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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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  • Where would I find a "whole market broker"? Do you mean like Cavendish and Moneyworld?

    The third method sounds intriguing. Any clues, links, etc?

    Thanks again.
    The oak sleeps in the acorn, the bird waits in the egg; and in the highest vision of the soul, a waking angel stirs. Dreams are the seedlings of realities.
  • Hi, have just been reading up on life assurance and am so confused right now. I am 25 years old and have a partner and two children, my partner already had life assurance so am only looking for myself. I read on the money saving website about brokers and commission and fees and was a bit confused. I went onto One of the sites and it said I paid an admin fee and got the cheapest price available, or I could do the commission based one where they keep a percentage of the commission but use the rest of it to lower the premiums but the premiums a actually more! How is this?? I really have mo idea what kind of assurance I need or how much etc etc so if any one could help I would really appreciate it,

    Zionism
  • Hi, have just been reading up on life assurance and am so confused right now. I am 25 years old and have a partner and two children, my partner already had life assurance so am only looking for myself. I read on the money saving website about brokers and commission and fees and was a bit confused. I went onto One of the sites and it said I paid an admin fee and got the cheapest price available, or I could do the commission based one where they keep a percentage of the commission but use the rest of it to lower the premiums but the premiums a actually more! How is this?? I really have mo idea what kind of assurance I need or how much etc etc so if any one could help I would really appreciate it,

    Zionism

    If that is the case then buying from a website could be a poor choice, however cheap it is.

    To put it simply:

    If you use an Independent FInancial Adviser they will research the whole of the market, after finding out your individual circumstances, and recommend a policy that suits you. Generally speaking for business like this the adviser gets paid a commission from the insurer ( which is built into your premiums ). The adviser can however remove the commission and charge a fee for his services but on protection business this is a rarely chosen option.

    If you use a website as Martin suggests - then you have to find the best policy, choose from the options available and you have very little consumer protection if it it the wrong choice. YOu benefit from a cheaper policy as there is no commission built in but you get no advice and take all the responsibility yourself. Thats fine if you know what you are doing but you clearly dont.

    Where protecting your family or yourself is important, picking the RIGHT policy is much more important that picking the CHEAPEST policy.
    I am a Financial Adviser specialising in Mortgages, Protection, Health and Medical Insurance. I also write wills. All information posted on this site is for discussion only, and should not be taken as advice.
  • The more I read the less I know.

    Thought about DIY but it seems a little more complicated than buying car insurance etc given the need to setup trusts, inheritence tax implications etc.

    Before I started reading I was of the mind to buy one policy to cover all eventualities but now realise this may not be the best solution.

    I am now thinking of getting:
    To cover mortgage - decreasing term cover - 2 single policies (2 lifes)

    To cover kids - level term cover increase with inflation put into a trust - 2 single policies (2 lifes)

    Tell me if I'm on the right track. Where is the best place to find an IFA with a good track record?
  • m0gw41m0gw41 Forumite
    4 posts
    My wife and I are both in our early 30s with no children and 3 years into a reasonably large 25 year mortgage on our home. I'd like to get the Decreasing Term Insurance to pay off the mortgage if one of us dies before it is repaid. At this stage I'm not interested in critical illness or level term amounts as we both have jobs that can support ourselves should one of us die. I am going to go through the Cavendish route but I have a few questions regarding this type of cover:

    1. I've put in the amount on money left on the mortgage and the remaining 22 year term, is that right? Does this have to be exact or can I overestimate?

    2. Does the payout follow the mortgage exactly or do they just guess based on an assumed percentage? As we are on a tracker the overall value of the mortgage can't be predicted.

    3. What happens if we upsize our mortgage, can you usually modify these policies or do you get a new one to cover the difference?

    4. What happens if we sell the house and decide to rent, is it possible to terminate these contracts easily, if we had no home and kept it would it still payout a lump sum if it was within the original term?

    5. If circumstances change (such as an illness) do we have to inform the life insurance company if it is a guaranteed type?

    Thanks in advance for the advice!
  • Important update! We have recently reviewed and updated our Forum Rules and FAQs. Please take the time to familiarise yourself with the latest version.
  • abbyrabbyr Forumite
    1 posts
    Can anyone help. I have just purchased my first home and have no idea what life assurance I need. The mortgage is about £120,00 and so far I will be paying this off for the next 35 years unless I am lucky somehow. I am confused as to how it works. I am not married but living with my partner. If I were to die my 'estate' would go to my parents which is fine as I don't have a ring on my finger yet, although they would pay off my mortgage so my partner were not left with a huge mortgage on his own.

    what confuses me is that if I take cover out now for the 35 years until my mortgage ends I have no idea what will happen in my life up until then. If I buy a new house which is worth more money would I need to change life assurance to cover the extra cost. If I have children will I need to change it again to cover their standard of living? How can I predict what will happen in the next 35 years?

