard way.0
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and my only debt is any outstanding balance on credit cards which would die with me yes?
No.
The debt would become part of your estate.0 -
Ah ok not to worries it aint an amazing amount anyhowCredit card and overdraft at 18. 2 loans and 3 storecards at 20. University education flushed down the toilet through debt at 22. Car finance at 23. Car repossessed at 24. Rock bottom at 25. Learnt my lesson 26-33. Now 34 with a mortgage on an affordable house, a car paid for with cash and a bank account in credit. I learnt the hard way.0
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I would say keep it going - if you stop working for that company and have no cover it could well be a lot more expensive to take out new insurance for the same amount.0
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But the amount would never be the same as it reduces inline with our repayment mortgage. So year upon year I would be getting less. I understood it would be level term when I first took out the policy which was fine at the time. But with changes for the better in my finances it won't be much longer before we start overpaying our mortgage soon as the current deal finishes in May 2011. At the end of the day its all crystal ball material, but I have to base it on my current requirements and the way I see it is im paying for something that pays out 2/3rds less then something else I will be getting for free.
Maybe its time to ditch the mortgage linked assurance and take out another policy with differing terms.Credit card and overdraft at 18. 2 loans and 3 storecards at 20. University education flushed down the toilet through debt at 22. Car finance at 23. Car repossessed at 24. Rock bottom at 25. Learnt my lesson 26-33. Now 34 with a mortgage on an affordable house, a car paid for with cash and a bank account in credit. I learnt the hard way.0 -
If it's level term it won't reduce in line with your mortgage - it will be the same throughout its term. That's what level term means.
It's cheap life insurance - I'd keep it. You are that much older now than when you took it out so a replacement will be more expensive.0 -
Sorry what I meant by level term was the amount they pay out reduces but the payments stay the same throughout the period of cover. Not really up on all the techincal jargon.Credit card and overdraft at 18. 2 loans and 3 storecards at 20. University education flushed down the toilet through debt at 22. Car finance at 23. Car repossessed at 24. Rock bottom at 25. Learnt my lesson 26-33. Now 34 with a mortgage on an affordable house, a car paid for with cash and a bank account in credit. I learnt the hard way.0
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LoopyPrune wrote: »Sorry what I meant by level term was the amount they pay out reduces but the payments stay the same throughout the period of cover. Not really up on all the techincal jargon.
What you describe is decreasing term assurance.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0
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