Level Term Life Insurance Guide Discussion

kingstreet

Sorry, I'm not suggesting what you should do.

A joint policy for life and critical illness will pay out on the first death, or the first critical illness.

Then the policy ends.

Two singles will pay out twice if both policyholders die or get a critical illness.

You'll find the cost of life and critical illness together is only a few pennies more expensive than critical illness alone, so splitting the life and CI will be a false economy, as I've said above, there could be two life payouts, two CI payouts or one of each.

mikeyr01

So would you suggest 2 policies each? One life only each and the other life and cic each?

Would we then get 171k for each policy so 342k worth each or just 85,500 life and the same again for cic each?

Thank you for all your help.

kingstreet

One life only each and the other life and cic each?

Why? How much life cover do you want and how much critical illness cover do you want?

If you want the same amount of each, you can do a joint life and critical illness policy or two singles.

Do you want unequal amounts of life and critical illness cover?

Please set out in £ the amounts of cover you want.

Finally, I'm not going to advise you. You are going to have to decide what you want and how best to go about it. Only information is provided here. Otherwise seek advice from a professional.

kingstreet

Here's the example I was referring to earlier;-

Male NS 28NB £142,375 decreasing death or earlier critical illness cover 35 years.

Female NS 32NB £142,375 decreasing death or earlier critical illness cover 35 years.

Total premium £57.78.

If one dies and one gets a critical illness there would be two payouts, same if there were two deaths or two critical illness claims.

If they took one £142,375 joint decreasing death or earlier critical illness cover over 35 years, the total premium would be just under £56, but there would be only one payout on first death, or first critical illness claim, then the policy would cease.

mikeyr01

I appreciate that you cant advise me, i just need the help with the figures.

Our mortgage is for 171k and runs over 34 years.

We would need that amount to go to either myself or my wife if either of us dies or has a CI to cover our mortgage.

If we did a joint policy and I got a CI then we would claim and the would get the 171k or less if its decreasing. But we would both be left without cover and it would cost more to get new cover.

I just want to make sure we are both covered enough for every outcome really which is why i suggested each splitting the 171k in to 2 policies each.

Apologies if im not making sense.

Thanks

kingstreet

I don't understand, why two policies each?

One decreasing death or earlier critical illness policy for you and one for her. Mortgage amount = sum assured, mortgage term = policy term.

Potential for one death payout each, one critical illness payout each, or one of each for each of you. Total, two potential claims.

A joint policy would have potential for only one claim.

Do you want the potential for four claims, two for life, two for critical illness, as that's what two policies each means.

If we did a joint policy and I got a CI then we would claim and the would get the 171k or less if its decreasing. But we would both be left without cover and it would cost more to get new cover.

Yes. That is the justification for doing two singles, one each for life and critical illness cover combined;-

£171k over 34 years for you, death or earlier CI
and
£171k over 34 years for her, death or earlier CI.

mikeyr01

Ok I think that makes sense.

I was thinking about 2 polices each incase one of us gets a CI and survives,we will then be left without any life cover. We would then have to take new policies out for life cover which would be more expensive as we would be older and in poorer health.

kingstreet

So, you don't just want to meet the need for mortgage protection?

You are planning to address other needs as well?

In which case, perhaps you could set out what these needs are and their value, perhaps family protection until your youngest child is 21, or until retirement if you have a non-working spouse?

You may wish to consider family income benefit which is a cheaper way of addressing a lost income in the event of death.

You should seriously consider writing the life cover elements in trust to ensure they are safe from inheritance tax, are paid quickly and without the need for probate directly to your chosen beneficiar(y/ies).

mikeyr01

I guess I should go to an IFA and get some proper advise.

Thank you very much for all your help, it is much appreciated.

AVENUE

Maybe a bit of a morbid question, but do most life insurance policies pay out in the event of suicide or not?