Joint or Single, Fixed sum or reduced Life Insurance

fluffymummy2012

Hi me and my husband need life insurance we have 3.5 kids.

I see you can get joint or single policy's, what do people think? I have seen there isnt much difference in the cost!

Should we get a fixed period and amount eg till 70 or 80 ? what age do people think?

or should you get over the length of your mortgage?

I wanted this insurance so that when/if we die before 70 - 80 that we would have a pay out for our kids, is this how it works?

help

clueless

kingstreet

You choose a plan which is for the amount and term of a need.

For example, if you are covering a £100,000 repayment mortgage over 25 years, you'd use a £100,000 mortgage protection plan (decreasing term) with a 25 year term.

You can do joint cover, or sometimes two singles isn't much different, so the survivor would still have cover if the partner died.

If looking for family protection, set the term based on your youngest child's 21st or other birthday, so you cover the term of the need. Base the cover on the amount you would need, perhaps the income you're replacing. For example, if one of you earns £20k, that's about £14k a year after tax.

Do a family income benefit for £14k a year, payable until the youngest child is 21 (hopefully when they stop being dependent on you) and that covers that need the cheapest way possible.

You'd use retirement age as the term, if protecting a non-working spouse.

Make sure any single cover is written in trust, so the benefit is paid quickly to those you desire, outside your estate for inheritance tax purposes and without the need for probate.

Murts

As Kingstreet says above it is likely to be worth looking at more then one policy here as you have differing needs.


One policy to cover your mortgage. If it is a repayment mortgage the most cost effective way is to look at a decreasing plan.


The other policy is to cover your families normal lifestyle. So people will say to age 21 or 25 of the youngest child, it really should be based on to when you feel they may still be dependant on you. This can be done two ways the more popular lump some or as Kingstreet suggests and I also that you look at a Family Income Benefit which pays out on a monthly basis. Also consider including 'indexation' as your monthly bills are likely to rise and you want your cover to pay your bills at the level when the plan may be needed rather then the cost of them now.


As you have stated it can sometimes only be slightly more expensive to have separate polices for each of you. This cost can be reduced even further as some insurers will give a small discount for 'multi' policies.


Speak to a broker or IFA and ask for a range of quotes so you can compare the costs between joint and single.