Life Insurance

KimLouise17

Hi all

After some advice on Life Insurance, We are a couple with 6 children (we are not married)

Hubby earns around 16,500 a year and i am a stay at home mum for the time being, when my youngest starts nursery/school i have every intention of getting a job

we have realised now we would like to get life insurance but i am confused by it all and im hoping you can advise

*we currently rent (at 29&35 i hope that one day we could buy our own home but not set in stone as the cost is massive) so no mortgage (yet)

*we would prefer to have a garunteed payout, im not a fan of paying for 40 odd years for no payout

any advice?

csgohan4

Whole life insurance is very expensive compared to Life assurance which set to cover you for a set number of years.


Have you tried looking for quotes online?


Other's will come on soon to further advice, but for me whole life assurance would be 10x what I pay for life assurance.

HappyHarry

KimLouise17 wrote: »

Hi all

After some advice on Life Insurance, We are a couple with 6 children (we are not married)

Hubby earns around 16,500 a year and i am a stay at home mum for the time being, when my youngest starts nursery/school i have every intention of getting a job

we have realised now we would like to get life insurance but i am confused by it all and im hoping you can advise

*we currently rent (at 29&35 i hope that one day we could buy our own home but not set in stone as the cost is massive) so no mortgage (yet)

*we would prefer to have a garunteed payout, im not a fan of paying for 40 odd years for no payout

any advice?

I'm glad to read that you are thinking about this area. So many people don't, and it can have devastating effects on those left behind.

No one can provide advice on this board, however, below are some areas you may want to consider.

Most people look at a policy called "Level Term Assurance". This would pay out a lump sum in the event of death within a certain time (e.g. 40 years). There would not be any payout after 40 years in the event that no claim is made.

A cheaper form of insurance that you might consider would be a type of life assurance called "Family Income Benefit". Instead of paying a lump sum in the event of death, this type of policy would pay out a regular monthly tax-free income to the survivor, for a fixed term.

Insurance policies that pay a lump-sum at the end tend to be poor value for money, and there are very few options available now. Effectively what happens with these policies is that some of your monthly premium goes to pay for the life insurance, and some of your monthly premium gets added to an investment. It would usually be better value to pay a separate premium for stand-alone life assurance, and another contribution to something like an ISA for an investment.

It is worth considering that most insurance policies do not pay out a lump sum at the end if there are no claims (think car insurance, contents insurance, mobile phone insurance).

You should consider the amount of income you would need to replace if something happened to your partner, and how long you would need that income for. Would you want the income to increase annually with inflation?

You should also consider the amount of income that your partner would need if anything happened to you (i.e. to cover childcare and other roles you might perform that your partner would not be able to do whilst working full time), as well as how long your partner might need that income for. Again, would you want the income to increase annually with inflation?

As you are not married, putting policies in trust would be important. The life assurance provider will likely be able to help you with this.

Good luck.

Chris_Pollard

Can't fault Happy Harry's content at all and agree it is great to see people thinking about protecting themselves against death. Purchasing a policy that covers you for your whole life, as opposed to during the time that you/your partner are earning income will be more expensive. A fixed term (30/40 years, as previously mentioned) would provide a lump sum, or regular income (Family Income Benefit) to cover lost earnings pre-retirement. Hopefully you will both live long lives and enjoy a happy retirement - don't consider the premiums you paid into life insurance wasted as the vast majority of your premiums will have been paid out to help other responsible families who have suffered a death.

Statistically, you and your partner, are more likely to become ill or disabled than to die whilst of working age. Therefore I'd encourage you to think about that insurance that would provide a financial safety net for those outcomes as well. Speak to a financial adviser, they are best placed to help you.

Good luck

ThinkingOutLoud_2

You seem to have put some thought into this and HappyHarry has, as noted, given you lots of sense.

I too think whole life may give you less cover for what you can afford than you may want. Think of it as paying much less for the for peace of mind if the worst does not happen and don't focus on money back that may be 50+ years away.

Similar to Chris's suggestion - I took Family Income policy instead of a Life Insurance in case my partner died or became terminally ill and I needed to stop working. It will pay the almost same as my net of tax salary until I would retire and get my pension. With six children to care for, it might be hard to carry on work full time as single parent. This is my peace of mind...

There is plenty of information on getting life quotes and advice on the main MSE site - it is not a bad place to start. The rates can vary markedly between insurers, so getting good value is important. Go here http://www.moneysavingexpert.com/insurance/cheap-life-insurance

Final thought and apologies if you have a will - but many have not. This is REALLY REALLY important for your circumstances - http://www.moneysavingexpert.com/family/free-cheap-wills