Do I really need life insurance?

Mrs_Money

I've been reassessing my outgoings as it's a new year and am wondering if I really need life insurance? I know Martin has said somewhere on here in the past, that if you have no dependants you probably don't. My policy is £23 per month and payout would be about £55k.
I'm 62, no mortgage, own my house, no debt, no dependants, recently widowed, working part-time at the moment and my current policy comes to an end at age 65 anyway and although I'll probably be offered a (expensive) continuation, I can't see the point.
I originally took out the policy as we had a small mortgage after a house move and DH was ill and may have needed a payout if I had died.
So I'm just putting it out there- is there a reason I haven't thought of that I should have life insurance?

grumbler

Personally, I don't have life insurance and don't see any reasons for you to need it.

Indout96

The idea is to help your dependant meet the cost of living should you die early but as you have no dependant or debt I cant see the point.
I had it when we had a mortgage and the kids were young but now mortgage free and youngest is 31 no longer have it.

Aretnap

You don't derive any benefit yourself from life insurance (you'll be past caring by the time you can make a claim) so it's really just there for other people. The questions to ask are basically: who do you envisage getting the money, what do you expect them to do with it, and do you want them to do that badly enough to keep paying the premiums? If the answers are "my son", "complete his university education when I'm not there to help him" and "definitely" then you probably want life insurance. If they're "a distant relative", "go on a round the world cruise" and "not really" then you probably don't.

Some people have life insurance policies to pay for things like funeral expenses so that their families aren't burdened with the cost, but if you own your home mortgage free then I assume there'll be enough money in your estate to pay for things like that already. And if your estate is large enough it can be used as a way of reducing your inheritance tax bill, as it can be set up in such a way that the payout lies outside your estate. But for most people the main reason for having it is to help their dependants if they die early - so if you don't have any dependants that means the main reason for having it doesn't apply.

Kernel_Sanders

Why didn't you post this in the Insurance & Life Assurance sub-board ?

EssexExile

I only buy insurance to cover expenses that I couldn't afford if they came along (or the law says I have to). In your situation you are not insuring against some occurrence that you can't afford, you're not even insuring against an occurrence that someone else can't afford as your estate will easily cover any expenses. I'd stop paying now.

Paul_1977

I have life insurance because it would pay out on diagnoses of terminal illness.

I would help the family, and enjoy the time I would have left.

You never know what is around the corner.

If tomorrow you were told you had six months to live, I would like to have a lump sum to do what the hell I liked with.

Mrs_Money

Paul_1977 wrote: »

I have life insurance because it would pay out on diagnoses of terminal illness.

I would help the family, and enjoy the time I would have left.

You never know what is around the corner.

If tomorrow you were told you had six months to live, I would like to have a lump sum to do what the hell I liked with.

Yes quite right - unfortunately mine only pays out on my death, so not really much use it seems!

planteria

[agreed re. the forum this ought to be in...can a mod move it?]

good point Paul, but you are referring to Life Assurance combined with Critical Illness Cover.

i don't have a policy like this, but probably should.. and have life assurance with a friendly society investment i have.

Aretnap

Many (not all) life insurance policies will indeed pay out on diagnosis of terminal illness rather than on actual death. That's distinct from critical illness cover - which pays out when certain illnesses are diagnosed whether they're terminal or not.

Paul is right that this is a benefit worth considering, though personally I'm not convinced that it's worth paying for life insurance just to cover terminal illness if you have no dependants - I would be quite expensive for he amount of benefit you'd (potentially) get from it and if I had no dependants and was diagnosed with a few months to live I'd have other ways of funding my last few months - blow my savings, sell the house (or at least release some of the equity) etc.

And if you want something primarily to give you some cover if you become seriously ill I'd have thought critical illness cover was a better option. It's more expensive than life insurance but that's because it's a lot more likely to pay out - it will also pay if you're diagnosed with many serious but not terminal illnesses.

Paul_1977

Yes critical illness payout is a good idea, I wish I had done it.

I took out a policy (life insurance with terminal payout) at a very young age, it only cost me £80 odd a year. Not sure if that is a good price.

Since taking out I have had a serious illness, its not possible for me to get any new policy as they won't touch me, but I understand they cannot take the current policy away thankfully.:j