life insurance

newby3

Hi

I am thinking about buying a life insurance policy. I understand most policies will pay out a lump sum in case of death or critical illness. I kind of remember you can also get some money when the policy matures (say, after a term of 15 years), but I am not able to find any up to date information. I'd like to know how much I can claim back in maturity, say, if I pay monthly premium of 100. Can someone shed some lights on this or point me to some links of information?

many thanks.

marathonic

A lot of older policies had a maturity value because they mixed insurance with investment.

These days, it's generally accepted that you should separate the two so, for example, instead of paying a monthly premium of £100 to these older type policies, you might pay a monthly premium of £30 for insurance and direct the other monthly premium of £70 towards some investment funds of your choosing.

ChampionBob

generally

accepted that you should separate the two

Fully agree
A maturity value sounds good, because people have a natural belief that they won’t die and will beat the term. I hope that you do !

The problem is that you lose out both ways.

You are more likely to get better savings options and returns from a standalone savings plan. Remember the tax free element of ISA’s. (I don’t want to get into qualifying rules on life plans here).

The cost of standalone life cover is also likely to be cheaper, although it is sometimes difficult to identify the cost of life cover from a combined life /savingsplan.

Finally don’t forget flexibility. If, for some reason, you could no longer afford the premium then with the combined policy both the life cover and savings go. With two policies you could stop contributing to the savings plan and possibly afford to keep the important lifecover in place. You would still have the savings plan intact and could start saving again later.