Life Insurance Discussion

Willman_Rodders

Just to add to dunstonh's post I would recommend you find an IFA you can trust.

When I started in the financial services sector as a 'tied' adviser I was only allowed and able to sell the products of the company I worked for. So my client's had ABC Ltd's life policies, ABC Ltd's pension plans etc. Even though I knew these were not the best value on the market I sold them because I knew that having these policies was better for the client than having no policy at all.

In due course I became an IFA (Independant Financial Adviser). The IFA has access to the whole market so then I could still offer ABC Ltd's life policies (if they were the best value for the client), but also XYZ Ltd's pension plans (assuming they were the best for the client.)

What I found was that the products I was originally selling for ABC Ltd could be obtained cheaper in nearly all cases, sometimes by as much as 1/3rd the premium. Now a saving of £10 per month might not sound alot but on a 20 year term assurance policy that is a saving of £2,400 (12 months x £10 x 20 years).

But before you dive for the yellow pages I would suggest you ask your friends, family and work colleagues to see if they know someone they trust and recommend. The advisers's experience, quality of advice they give, and sales methods can make a massive difference to what is recommended to you.

Kev64

Could someone offer a little advice please ? I want to make sure my wife isn't left penniless in the event of my death, so I'm sitting here with a completed Term Assurance form, ready to post, but then I started thinking 'maybe I should be talking to an IFA about this' as my finances are in a bit of a mess. I'm a bit wary of going to an IFA for a couple of reasons; I'm worried that I might get sold something that's more beneficial to the IFA than it is to me (cynical git I know !), but more importantly, I'm scraping by financially and have seen fees quoted of £150 per hour, and there's no way I could afford that.

In a nutshell, we're both in our mid to late 40's, no kids, and my job provides 95% of our income. We're renting a house as we can't afford to get on the housing ladder, we have no savings and I'm in debt to the tune of £16,000. Neither of us have any pension, beyond a couple of tiny ones from my previous employers, which will amount to only a few hundred pounds a year.

Winning the lottery notwithstanding :rotfl:, I have all but accepted we are going to end up trying to scrape by on the state pension, and possibly living in subsidised housing at the end of our lives. This isn't what I had hoped for, but depressingly, looks like the most likely scenario. I am doing all I can to reduce my debt (card tarting etc), and have little money left at the end of each month.

So, that's the picture, here's the question ! :-

I need to make sure my wife has some protection in the event of my death. The completed form next to me would provide £150,000 cover over the next 20yrs for a fixed £34.15 pm. (that was the cheapest I could find using Martin's recommended brokers). I know I can drastically cut the premium / up the cover, once I'm 12 months free of cigarettes, which I'm trying hard to quit, but getting cover now is more important.

The questions (yes, I'm getting there ! ), are:

Is there any sort of policy that would provide something to help us on retirement whilst also providing cover in the event of my death, that won't cost me far more than I can afford now ?

Or, given our situation, should I just forget the pension for the moment, go for a simple Term Assurance, like the one I have next to me, and concentrate on clearing my debt ?

Or, get down the docks in a pair of stockings and see what extra money I can bring in ? :eek:

Kev64

Nobody has any advice ?

Willman_Rodders

Hi kev64,

Unusually none of the financial advisers have answered your post. As an ex-IFA my advice would be ...

Keep your life policies separate from your pension/savings policies. So, take out the term assurance policy now to protect your wife, and look at savings/pension plans in due course.

Why? Because:
1. Basic training says you should protect what you have before saving for an unknown future;
2. Any scheme that offers dual benefits (e.g. a savings element and life cover) will comprise two distinct components - life cover and a savings plan in this example. e.g. the old fashioned endowment savings plan costing say £50 p.m. A small element of the £50 would go towards life cover, and the remainder towards an investment savings plan. The life assurance company do not make that clear within their sales brochure but that is how they allocate your premiums.

Now if you do a bit of research you will find that premiums for life cover vary significantly from company to company - for the same level of insurance. Also investment performance varies from company to company. The most cost efficient life company rarely provides the best returns on investments. So, if you buy a multi-benefit product you will almost certainly be buying a product that is cost effective for one aspect but not for the other - or you may even buy a product that is not cost effective for either benefit.

3. By buying two products you can change them in due course. Lets suppose that you do manage to stop smoking (and good luck in that aspect) then you may want to revisit your life cover in say three years time. Yes, you will be 3 years older but your premiums may well have dropped significantly because you are now no longer smoking. If you had bought one multi-benifit product you will not be able to switch insurers.

On a similar theme, if your savings plan is under-performing, and is linked in with the life assurance, you will not be able to change investment company without having to rearrange life cover - which might be significantly more expensive or even impossible to obtain.

Hope that helps.

Rod

Kev64

Thanks Rod - that answered everything I needed. Much appreciated.

orton1h

Our current life insurance is a decreasing pplicy linked to a mortgage. We no longer have a mortgage so need to switch to a term policy - I think?
I am 52 next birthday, husband 51. Don't know whether best to go for joint or seperate policies or what level of cover.

zagor

Hi All,

Could anyone advise between these two level term assurances:

HSBC LifeChoices

Friends Provident Level Term

I got a quote from HSBC that is about one third (35) the quote from Friends Provident (100)

-Friends Provident includes critical illness and disability benefit and waiver benefit;
-HSBC includes terminal illness benefit, (totally and permanently) disability cover;
-Both policies don't have cash in value at any time.

Thank you for any help.

Kind regards

_Andy_

zagor wrote: »

Hi All,

Could anyone advise between these two level term assurances:

HSBC LifeChoices

Friends Provident Level Term

I got a quote from HSBC that is about one third (35) the quote from Friends Provident (100)

-Friends Provident includes critical illness and disability benefit and waiver benefit;
-HSBC includes terminal illness benefit, (totally and permanently) disability cover;
-Both policies don't have cash in value at any time.

Thank you for any help.

Kind regards

Completely different policies. You can't compare one that has critical illness cover included with one that doesn't.

zagor

Andy,

Thank you for your reply. I thought that critical illness and terminal illness were the same thing.

Kind regards

Lapadore16

My husband is 69 years old and has not got any life insurance and neither have I at 56. We still pay a mortgage so should we really get insured? He is in good health but is a diabetic. Should we only go for something to pay a funeral? I know we should have sorted this out years ago but we couldn't seem to afford it then. Thanks.