Spend or save? 18 February 2014 at 10:57PM edited 19 February 2014 at 9:13AM in Over 50s MoneySaving 52 replies 9.3K views

zygurat789

Parsimonia wrote: »

My understanding is that they originally took out such large policies when their children were quite small, in order to provide them with security if the worst happened. I don't think (though I could be wrong) that the motive for the insurance was to provide security for the surviving spouse.

I've never delved too deeply into the motives behind such large sums insured - I suppose I always assumed it was something to do with Steve having lost his parents at such a young age and so unexpectedly....I know they were able to buy the house on the proceeds of the legacy, but I expect (I didn't know them at the time so can't say for sure) that it was a pretty traumatic time for everyone concerned, and I guess I've always assumed that that is why they are so keen on life insurance.

But, as I say, I've never asked Trudy explicitly.

Hubby and I only have life insurance as part of our endowment policy (our mortgage company insisted on it) and only for the borrowed amount, so I have no idea if £900k of insurance costs a lot in terms of premiums or not. I know the cost of our life insurance premiums is wrapped up in our £55pcm endownment premium.

[Actually I've just had a horrid thought!!! Our original mortgage was for £38,950 (we bought our tiny cottage in 1992) and we've since borrowed a further £25k to have an extension built....I don't know if we raised our life insurance amount when borrowed the extra money....would that be a problem? If so, I guess I'd better look into it ASAP!!!]

Incidentally, about 5 years ago I did look into taking out critical illness insurance for myself (it would be financially catastrophic for us if I couldn't work due to illness or accident because I'm the sole breadwinner) but I just couldn't afford it. To add critical illness cover had a ridiculous impact on our premiums - if I recall, it did something like quadruple the premiums or something silly like that! I just need to keep my fingers crossed that I stay healthy!!!:D:D:D

Most of that is irrelevant or your own problems, which need to be addressed.
I was trying to move forward, not moralise or theorise.

Parsimonia

Idiophreak, you've summed up the situation very well - I agree 100% that 'Steve' is taking advantage, and it's not a pleasant thing to witness.

Question is - do I spell it out to Trudy?

She knows I've raised her situation on this forum, and every day she says 'Have people made any more comments yet? What are they saying?!?!?' and I told her it was best if she just registered for MSE and read the thread....but she doesn't want to (perhaps because she's scared of negative comments?) I've given her a potted account of the sort of comments that people are making and she's been quite defensive (understandably!).... but I've tried to be diplomatic....

pollypenny

She can read the thread without registering. It's only DT which doesn't come up when you have not logged on.

Parsimonia

pollypenny wrote: »

She can read the thread without registering. It's only DT which doesn't come up when you have not logged on.

Oh, thank you, I didn't realise that! I'll send her the link then - hopefully she'll chime in.

PennyForThem_2

You can buy accumulated years with NHS pension. I would look into that and I would advise her to go to Independent Financial Advisor.

If accumulated years bought then taking a year off may not make much difference to her NHS pension. I would not retire. At the end of the day if she is in good health she may have another 40 years to live. (into 90's)

I would not stop work. As said previously there is nothing to say her husband won't survive another 20 years...

She has to think of herself ... to preserve the lifestyle she would like (with compromise) if her husband dies.

zygurat789

Parsimonia wrote: »

Idiophreak, you've summed up the situation very well - I agree 100% that 'Steve' is taking advantage, and it's not a pleasant thing to witness.

....

I'm not so sure. He brought athe family home, mortgage free, into this equation and when he dies he leaves this and £450k. That must be good.
I think he is panicking, who wouldn't with that hanging over them?
It could also be argued that Trudy can see £450K in cash when Steve dies and thinks "why should I work any more?"
Personally I tend to agree with the sceptics concerning the OP and the reluctance to respond to my last post.

Parsimonia

zygurat789 wrote: »

I'm not so sure. He brought athe family home, mortgage free, into this equation and when he dies he leaves this and £450k. That must be good.
I think he is panicking, who wouldn't with that hanging over them?
It could also be argued that Trudy can see £450K in cash when Steve dies and thinks "why should I work any more?"
Personally I tend to agree with the sceptics concerning the OP and the reluctance to respond to my last post.

Yes, it's true, they were able to buy their lovely house without a mortgage because of the legacy from Steve's parents. I'm not saying he hasn't made a significant financial contribution but he's also always been proud of having expensive tastes and being 'high maintenance.' It's one of his favourite jokes that he's like a sultan, and that Trudy's role is to peel his grapes for him and wait on him hand and foot.

That's my idea of the marriage from hell but it's obviously suited them both for 30 odd years, so horses for courses....

I know his illness has been hard on both of them (physically and mentally), and I can also guess how scared he must be. However, I don't think being scared is an excuse for selfishness. Plenty of people (my husband included) face an uncertain future, but they don't take advantage of another person's love and concern. Trudy's scared witless too, and I can't say I blame her for wanting to go part time or to give up work earlier than she'd planned, especially if his health deteriorates even further and he leans on her even more.

As for not commenting on your earlier post, I considered myself well and truly put in my place for digressing off topic and I thought that responding would only compound my offence. Or, if I've misunderstood and the idea were for me to defend myself against the charge of being fictious or untrustworthy, there's little I could say that would make much difference, is there? You either believe me or you don't. I'm hardly in a position to provide credentials....

zygurat789

So I'd let Steve spend £450K funded from the sale of his books and the balance from a mortgage on the house which will be repaid from the proceeds of the insurance policy. Trudy can do as she sees fit but she should be aware that if Steve enjoys life too much then allopurinol is used to treat gout.

margaretclare

It's one of his favourite jokes that he's like a sultan, and that Trudy's role is to peel his grapes for him and wait on him hand and foot.

It's a joke? Well, there's an old saying: 'Many a true word is spoken in jest'.

If any man ever 'joked' that about me he would be shown the door PDQ.

How does she manage all this - you said she had a very responsible and busy career?

hunters

Parsimonia wrote: »

What would you do???

I'd pick a better best friend for a start, one that didn't broadcast all my financial affairs over the internet, then I'd go and spend what I wish and tell you nothing more