Level Term Assurance Discussion

bobby64

Endowments of recent have been considered as unsuccessful investments. An alternative for an endowment is the cashback plan. This is a non-investment product however. If you dont claim during the term of the policy, you receive the exact amount of premiums you have paid into the policy after the term expires. This is becoming a very popular avenue for ppl to take, as the risk-factor is literally zilch. I have signed up to one of these products myself.

lisyloo

as the risk-factor is literally zilch

Your money will however be going down in real terms.
So you will not be getting back what you put in (in real terms) i.e. £10 paid in 2004 will be worth very little in 2024.

bobby64

The MAIN reason why i chose this cashback plan over a normal level term assurance was because in the cashback plan, you do get your money back, even though it might not be a substantial amount in 20 years time. Normal level term assurance - on the other hand - is where you dont get any money back.
The premiums i'm paying for this cashback plan is only £2-3 more than the normal level term assurance.

lisyloo

The premiums i'm paying for this cashback plan is only £2-3 more than the normal level term assurance.

So did you do the calculations to make sure that was worthwhile (adjusting for inflation of course)?

I'm not saying it isn't a good idea, just wondering how you worked it out.

i.e. you'd have to calculate whether your £2-£3 per month now is worth the total amount you get back at the end given that the total amount will be vastly reduced by 20 years inflation.

MarkyMarkD

If it's anything like the Zurich Municipal product described here then it's appalling value.

The Zurich product involves paying £16.45 a month for the cashback plan, instead of £10.28 a month for straightforward level term cover from the same insurer.

You get back half of the premiums if you don't claim.

The effective AER on the £6.17 extra you pay per month is 2.80%. Better to take a plain vanilla level term policy and invest the surplus funds somewhere worthwhile.

Flower_Power_5

Thanks for that guys - it really gives me something to think about

markyb_2

Hi guys,

my wife has a Family Income Protection Plan. It last for 18 years and will pay out £24000 per year for death or Critical Illness. I havent got any cover at present like this as my company pension is pretty good with ill health pension, death in service(lump sum & pension) and death in retirement.

but looking at the quotes people are getting here for term assurance I was wandering is there any difference between Family Income Protection and Term assurance?

My wife does not work at present and looks after our two young kids which is why we had the cover in case anything bad happens, and I have to give up work.

Basically we are paying monthly premiums of £38.

Should I look to get a cheaper family income protection quote, or switch to a term assurance or are they pretty much the same anyway.

Having done a quick quote on cavendish the chepest quote was £31 for a similar family income protection plan elsewhere.

Thanks.

dunstonh

but looking at the quotes people are getting here for term assurance I was wandering is there any difference between Family Income Protection and Term assurance

Technically, they are both term assurance. I believe you are comparing level term assurance against family income benefit.

One pays a lump sum, the other pays the benefit in the form of income. FIBs are generally not as popular as 10 years ago as stats show that most get commuted to lump sum at a loss of around 30% benefit. Many providers have pulled out of the market leaving only a limited selection.

The FIB can be quite good if you die in the early years of the plan but quite poor later on (ie, if you die with 2 years to go, you only get 2 years payments). With a level term assurance you get the full lump sum regardless of when you die in the term.

scootermacc

Help! ???

I like to think I understand money issues (my credit cards, mortgage and savings are all in order), but when it comes to deciding how best to insure my life to protect for me and my partner, my home, income and (future) family, and to save for the future, I'm lost...

Is there a good overview guide (here or elsewhere), that can tell me in basic/simple terms what the following terms mean, what they protect for, who they are best aimed at, what the impact may be if I don't take them out, and any pitfalls to look out for?

I know some of these are covered by Martin's detailed articles, but a good 'quickstart' overview guide is what i need...

If not, I may have a stab myself...

Here's the list:

Health/Life:
Private Health Insurance
Life insurance
Critical Illness cover
Level Term assurance

House:
Mortgage Life Assurance
Mortgage Payment Protection
Critical illness cover (covered by Life/health one?)

Also, aside from a will and pension, is there anything else that I should be paying attention to or is missing from this list? Maybe martin could develop a glossary?

Once I've got my head round this, I'm going to try and work out what the 'best' combination is for me, and then look at what amount of my income I should be putting into these things. For example, at age 35, what % of my income should I really be putting into a pension? anyone have an easy answer or a good way of working it out?

Eme

Hello,

Please excuse my lack of knowledge here, but I am a single mum with two teenage daughters (one school age, the other 18) and want to ensure that my girls receive a lump sum on my death. I have read the various posts and am still unsure as to what type of policy would be best: Assurance/Insurance -both ???

My savings are negligible.

I would very much appreciate advise on the best course of action to take.

Many thanks.
Eme