Life Assurance/Insurance Policy Advice needed

Jo4

Neighbours of ours are considering taking out a life assurance/insurance policy. They are married, living together and have children. They have the same bills as everyone else, mortgage, telephone, electric, mobiles ... They also have credit cards, loans, car repayment and are on benefits. Due to the loans and credit cards he has had to go to work and she looks after the children while they are still claiming benefits. What they want to know is if they took out a life assurance/insurance policy now what effect would it have on their benefits if something was to happen to the other? The amount they are thinking of taking out would be to cover the bills and a little nest egg to help raise the children because of one parent having to stay at home to raise them.

What should they do? I cannot help them as I know nothing about life assurance/insurance policies.

dunstonh

Benefits are stingy and planning to depend on benefits which may or may not be there in the future is silly.

Life cover has never been cheaper and it doesnt impact on widows pension. It wouldnt impact on working/childrens tax credits either. It would hit income support but then so would the widows pension. Also, if they have pensions, there will be payouts on those as well so benefits it could wiped out by them.

Jo4

dunstonh wrote:

Benefits are stingy and planning to depend on benefits which may or may not be there in the future is silly.

Life cover has never been cheaper and it doesnt impact on widows pension. It wouldnt impact on working/childrens tax credits either. It would hit income support but then so would the widows pension. Also, if they have pensions, there will be payouts on those as well so benefits it could wiped out by them.

Thanks for responding! They need life cover?? They do not have pensions, should they get a pension or should they get life cover or do they need both and where should they look??

dunstonh

They almost certainly need life cover and ensions. Its not a choice of one or another, its a commitment to both that needs to be looked at.

At the end of the day, the state is there to cover to the absolute minimum. Although we all hear of excessive benefit payouts, those that often genuinely need them, do not get them. So, relying only on this minimum is not an ideal situation.

If they say they cannot afford to do it, ask them how they will afford living on £79 p.w. in retirement.

Jo4

dunstonh wrote:

They almost certainly need life cover and ensions. Its not a choice of one or another, its a commitment to both that needs to be looked at.

At the end of the day, the state is there to cover to the absolute minimum. Although we all hear of excessive benefit payouts, those that often genuinely need them, do not get them. So, relying only on this minimum is not an ideal situation.

If they say they cannot afford to do it, ask them how they will afford living on £79 p.w. in retirement.

Thanks for responding again. I told them what you said and they want to know if saving for a pension will affect the benefits they currently receive. They also want to know where they should get their pensions and life cover from. I am beginning to think that I should be thinking about this too!

dunstonh

Saving for retirement in a pension will not impact on any current benefits (providing they are not over 50. Otherwise there may be potential implications with some benefits). Saving for retirement in ISAs (which can be beneficial for those closer to retirement or already have larger pension funds) could impact on current benefits as they would be considered savings.

If they want cheapest, they can buy their life cover and stakeholder pension online. Hargreaves Lansdown or Cavendish are often quoted on here as being the cheapest. They will have to take responsibility for doing it themselves though as there is no advice through this method. If they want advice, then an IFA could provide that. The IFA would be paid via commission from the product provider used or by fee. It doesn make a big difference to the charges and in some cases, it can still be cheaper getting advice from an IFA than buying your own stakeholder via one of the aforementioned companies. Life cover is much easier as its generally the cheapest "recognised" insurer offering guaranteed premiums and online applications are quite straightforward.

Jo4

dunstonh wrote:

Saving for retirement in a pension will not impact on any current benefits (providing they are not over 50. Otherwise there may be potential implications with some benefits). Saving for retirement in ISAs (which can be beneficial for those closer to retirement or already have larger pension funds) could impact on current benefits as they would be considered savings.

If they want cheapest, they can buy their life cover and stakeholder pension online. Hargreaves Lansdown or Cavendish are often quoted on here as being the cheapest. They will have to take responsibility for doing it themselves though as there is no advice through this method. If they want advice, then an IFA could provide that. The IFA would be paid via commission from the product provider used or by fee. It doesn make a big difference to the charges and in some cases, it can still be cheaper getting advice from an IFA than buying your own stakeholder via one of the aforementioned companies. Life cover is much easier as its generally the cheapest "recognised" insurer offering guaranteed premiums and online applications are quite straightforward.

Thanks again for responding, will pass on this info!