Is life assurance necessary? Single and no dependents

pookali

I am in the process of buying a house. I have no dependents and I am single. I have had quotes for life assurance for the mortgage and also income protection cover, they are both around £30/month.

I am 30 and of good health. I have parents who live close by so if I was really ill I could move back with them.

In terms of my finances after mortgage/bills I will have about £1000 each month, so I could afford the assurance but would prefer to put any spare money into overpaying mortgage or towards a pension as I have not got one.

What do people think?

Tammer

Hi,

2 things -

• If life assurance is £30 a month then something is wrong. I would expect it to be less than a tenner a month for you.

• The life assurance and income protection is just to protect you in the years ahead. For example, say in 3 years time you have a partner who lives with you - and you died, the partner would not have the double whammy of you dying and then being evicted from the house by your bank. They're maybe not essential for you right now but they do offer some protection. The income protection would prevent you having the house repossessed if you lost your job.

dunstonh

Its simple. No financial dependents means no need for life cover. Focus on income protection for yourself instead as that is where your need will be.

ACG

Life insurance for you should NOT be £30! Unless your looking for about £300k worth of cover.
Even life and critical illness seems a little on the high side.

As Dunston has said, take a look into Income Protection. For £1k a month benefit i would think you will be looking at around £20-25 a month depending on deferred periods, ceasing ages etc.

kingstreet

Ordinarily, being single with no dependents means there is no need for life cover. However, you need to ask yourself a question or two about your requirements should you die.

I've added a bit on making a will here as I think it's important.

If you die intestate with no life cover, someone is going to have to act as executor for you and negotiate probate with HMCS. They will have to sell the property while trying to protect the equity in the property which is an asset of your estate; while at the same time trying to keep the lender at bay, who, with no payments being made will eventually repossess and sell at the best price they can, regardless of your equity.

If you'd like someone to inherit your home, mortgage free if you die, think about making a will* and think about decreasing life cover for the mortgage. Making a will sets out who should receive your assets on death. Writing a simple decreasing term assurance for the amount and term of the mortgage should be relatively cheap. Write it in trust for the benefit of the person you want to inherit the house. On your death, they get the money quickly, it's outside your estate for tax purposes and they can settle the outstanding mortgage before the lender can rack up too many arrears.

For a male non-smoker 30nb, £100,000 decreasing mortgage protection cover over 25 years, there are several companies quoting less than £6 per month.

*I realise probate is still needed when a will is available but as there are no "dependents" the settlor might wish to name someone not normally in the beneficiary list.