Insurace Help Needed

Mc4ndy

Hi,

I've never really been one for having much insurance/assurance other than the minimum.. but now I find myself wondering, however it's not a subject I know anything about. Please can someone point me in a good direction or offer some advice.. I read Martins guides on it, so I have that knowledge.

I live with my GF and she's due to have a baby next year. We have a mortgage of a reasonable amount, but I should be able to pay about half off this soon from an inheritance. Mentioned that since one the products Martin mentioned was Mortgage Life assurance which seems linked to your decreasing mortgage, and if I do this then mine will take a big hit. We plan to get married next year also.. Don't know if the policy is best sole or joint either.

Just wondered what would be a normal kind of policy to take out, and for what term? I'm not really up for full on medical assessments and having my genetic code broken down to give me my life expectancy to the nearest millisecond either. Just a few questions on if I smoke, tame lions, wrestle alligators that kind of thing.. Currently I don't have any insurance other than car, and building and contents on the house. It would be nice to think that if one of those alligators does get the better of me one day then my GF and son/daughter get a bit of cash.

oh just noticed I put insurace in the title not insurance.. isn't this editable too?

jasonking

If your mortgage is a repayment mortgage then you should look at a joint life decreasing term assurance for the remaining term of your mortgage. If you plan to make a lump sum reduction to your mortgage then you need a level of cover which equals what your o/s mortgage value will be after the repayment. You should also consider adding critical illness to this as an optional extra...this means that the mortgage will be repaid if either of you die and (if you include CI) also if either of you suffer one of the covered critical illnesse (cancer, heart attack, stroke etc).

Over and above this you should put in place extra term life cover for both of you so that in the event of death the mortgage is paid off but the survivor can still afford the live, eat, heat the house, pay for child care etc.

Finally Income Protection (PHI) for both of you so that if you are off work sick then you will still have a long term income coming in.

There are lots of other things to consider like using a trust, levels and term of cover etc but this will set you off in the right direction. Also you might not be able to afford all the things I have listed so you may need to make some choices.

I do recommend you seek advice from an IFA, there are telephone based ones if you dont fancy a face to face meeting.

Good luck

Mc4ndy

Thanks for your post. I've had a very small look into this and I see it's a pretty vast subject. I like the idea of an execution only broker such as Cavendish once I get my head round what I want.

I don't have any gel for seeing an IFA. I don't believe any IFA is fully I. Perhaps what I mean is I have my best interest at heart an IFA has theirs, at some point these two WILL conflict.

Also I am not certain what you mean by unable to afford, like it's a commodity I would desire if only I had enough money. Like the insurance companies calculating risk on their policy holders the same works in reverse. As a potential customer I need to weigh up the chances of x happening against the actual cost. As I mentioned in my post I'm not one for insurance. I can insure my fridge, my washer, my central heating, my cooker, my kettle, my toaster, my computer, my boiler, my car against breakdown... really the list is endless... but I don't. Why? Because it's too mental. Maybe none will go wrong, then I paid out for nothing. Maybe a few will, and I'm most likely still in front. Maybe they all do, then I'm perhaps pretty damn unlucky.

I thank your for your advice however, I'm sure I fit neatly into a stereotypical category that insurers have, so based on my rant what do you think would be a good level of insurance. Basically a none paranoid person who wants a bit of cover but doesn't want to insure against every perceivable eventuality.

Your opinion only I understand, not your professional advice.

jasonking

http://www.torquilclark.com/life/calculator will give you an idea about a level of cover for life insurance, go for CI cover to cover your debts (mortgage etc) and then Income Protection to the max. All for both of you.

Free 'advice' from an award winning insurance IFA and then buy it from an execution only broker...thats life I guess!

Good luck anyway

dunstonh

I don't have any gel for seeing an IFA. I don't believe any IFA is fully I. Perhaps what I mean is I have my best interest at heart an IFA has theirs, at some point these two WILL conflict.

I cant see any conflict.

Basically a none paranoid person who wants a bit of cover but doesn't want to insure against every perceivable eventuality.

Non paranoid? Your statement on IFAs suggests different.

Ok, down to the nitty gritty, what type of life cover are you looking at?
Family Income Benefit, Level Term assurance, pension term assurance, decreasing term assurance, pension decreasing term assurance or more commonly a combination of some of these?

Do you need to place the policy in trust? (quite possible seeing as you are unmarried).

What sum assured do you require? Have you included state benefits in that or not? Do you have any pension arrangements that can be included? Any employer benefits?

