Level Term Life Insurance Guide Discussion

dunstonh

gerrimire wrote: »

Both my wife and I are looking for a level term assurance we are both in our late 60's obviously on a pension, we are the kind of pensioners that have just the pension to live on so it needs to be fairly cheap,it is to bury us should anything happen, it sounds morbid but thats a fact of life we do not want to rely on our kids having to fork out, any suggestions.
Gerrimire

You say you want a level term assurance but your objective is more in line with a whole of life assurance.

Which do you want?

Sparkym_2

Hello

First of all, I love the guides and forums, but as a first time buyer I feel totally lost, and was looking for some more advice.

I have recently bought a house, with an outstanding mortgage of £158000. My mortgage Advisor has given my partner and I a quote for a joint Self Assurance Mortgage. We have been quoted £57.04 pm for a level payout on death or critical illness, or £39.24 pm for a reducing cash sum. Both of these quotes are with Scottish Provident.

First of all do these seem reasonable? We are both healthy 25 year olds. Non smokers. Secondly, which of these two would be the best option?

Following advice from other people i asked my mortgage advisor for options if we were to get inidividual life policies. We were given the following option: both policies £250000 level life cover and £158000 decreasing CIC cover. This would be a joint payment of £61.16 pm.

The policies would be for the term of the mortgage.

I know this is a HUGE post, but i just wanted to make what we had been offered clear. Is one option better than the other? What are the pros and cons? And is the price reasonable?

Thanks for taking the time to read this. i'm looking forward to any replies.

stephenni1971

Sparkym wrote: »

Hello

First of all, I love the guides and forums, but as a first time buyer I feel totally lost, and was looking for some more advice.

I have recently bought a house, with an outstanding mortgage of £158000. My mortgage Advisor has given my partner and I a quote for a joint Self Assurance Mortgage. We have been quoted £57.04 pm for a level payout on death or critical illness, or £39.24 pm for a reducing cash sum. Both of these quotes are with Scottish Provident.

First of all do these seem reasonable? We are both healthy 25 year olds. Non smokers. Secondly, which of these two would be the best option?

Scot Prov are competitive enough, but is he doing research of the whole market or is he tied to one or two companies? As for which is the best option, strictly speaking to cover a decreasing mortgage you should look at decreasing cover - however as the difference is relatively small between decreasing and level some will opt for that and 'build' some extra cover as the years go on.

Following advice from other people i asked my mortgage advisor for options if we were to get inidividual life policies. We were given the following option: both policies £250000 level life cover and £158000 decreasing CIC cover. This would be a joint payment of £61.16 pm.

Thats a strange mix. usually the CIC would include life cover as well as this would normally bring the price down below that of standalone CIC. If the £250,000 additional life cover is for what we would call family protection why is it tied to the term of your mortgage?

I personally am not a big fan of having CIC on a decreasing basis - the older you get the lower your cover and higher the likelihood of a claim.


The policies would be for the term of the mortgage.

I know this is a HUGE post, but i just wanted to make what we had been offered clear. Is one option better than the other? What are the pros and cons? And is the price reasonable?

Thanks for taking the time to read this. i'm looking forward to any replies.

A few comments for you... ask away if you have any questions!

edwardfirst

I was about to take out a level term life policy, but decided to come here first to see if there was any advice before doing so. But reading all these posts is just making it confusing for me. I thought it was just a case of me taking enough cover to cover the cost of paying off the mortgage and then leaving a lump sum over for the remaining partner. I filled in a couple of quotes and simply put that I wanted £150000 of cover. That would be enough to cover the house and leave some over to help take care of my children. As far as I believed that sum would automatically go to the surviving partner too? I am getting quotes of around £15pm for this. I am unsure what to do now, is it not as simple as this? Do I need to take some advice from somewhere? Thanks in advance.

dunstonh

I thought it was just a case of me taking enough cover to cover the cost of paying off the mortgage and then leaving a lump sum over for the remaining partner.

