Regularly Change life insurance policy ?

mcdermott_c

Hi

very quick question is it a good idea to regularly change life insurance policies to other suppliers or are you better to keep the same one for along period just in case the policy required

The reason I ask I have had the same policy for about 7 years never used it but realise that I get a much cheaper dealer from another supplier - should you treat life insurance like car insurance and change it every year to get the best deal ?

thanks

ACG

You should review your life policy periodically.
First reason is to make sure it still fits your needs - requirements change all the time sometimes you need more, sometimes less.
The second reason is to make sure its still cost effective. But dont think cheapest is best, there are sometimes reasons why its a lot cheaper - guaranteed/reviewable premiums for example is one reason to not always trust cheapest is best.

But there may become a time you do get an illness which prevents you from moving your life insurance away so its always worth ensuring you have adequate cover in place from the outset.

kingstreet

If you can get the same, or better cover cheaper then do it. There's no benefit in staying with the same provider.

Don't cancel the old cover until the new one is accepted, in force and you are happy with it.

Write life cover in trust to speed up claims settlement, have it go straight to your intended beneficiary, avoid probate and avoid it going into your estate - creating or worsening any current or future Inheritance Tax issues.

mcdermott_c

thankyou for the replies...

When I got a quote off a new suppliers website i tried to keep the same cover although not really being too up on insurance I'm not sure if the cover really is the same.

"Write life cover in trust to speed up claims settlement, have it go straight to your intended beneficiary, avoid probate and avoid it going into your estate - creating or worsening any current or future Inheritance Tax issues."

Im sure I am going to sound stupid here... not too sure what some of these mean but I imagine I would need to negotiate these with the new supplier as I guess if I just bought the cover online I would not be able to specify the above.

sorry for the silly questions I really do not know much about insurance

thanks

ACG

When you make an application call up the insurance company and ask them for a trust form. They will ask which one, just ask them to explain the differences and choose the one you want.

When they post it to you, complete it and post it back to them.
Its not the most interesting read but the forms are generally only around 4 pages long.

I tend to use this with my clients - no matter which provider i go to as it makes what could be quite a complicated read not too painful - http://www.brightadviser.co.uk/downloads/PC1578A.Our-guide-to-trusts.pdf

Sponge

Writing in trust: what happens if I write my life assurance to my wife and she to me and then we both pop our clogs at the same time, e.g. a car crash?

What happens if each of us write it to our kids, but only one of us goes? Would the remaining spouse be able to access the money to pay off the mortgage, etc?

kingstreet

Trusts allow contingent beneficiaries.

For example, the wording could be "my spouse, or should he/she pre-decease me, my children at the time in equal shares" or something similar.

Insurers have set forms and all you do is add the Trustees details and cross out the beneficiary clauses you don't want.

ACG

It depends on whether its a single life policy or a joint life policy and what you put in the trust.

It can all be set up to work exactly as you wish without too many problems.

busicat

…I used to make a living out of doing so, until I realized trusts weren’t working for people and tried to work out why. It turns out there’s lots of contributing reasons, but basically it boils down to most normal people who have a life and don’t want to plough through a trust guide just don’t get it. So they just don’t do it. Or do it wrong. And little in the way things get done conspires to help them.

So I’ve lobbied the Treasury Review of Simple Products (and others have joined in) to push for a simpler solution. But I fear, with so few voices currently behind this, it won’t happen when the Review report comes out (due soon).

So in the mean-time, mcdermott_c, no you’re being silly at all – join the club. It’s “the system” that’s stupid. And thank goodness for the kind professionals on here prepared to throw in free pointers.