Life Assurance - Not sure my broker has my back!!!!!!!

TCatt

I want to buy a Life Assurance policy to cover myself and my husband that will pay out the full amount after the 1st death.

My broker keeps pushing me to go for a policy that will cover each of us seperately which will pay out an amount on each of our deaths.

Does anyone know which type of policy is better and which one he gets more money from????

Would really appreciate some advice on this. I would prefer the top option but my broker is being so pushy about the second option it's making me suspicious!!!

dacouch

Do you have dependent children and / or a mortgage ?

What reason is the reason you are buying life insurance for in the first place ?

foggytown

TCatt wrote: »

I want to buy a Life Assurance policy to cover myself and my husband that will pay out the full amount after the 1st death.

My broker keeps pushing me to go for a policy that will cover each of us seperately which will pay out an amount on each of our deaths.

Does anyone know which type of policy is better and which one he gets more money from????

Would really appreciate some advice on this. I would prefer the top option but my broker is being so pushy about the second option it's making me suspicious!!!

In your place I would do the following. Flat out ask him how much commission he stands to earn on each option. His response should be interesting.

TCatt

dacouch wrote: »

Do you have dependent children and / or a mortgage ?

What reason is the reason you are buying life insurance for in the first place ?

I have one dependent 5 year old daughter and no mortgage. Thanks for your question.

TCatt

foggytown wrote: »

In your place I would do the following. Flat out ask him how much commission he stands to earn on each option. His response should be interesting.

Thanks for this. I might just do this. I don't know him personally so I have nothing to lose.

lordhaldon

Your broker does have your back. Normally, normally for the cost of the policy fee you will get double the amount of life insurance. For example, if the premium is say £50 per month on a joint life policy, the cost for 2 policies for DOUBLE the amount of life cover will be say £52.50. That way, when the first one dies, the other will still have life cover and all for about £2.50 per month....................... and what does it matter what commission he earns? If he has done you a good job so what. He still has a mortgage to pay. Try telling your solicitor he is charging too much. Hope this helps.

dacouch

I'm not an expert on Life Insurance, but my limited working knowledge is thus.

In your situation, the life Insurance is mainly to pay for providing an income should the bread winner die, or should the home maker die for the bread winner to retire and provide an income so they can look after the child.

Should the worst happen and you claim on the policy, the remaining spouse would then often want to take out further cover to cover them should they also die. Having the double cover would future proof you for this, in addition life insurance is generally more expensive to buy the older you get. So should you not take out the double cover and then decide to take it out in the future after the death of the first spouse you could find it is considerably more expensive.

Hopefully Brize and Dunstonh could correct me if I'm wrong / elaborate further

Have the broker given you a quote for double cover and if so how much extra is it.

Are they including Critical Illness or do you already have any Critical Illness Cover already

Brize

dacouch wrote: »

Hopefully Brize and Dunstonh could correct me if I'm wrong / elaborate further

I'm no expert on life assurance either, so I'll defer to Dunstonh.

For what it's worth, though, I would want two separate policies in the OP's situation. As lordhaldon points out, you can usually get double the cover for only a modest increase in premium.

TCatt: I hope your broker/adviser has suggested that the policies are written in trust.

vaio

lordhaldon wrote: »

.......For example, if the premium is say £50 per month on a joint life policy, the cost for 2 policies for DOUBLE the amount of life cover will be say £52.50. That way, when the first one dies, the other will still have life cover and all for about £2.50 per month............

am i misunderstanding or are you saying that out of a £50 premium £47.50 every single month goes in set up costs, commissions and shareholder profits etc?

and £2.50 is enough to cover the pure insurance side of it?

lordhaldon

vaio wrote: »

am i misunderstanding or are you saying that out of a £50 premium £47.50 every single month goes in set up costs, commissions and shareholder profits etc?

and £2.50 is enough to cover the pure insurance side of it?

No. Sorry for confusing you. Every single life policy has a policy fee. I am saying it is normally about £2.50 to cover the costs of administering the policy. So whereas a joint life first death policy would cost say £50 per month, two single first life policies for effectively double the amount of life cover would cost say £52.50. Try it for yourself. Go to a price comparison website and get say a joint life term assurance quote and then get two quotes with the exact same dates of birth but seperate policies. Oh and whilst I am replying, if the policies are for "legacy's, funeral costs etc etc" then you should use a Trust that is suitable. Phew! :beer:

Sorry I forgot to cover the fact that the only expense you forgot to mention was the actual cost of providing the actual life cover and that is the biggest cost. Commissions are a very small part of the monthly premium and finish after 4 years. So the adviser that arranged the policies for you would only get paid after the premiums had been paid for 4 years. Imagine asking your solicitor or even your garage if you could pay them over the next 4 years interest free!! (Unless of course you pay the broker a fee and then they get paid straight away.) And, if your broker s not offering you the choice of fee or commissions, you should not be using them as the are not a whole of market IFA.

dunstonh

I'm a fee based adviser so commission bias is not something i worry about. However, if you are working on commission basis then it doesnt matter if you take out one policy or twenty. The adviser doesnt earn on case count. They earn on the premium you pay. So whether its £50pm or £30 + £20, they earn the same.

I find most households have uneven insurance requirements and multiple needs. So, its very common to end up recommended 2, 3 or even 4 policy policy segments to cover each of the different needs (e.g. mortgage would be one need, a high earner and a low earner or housewife would have different income replacement needs, there may be short term debts that need covering for a short term only etc or children cover needed to end before retirement).

Single life plans as already said above, can be cost effective and sensible where children are concerned as there will still be a life assurance need on second death and not just first death. The amount may be different but it would be unusual not to have a second death need. A joint life policy would not provide for a second death.