Typically you would use at least two policies/segments for that as it is two different need areas with almost certainly two different timescales.

I filled in a couple of quotes and simply put that I wanted £150000 of cover.

That isnt very much nowadays. Especially if you have young children.

As far as I believed that sum would automatically go to the surviving partner too?

Depends on how you write the policy and if you place it in trust or not and if you are married or not.

Do I need to take some advice from somewhere?

If you need advice then you do. If you don't then you don't. Only you can decide if you know enough of what you are doing.

tazzababe

I am a single parent and am considering getting life insurance. I have had a quote from L&G and LV, both are approx £6 per month. I don't have a mortgage (may do in a couple of years) and I will be setting up a trust for my daughter.
Is there anything else I should consider?

weighty1_2

Hi Tazzababe,

Personally, (presuming that you work) I'd consider arranging an income protection (PHI) policy over life insurance. Statistically you are far more likely to need to claim on this and without any financial assistance in the event of long term ill-health then you could end up in a situation whereby you are reliant on your your daughter as she grows up!

Unfortunately, the cost of IP/PHI cover is significantly more expensive for females than males, however, some of the Friendly Societies (Exeter Family Friendly, Shepherds Friendly, Cirencester) do offer PHI plans with the same rates for men and women, althought the premiums do increase a bit each year generally.

In relation to the life insurance, as long as the term of the cover protects your daughter through to her likely financial independence and the sum assured is enough to ensure the cost of raising her and giving her the experiences you would want to have, then that's pretty much everything taken care off. Just carefully consider who the trustees of the plan are as they will ultimately have overall say on how the life insurance is spent.

tazzababe

Thanks Weighty1,
Yes I do work- I'm a teacher! Never heard of PHI before, will be having a look into that.

Thanks for the advice, much appreciated:beer:

stephenni1971

weighty1 wrote: »

Hi Tazzababe,

Personally, (presuming that you work) I'd consider arranging an income protection (PHI) policy over life insurance. Statistically you are far more likely to need to claim on this and without any financial assistance in the event of long term ill-health then you could end up in a situation whereby you are reliant on your your daughter as she grows up!

Unfortunately, the cost of IP/PHI cover is significantly more expensive for females than males, however, some of the Friendly Societies (Exeter Family Friendly, Shepherds Friendly, Cirencester) do offer PHI plans with the same rates for men and women, althought the premiums do increase a bit each year generally.

In relation to the life insurance, as long as the term of the cover protects your daughter through to her likely financial independence and the sum assured is enough to ensure the cost of raising her and giving her the experiences you would want to have, then that's pretty much everything taken care off. Just carefully consider who the trustees of the plan are as they will ultimately have overall say on how the life insurance is spent.

Seriously????

Single parent with child, and you would place PHI over life cover??!!!

weighty1_2

Income protection (formerly PHI - permanent health insurance) provides a long term income in the event of incapacity. Presumably as a teacher you will receive sick pay to the tune of 6-months full pay and 6-months half pay?

The problem is, if you are ever unlucky enough to be unable to work for 6-12months then you are obviously pretty unwell. Statistics show that if you're off work for more than 6-months then there's something like a 70% chance of being off work for at least 12-months and if you are off after 12-months then there is a 80% chance that you'll be off work for at least 5years!!!! (bit of guesswork in the stats, but I know I'm not a long way off).

LV= publish claims stats for their income protection plans and the average length of a claim is 7-years! Unforunately, teachers are classed as a fairly high risk occupation due to the stress involved. For example a female, non-smoking teacher, aged 32, arranging £1,000/month benefit until age 55, deferred by 12 months would expect to pay around £33 with LV= or £35/month with Friends Provident - not cheap.....but far more likely to be claimed on than life cover....plus LV= allow you to tag on the life insurance as an additional benefit which provides a slight discount on the overall cost.