Mc4ndy

dunstonh wrote:

I cant see any conflict.

Well if it's fee based to client then probably not. If it's commission based then It could be. I'm not paranoid I just don't trust most folk, especially where money is concerned

Thanks for your post.

Something like decreasing term with some CI and possible income protection sounds about right.

We're getting married next year, I don't want to put it in trust.

jasonking

"I'm not paranoid I just don't trust most folk" - Thats paranoia!

Seriously though you are on the right lines...if you dont want to use a trust then you must love Gordon Brown, as he may well get his hands on 40% of the payout if you dont use one!

Mc4ndy

Ok, lets get this bit off my chest. It's only paranoia if it's baseless and I think we can assume that the very fact this whole website exists is because when it comes to all things financial, be it banks, insurance, or whatever there is a lot of misselling, bad advice and general complete and utter rip-offs, all dressed up to sound attractive with many many hidden terms and conditions. Mis-sold endowments, mis-sold pension funds... I really don't think putting ALL your trust in one person or institution, fee paying or not is a good idea. To me it seems best to gather as much info as you can from as many sources as possible and then to make my OWN decision based on what I think I want, not what someone else thinks I need.

My mortgage lender wanted me to take insurance out with them, it was 4x more expensive than I could get elsewhere for like. My travel agent wanted my to take their holiday cover, it was 10x more expensive then I could get elsewhere for like. Ok they are not independant advisors, accepted, but still if I beleived them I would be paying massivley over the odds for something - should I trust their advice?

I don't have a baseless suspicion of the motives of others, I just have a firm grasp on the way this world seems to work. I don't have an issue with talking to a Financial Advisor, but in no way would I take their information as gospel without verification and cross references to other information. You can learn a lot for free these days with a little time and understanding.

Anyway I thought I was looking at a decreasing term, which is to cover the mortgage not for looking after dependants. Why would I put that in a trust? I thought Gordon had tightened the tax laws on in trust life policies a bit?

dunstonh

My mortgage lender wanted me to take insurance out with them, it was 4x more expensive than I could get elsewhere for like. My travel agent wanted my to take their holiday cover, it was 10x more expensive then I could get elsewhere for like. Ok they are not independant advisors, accepted, but still if I beleived them I would be paying massivley over the odds for something - should I trust their advice?

Whilst it is more expensive, the advice is not bad.

I don't have a baseless suspicion of the motives of others, I just have a firm grasp on the way this world seems to work. I don't have an issue with talking to a Financial Advisor, but in no way would I take their information as gospel without verification and cross references to other information.

The adviser would have a cost comparison which you can view. Most IFAs I know would show it automatically as part of the research.

Ok, lets get this bit off my chest. It's only paranoia if it's baseless and I think we can assume that the very fact this whole website exists is because when it comes to all things financial, be it banks, insurance, or whatever there is a lot of misselling, bad advice and general complete and utter rip-offs, all dressed up to sound attractive with many many hidden terms and conditions. Mis-sold endowments, mis-sold pension funds...

The FOS published some stats a few weeks back that said over 80% of advisers around today have not had a complaint. Sites like this pick up the minority of people that have had issues but it becomes a common subject as you rarely see good news posted.

Anyway I thought I was looking at a decreasing term, which is to cover the mortgage not for looking after dependants. Why would I put that in a trust?

It can still reduce the value of the estate to below IHT threshold. Speaking of tax, have you not looked at pension term assurance as a possible option?

I thought Gordon had tightened the tax laws on in trust life policies a bit?

life assurance investments but not pure protection. Also a tightening up doesnt mean its no longer possible. Just some of the trusts are no longer available. New ones have started to appear.

Mc4ndy

Pension term assurance is a possible option, i've just read the fool about that. It seems to suggest that the tax relief benefit could be messed with by future government policies, and I would need to find separate CI or income protection should I need these.

Generally it all sounds ok to me. I just need some. Not too much, not too little.

What about family income benefit?

dunstonh

pension term assurance almost went totally out of use for new business in 2001 due to heavier qualifying terms but those that had it already could keep it. I did more pension term assurances in the 90s than level term. So, if it gets changed in the future again, I wouldnt worry about it.

Also, it is possible to get CI and joint plans packaged as one with pension term assurance. Some providers do this more successfully than others. Although the tax relief only goes on the life element.

Family income benefit is sometimes a cheaper option. Its ideal if you need income as a need rather than lump sum.