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Level Term Life Insurance Guide Discussion

edited 5 October 2010 at 7:26PM in Insurance & Life Assurance
497 replies 149.7K views
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  • I Have just read the MSE article and everyones responses. I was hoping someone could help me.

    I'm a bit confused with mortgage life assurance and level cover. If I had a repayment mortgage of £100,000 for instance and I wanted cover to clear the mortgage and I also wanted extra for living expenses what is the best way to do it?

    Would I take out a mortgage life assurance policy for the mortgage and a level life policy for the extra or would I just take out a level term policy to cover the lot? Which would work the best and be most affordable? To me, it would make more sense to have both so you would know exactly what you were covered for. This may however not be cost effective.

    Thoughts appreciated..
  • dunstonhdunstonh Forumite
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    I'm a bit confused with mortgage life assurance and level cover. If I had a repayment mortgage of £100,000 for instance and I wanted cover to clear the mortgage and I also wanted extra for living expenses what is the best way to do it?

    A decreasing term assurance for the mortgage (assuming its capital & repayment mortgage) and a level term assurance and/or family income benefit policy for the family protection. i.e. two different needs means two different products. Many modern life policies allow you to have multiple segments under the same policy. So, you can set up multiple needs and types of cover under the same plan.
    To me, it would make more sense to have both so you would know exactly what you were covered for. This may however not be cost effective.

    it is cost effective as the chances of your family protection needs having the same term as your mortgage protection needs is unlikely. Also, what happens if your mortgage changes in future needs (you borrow more or change the term). You would then have to potentially re-write the lot again or be stuck with a policy that doesnt fit your needs.
    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.
  • First of all, thanks Martin for naming Contact Insurance in your 'What is Level Term assurance' article. Certainly the article raises all the salient points. Life cover is important and can be used and viewed in many ways.

    On the unadvised / advised point, the main area of concern we have, is the number of people who buy life insurance to provide for their dependents in the event of their death, yet remain unaware of attaching a trust in such situations. I am all for reducing the burden of cost, as long as the full benefits of the policy are there when they are needed - it is all a bit of a false economy if low premiums without advice result in inadequate cover.

    David Yates
    Head of Marketing and Design
    Contact Insurance
    ____________________________________

    I'm spending a fortune trying to save money
    ____________________________________
  • dunstonh wrote: »
    A decreasing term assurance for the mortgage (assuming its capital & repayment mortgage) and a level term assurance and/or family income benefit policy for the family protection. i.e. two different needs means two different products. Many modern life policies allow you to have multiple segments under the same policy. So, you can set up multiple needs and types of cover under the same plan.



    it is cost effective as the chances of your family protection needs having the same term as your mortgage protection needs is unlikely. Also, what happens if your mortgage changes in future needs (you borrow more or change the term). You would then have to potentially re-write the lot again or be stuck with a policy that doesnt fit your needs.


    Thanks for that. I have recently been offered a level policy to cover my lifestyle and house? When I pointed out to the advisor that the payout would be variable depending on how much of my mortgage was left he looked at me blankley. I tried explaining to him that the cover he was offering would be fine if I died in 15 years time as most of my mortgage would have been paid if however I died tomorrow I'd still have a large mortgage and it would not leave enough to support my family. Makes sense to me, shame my advisor did not get it!
  • paylesspayless Forumite
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    IMHO decreasing term can have a place in family protection as well as mortgages. Its no real difference to FiB ( family income benefit) in that the total payout reduces as time goes by - ( reflects the reducing costs - ie you need more to see a 3 yr old to independence than you would a 17 yr old) in fact some people convert FiB polcies to a lump sum on death anyway .

    Maybe not a text book solution - but a good adviser will investigate options - Means if budget is an issue you can still go for high initial cover when its really needed
    Any posts on here are for information and discussion purposes only and shouldn't be seen as (financial) advice.
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  • ISAmadISAmad Forumite
    48 posts
    Please could someone advise me?

    I need to buy Life Assurance. I'm British. I live in the UK (for now). In two months I intend to emigrate to Japan.

    There seems to be a big market in expat Life Assurance polices but why is that? When does a standard UK-bought policy suddenly stop covering a Briton overseas?

    I've tried looking at T&Cs online but can only find the Key Facts as opposed to the whole document.

    Any help would be so much appreciated! Thank you!:beer:
  • mac.dmac.d Forumite
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    Help! I've just been trying to read up on life insurance, I never realised it was so confusing...

    If I just want money to cover funeral costs etc paid out when I die what should I be looking for. Is it a whole life insurance policy I require, or am I as well paying for a funeral plan with an undertaker rather than life insurance?
  • dunstonhdunstonh Forumite
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    If I just want money to cover funeral costs etc paid out when I die what should I be looking for. Is it a whole life insurance policy I require, or am I as well paying for a funeral plan with an undertaker rather than life insurance?

    Whole of life assurance plan is typically the type of life assurance that would fit that objective. However, pre-pay funerals can also be a suitable option.

    Internet has very little coverage of whole of life assurance plans. Avoid the over 50s plans as they are usually poor value for money.
    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.
  • mac.dmac.d Forumite
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    Ta much dunstonh, I'd wondered how I couldn't find much online myself about whole of life assurance plans, but at least I know that's what I should be looking at now!
  • Hi All,
    I am looking at our life insurance and don't really know where to start.
    We don't own a house, it comes with the job, so if anything were to happen to my husband, myself and my child would be without a home or income.
    We want 250,000 cover until retirement, but should we look for increasing benefit to increase inline with inflation, and is this likely to put our premiums up significantly (which we wouldn't be able to afford)
    ALso, I looked online through here and did a quote myself and it was £13 a month cheaper than that of a financial advisor, I know that it was a one off fee which will make a small difference - but why so different?
    Can anyone help or have any recommendations?

    Thank you.
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