Life insurance

Nikkijo679

Hi there,

I was hoping someone might be able to advise me, as I'm struggling!

I am 27, married and have a 1 year old child. I work part time earning £18k.

I'm looking for life insurance and am completely baffled with all the choices! I think term cover seems the best option for me and I think I understand how this works.

However, I do have friends who I know have received payouts from their life insurance companies a few years in... I don't seem to be finding anything that pays out unless the worst happens... Are these policies a thing of the past? Or am I looking in the wrong places?

Thanks in advance,

Nikki

stephenni1971

They are a thing if the past.

InsideInsurance

They have fallen out of favour. Effectively it was an investment and insurance product rolled into one. A lot of people blindly invested into these things and then when investments failed they blamed the insurers or people selling them.

Now a days to resolve the issue most sell them as two separate products thus removing complaints from the insurers and enabling clearer sales advice/ information to be given (and captured as given) for investments.

dunstonh

However, I do have friends who I know have received payouts from their life insurance companies a few years in

The last mainstream insurer to offer endowments withdrew their product in 2003. Also, you would need to pay around 10 times more per month to get a like for like sum assured on death. So, you are better off paying the smaller amount to a pure term assurance policy and the rest to a stocks & shares ISA to get a similar set up but more tax efficient and lower cost.

marathonic

Also, I'm sure a lot of people find themselves in the following hypothetical scenario:

• In 1995, I'm offered the choice of a standard life insurance (which only pays out on death) £200,000 policy for a £20 per month premium or else one of these investment/life combined products for £200 per month;
• In 2010, I develop some condition that is treated and given the all clear;
• In 2012, I lose my job in the recession

Given the above, the £200 monthly policy becomes unaffordable due to lack of income but, also, you're going to get a huge loading on your premium if you cancel the policy and attempt to take out a normal life insurance policy.

If, instead, you took the £20 monthly policy and invested the other £180 monthly into an S&S ISA, you can temporarily halt the ISA contributions if you hit tough times whilst keeping the life insurance in place.

The ISA funds could even be used to fund the life insurance premiums until you regain employment.

Insurancehelp_2

If you want to take out a policy that pays out while you're alive, then life insurance isn't for you. Instead, it is worth considering income protection and critical illness cover. With income protection, you receive a monthly benefit if you're too ill to work. The money can help with bills and other essential payments. As for critical illness cover, you could receive a lump sum if you're diagnosed with a serious illness.

It's always best to speak to a financial adviser or protection adviser. Some advisers can give you a free, no obligation assessment - like the TurnKey Life team

Hope this has been helpful

stephenni1971

Insurancehelp wrote: »

If you want to take out a policy that pays out while you're alive, then life insurance isn't for you. Instead, it is worth considering income protection and critical illness cover. With income protection, you receive a monthly benefit if you're too ill to work. The money can help with bills and other essential payments. As for critical illness cover, you could receive a lump sum if you're diagnosed with a serious illness.

It's always best to speak to a financial adviser or protection adviser. Some advisers can give you a free, no obligation assessment - like the TurnKey Life team

Hope this has been helpful

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