Life Assurance

Lady_maverick1979

Just looking for a wee bit of clarification...

We're in the process of buying a new house (entry in March - sold our previous property in September, currently in rented accommodation in Inverness while my husband is on placement, then moving long-term to Aberdeen) and are obviously looking at our life assurance.

I've read through the MSE article, but am still a wee bit confused. Can someone clarify for me?

Husband has salary of £56k, while I am a stay-at-home mum with our 20-month old son. We're planning another baby next year, so I won't be going back to work before 2010. Mortgage is for £197k.

Am I right in thinking that we would better with level term assurance rather than decreasing term? And should we take it for the 25 year term of the mortgage, or just 21 years when our son should be out of full-time education? (Although, once I get back to work we would hope to start hammering away at the mortgage and get it paid back a good bit earlier).
And how much cover would be appropriate...the article mentions 10x salary, so half a million???

Thanks in advance for any advice offered.

M.xx

dunstonh

Am I right in thinking that we would better with level term assurance rather than decreasing term?

No. A level term alone doenst match your need.

And should we take it for the 25 year term of the mortgage, or just 21 years when our son should be out of full-time education?

You match the need. So, mortgage life cover should match the term of the mortgage.

And how much cover would be appropriate...the article mentions 10x salary, so half a million???

What is your financial need? How much do the pensions you have pay out? Is there death in service provided by employer? If you died, would your husband stop work and look after children or would you want childcare?

Thanks in advance for any advice offered.

Although advice is clearly what you need, we cannot give that on the forums as it is against FSA rules and board rules in areas which are regulated. So anything mentioned here is discussion only.

You have two needs. Mortgage and family. This would indicate two plans being need. Possibly even 4 plans or a packaged plan as your husband is a higher rate taxpayer and can get 40% tax relief on pension term assurance and pension decreasing term assurance.

Using a 10x salary multiple is a very crude and old fashioned way working out what you need and will almost certainly result in an inaccurate requirement and probably over insure yourself costing you more money than you need it to. Not exactly money saving!

Lady_maverick1979

Thanks dunston for the reply.

In going through our paperwork, I've realised that my husband is actually due a review of his income protection with Medical Sickness. They offer an FA service as part of their cover, so I think we'll make an appointment to speak to our local advisor. I'm not sure if they're independant in terms of what products they sell, but I would think they should be able to advise us on what we need to cover ourselves at least.

Thanks again.

L_M.xx