what kind of (life?) insurance is this?

davidmaxwaterman

My wife has a policy that works like this :

1. she pays a monthly premium until she's 60
2. if she has a critical illness during that time, they pay her a lump sum
3. if she dies during the policy, they pay her beneficiary a lump sum
4. when she's 60, she is paid the sum of her monthly payments

So, it's sort of like a fixed-term savings account that, instead of interest, it provides critical illness and life insurance.

It is easy to find critical illness and life insurance policies, but they don't pay back anything at the end of the policy.

Note that my wife's policy is not in the UK. I'm looking for the equivalent policy in the UK.

Regards,

Max.

stephenni1971

There isn't a UK equivalent...

dunstonh

The closest equivalent would have been an endowment policy. However, they went out of fashion in the 90s and the last mainstream provider pulled out in 2003.

but they don't pay back anything at the end of the policy.

That is because it isnt tax efficient to do so. The premiums for endowment would be about 10 times higher than a term assurance. That is to cover the investment element. Life funds pay 20% tax at source. However, a stocks and shares ISA is tax free. So, there is no point paying into life funds if you have your stocks and shares ISA allowance available. This is one of the main reasons they died a death.

If you want life assurance (and CI) then take out a term assurance. If you want investments then use a stocks and shares ISA. They will be standalone to each other but they are far more tax efficient and better value than the old combined endowment plans.

Weighty1

There is a plan which is similar to the over 50's type plans in that it has no medical underwriting, so guarantees acceptance and you don't need to be 50 to take it out. It only covers accidental death for the first 2 years and there is a maximum sum assured of £50,000. It doesn't offer critical illness cover but it DOES offer a lump sum payment if you have maintained the cover and not claimed by age 70.

If you google Union Insurance Guaranteed Acceptance you should come across the site as the first hit.

It is expensive however and if you use a compound interest calculator, you'll probably find it would be more cost effective to take out a "normal" life insurance plan and place the savings into an account/investment of your choice. Based on the maths I did, I'd only have to achieve a 1% per annum return to be better off doing this than taking out the guaranteed acceptance plan.

dunstonh

Those guaranteed acceptance plans are an option of last resort. Typically really poor value for money and should only be considered when every other option has been eliminated.

Weighty1

dunstonh wrote: »

Those guaranteed acceptance plans are an option of last resort. Typically really poor value for money and should only be considered when every other option has been eliminated.

Absolutely! It was mentioned only because it does offer a money back option at the end of the term which is what the OP had referred to wanting. As per my post, the money back is actually pretty poor compared to the likely returns you'd get on a long term investment.