    How much cover would I need to cover the mortgage, funeral expenses, children, loans. Am i committed to a single policy for the next 35 years are can they be changed and adapted to suit a changing life.

    Any advice would be appreciated.

    thanks
  • kingstreetkingstreet Forumite
    36.5K posts
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    Did you buy the property as joint tenants, or tenants in common? Your share of the property only passes into your estate in the latter case. Joint tenants receive the deceased's share on death.

    You can cancel policies and take out new ones, subject to your health, at any time, so you won't be buying a policy for the next 35 years. As your circumstances change, your needs change, so your cover will need to change too.

    If you both want the mortgage paid off on death you could take a joint mortgage protection policy with cover which falls as the mortgage debt falls. This is the cheapest form of cover.

    Alternatively, you could take level cover which could then provide funds over and above the mortgage repayment (as it stays the same as the debt falls). Separate policies on each of you, written in trust for the other, would be both tax efficient and helpful as the benefits are paid outside your estate and directly to the beneficiary.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
  • dunstonhdunstonh Forumite
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    what confuses me is that if I take cover out now for the 35 years until my mortgage ends I have no idea what will happen in my life up until then. If I buy a new house which is worth more money would I need to change life assurance to cover the extra cost. If I have children will I need to change it again to cover their standard of living? How can I predict what will happen in the next 35 years?

    You cover the financial need. If the need changes then you can change it. oVer time the need will change or you will get more needs (which means you get more policies/segments to cover them)
    How much cover would I need to cover the mortgage, funeral expenses, children, loans.

    Best not to try and bundle it into one policy. It wont work and you will just end up paying more than you need to.

    Treat each of the major needs individually.
    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.
  • VJ_VJ_ Forumite
    64 posts
    Ninth Anniversary Combo Breaker
    dunstonh wrote: »
    Best not to try and bundle it into one policy. It wont work and you will just end up paying more than you need to.
    Not necessarily - If you're getting level term life assurance (as I'm doing as part of buying my first flat), the cheapest way seems to be to take it out for as long as possible; my mortgage is only 63,000 over 25 years, but I can get 40 years of £200,000 cover for under £10\month as I'm only 28.

    If I get run over tomorrow, that insurance will cover my mortgage, funeral, cremation & any unforeseen costs* with plenty to spare.
    Hopefully the same policy will still cover most\all of that in 5\10\15 years time when I'll (hopefully) have a bigger house, family etc. but I'll still only be paying under £10\month.

    Why bother with many separate policies that only get more expensive as I get older, when I can have one fixed at a very low rate until I'm 68?



    *Currently, my only other debt is my student which is written off at death.
    ~share and enjoy~
  • edited 12 May 2011 at 6:50PM
    stephenni1971stephenni1971 Forumite
    895 posts
    edited 12 May 2011 at 6:50PM
    VJ_ wrote: »
    Not necessarily - If you're getting level term life assurance (as I'm doing as part of buying my first flat), the cheapest way seems to be to take it out for as long as possible; my mortgage is only 63,000 over 25 years, but I can get 40 years of £200,000 cover for under £10\month as I'm only 28.

    If I get run over tomorrow, that insurance will cover my mortgage, funeral, cremation & any unforeseen costs* with plenty to spare.
    Hopefully the same policy will still cover most\all of that in 5\10\15 years time when I'll (hopefully) have a bigger house, family etc. but I'll still only be paying under £10\month.

    Why bother with many separate policies that only get more expensive as I get older, when I can have one fixed at a very low rate until I'm 68?



    *Currently, my only other debt is my student which is written off at death.

    I think people get too hung up on the 'cheap' way and not the 'right' way.

    Segmented polices are a sensible idea, circumstances and priorities change and rather than having to rewrite your whole protection policy you can amend what you need to.

    Looking back through this thread it is sad that so many claim to have found the perfect route to getting cover through a non advised route like Cavendish and then come on here to ask the opinions of anonymous posters as to how much/how long/do I need CIC and other important questions.

    Cavendish and others give you the tools to do it but without the knowledge of what you need it opens a whole variety of pitfalls - most of which will only be discovered if you die or suffer a serious illness.
    I am a Financial Adviser specialising in Mortgages, Protection, Health and Medical Insurance. I also write wills. All information posted on this site is for discussion only, and should not be taken as advice.
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