Widow - life insurance payout help

g424ahe

Hi,

My father in law passed away leaving my mother in law with a life insurance payout of about 60K when the mortgage is paid off.

My mum is 64 and has never had to deal with finances and isn't the best at budgeting. I was wondering if it's better to buy a pension with this to give her a guarnateed income but is this a good idea? Is there a better way to invest the cash? She really needs this money to work for her for the rest if her life.

Any advice would be greatly received.

dunstonh

I was wondering if it's better to buy a pension with this to give her a guarnateed income but is this a good idea?

It can be a good idea but it would depend on her circumstances

Is there a better way to invest the cash?

There could be.

What you ask is very specific and the options available will depend on her circumstances now and in the future, her requirements now and in the future, her tax position, general view and understanding on investing and the distribution channel used (e.g. DIY or IFA)

atush

Does your mother work? Does she have a pension? Did you FIL leave her any pension income? Does she have savings and investments? Property?

You may well need specialist advice here, but we might be able to provide some help if we knew more.

In the meantime, some suggestions. Get her a computer and the internet if she doesn't have one.

Do a budget for her, and have her do a spending diary. Go thru all her insurance and utilities and see how long since they have done price comparisons/switching. You may be able to save her some money on outgoings going forwards.

g424ahe

Apologies for lack of detail.

She has a basic state pension and a small pension from my father in law. The mortgage is paid off now thanks to the life insurance policy, but apart from that there are no savings. We've already done all the maintenance work on the house that was needed new windows, roof etc.. so she should be OK for the rest of her life in that respect. She has a small Ford Ka that she uses to potter around in, at some point that may need replacing but there's no immediate plans for that as she doesn't do that much driving.

I've been through all the basics with her regarding her bills and made sure she's on cheapest tariff etc.. my main worry is she's never had much money, and I'm concerned that although it seems like a lot of money to her now it will quickly disappear if she's not careful. Which is why I thought about a pension.

My FIL died very suddenly after getting a hospital infection so in the future there may be compensation if the coroner reports that someone was negligent but I'd rather not rely on that until it becomes a reality.

Just after some advice at this stage really. Will a financial advisor be interested in such a small amount of money?

bigadaj

An ifa would always be interested but they would want a minimum fee, if this was £1500 then that knocks a big chunk off the sum or income received.

Buying a annuity would give certainty but would generate what, less than 5%, so an income of under £60 per week.

Returns on cash would be even less, and presumably equities would be too risky and unfamiliar for someone such as this.

atush

I am a bit worried about their spending. Given they were retired and she will have (apart from food/clothing) the same outgoings and they had NO savings? At all? Yikes.

Can she downsize her house?

yes, an IFA may cost quite a bit. And an annuity might give a very small income. Does she have ny health issues that might mean an enhanced annuity is available?