Single Parent - What Life Ins./MPI/IPI should I have?

emmalife

Hi, wondering if any financial experts out there could advise me on what sort of insurance I should go for...

I'm a single parent, bought my first house a bit over a year ago (I didn't take out the mortgage lender's offered insurance because I thought I could find better value elsewhere).

I have been researching policies that pay out a lump sum, policies that cover the mortgage amount but decrease over the years, critical illness cover, now I hear about income protection... I'm going a bit mad so please help me focus the priorities since I can only realistically afford under £30 in monthly premiums for this so need to decide what my money is best spent on. Any suggestions?

dunstonh

We dont know your financial needs so cant really comment.

However, chances are you have multiple needs

1 - mortgage life assurance
2 - income replacement life assurance (As you have a child)
3 - income protection (either PPI or PHI or combination)
4 - critical illness protection
5 - retirement provision

emmalife

Hi,

That sounds expensive!

Re. needs, I just want basic security and protection, so either to be able to keep paying the mortgage to keep as an investment for my son or to have peace of mind as sole earner if i was incapacitated in some way. I work as a teacher. If there is anything else I should state as my 'needs' in order for you to give the best advice just let me know.

dunstonh

Are you in the teachers pension scheme?

emmalife

Yes, have been for about 4 years. I'm 33.

smartiedriver_2

Go and ask the financial advisor at your bank. Many ppl on here 'pooh-pooh' in-house financial advisors but they can be a useful source of information. At the end of the day you don't have to take their advice.

It is expensive to be fully insured, and you may feel you cannot afford it, but the question really is 'can you afford NOT to be'?

dunstonh

Go and ask the financial advisor at your bank.

Please disregard that "advice". smartiedriver clearly doesnt belong on MSE as the banks are the most expensive distribution channel for financial products.

Seeing a bank sales rep is never a good idea. If you want real advice see an IFA. If you dont want advice then DIY. They are your two suitable options. A bank sales rep is not a good option.

Many ppl on here 'pooh-pooh' in-house financial advisors but they can be a useful source of information.

They are limited to their own product range and not the whole of market. If they dont offer a product, they wont know about it.

Yes, have been for about 4 years. I'm 33.

That comes with death in service. You will also have sickness benefits as well. So, before you arrange anything, take a look at your employment benefits.

magpiecottage

DunstonH is correct.

From my memory of the Teacher's pension scheme (I worked on the pension review). If you are forced to retire and have more than 2 years service, you will get a pension and lump sum equal to that earned by double your service (i.e. 8 years worth of service at the moment) until you get to 10 years service when it is topped up to 20 years or 6 years 243 days plus actual service) provided you are still contributing to the scheme at the time you die (otherwise there is no enhancement).

If you died the lump sum would be payable and probably a child's pension (if you left no spouse or civil partner). However my information is now quite old so you really need to check your own documentation or ask the scheme.

Get this information together BEFORE speaking to an INDEPENDENT financial adviser and remember there is a reason why [STRIKE]advisers[/STRIKE]salesmen at banks are not recommended here. If you want to know what, head over to the PPI reclaiming threads and see how many of the complaints are about banks and how many are about true independent whole of market advisers (as opposed to banks, car salesmen or furniture salesmen).

maginot

As mentioned, bring a teacher you have quite good benefits. You have 3 times salary in death service and will receive 6 months full pay and 6 months half pay if you are ill, as you have been a teacher for 4 years.

As you have limited funds, there is little point over insuring yourself for the maybes!

emmalife

Thanks everyone, very informative and fairly reassuring too. I am definitely going to check what my employment entitles me to exactly and take it from there.

ACG

As mentioned it is difficult to say without knowing the full ins and outs.

However, the insurance i recommend the most of is Income Protection. The reason being is that Critical Illness covers you for around 35 conditions. What happens if its something different that stops you working.

The problem you have is that a Teacher is seen as a highly stressful job and so because of that it has a high occupation class (meaning it can be quite expensive).

It could be that Critical Illness is your best option without knowing everything its difficult to say. Go and see a Mortgage or Financial Advisor. They usually wont charge for Insurance advice as we make enough commission on the back of it.