Life Insurance / Assurance? Good idea?

BatchedMetting

Hey,

I'm self-employed and am the main earner for my family (SO and 2 kids).

We have no assets and quite a bit of debt and are renting.

If I were to pop my clogs, they'd be in a pretty bad way financially.

Do you think life insurance is a must? I saw online that it can be had for as little as £10 per month, covering me for up to 25 years. I always thought it would be way more than that so never looked into it.

• Is it a good idea or should I carry on playing the lottery each week via direct debit?
• Is it really that cheap (£10 per month)?
• What sort of things aren't covered (eg, bike crash, murder, suicide, bad health?)
• I'm 37 and my youngest is 4 - what sort of period of cover would you recommend?
• Are there any that will test your health thoroughly to lower premiums? I think I'm quite healthy

Any advice? Thanks!

dunstonh

Do you think life insurance is a must?

What we think doesnt matter. What you think is important. Or more important is what your family would think of you if the worst happened and you had failed to plan for them.

That should not be understated. I know widows that have gone on to hate their husband for the mess they were left in following death.

Is it a good idea or should I carry on playing the lottery each week via direct debit?

1 in 5 change of death before retirement.
Lottery is about 1 in 16 million.

What sort of things aren't covered (eg, bike crash, murder, suicide, bad health?)

It can depend on the type of life assurance but most mainstream have no restrictions.

I'm 37 and my youngest is 4 - what sort of period of cover would you recommend?

It can be a matter of opinion but the youngest to around 25-30. Cover for debts should match the debts.

Are there any that will test your health thoroughly to lower premiums? I think I'm quite healthy

Pricing is already assumed clean health from the start. So, premiums can only go higher due to medical reasons. Not lower. Although there are some which can be variable based on exercise activity etc. The jury is out on those. Some love them. So do not because you may like going to the gym now but will that still be the case in 15-20 years.

ACG

The premiums can be as much or as little as you like.

The cover amount will vary depending on the amount you are happy to pay, your age and health.

Usually murder and suicide are included. The exception to suicide is if you have had mental health issues in the past.

If your family are going to up a creek if you were gone, then it is worth looking at some cover. There is a saying that some cover is better than none.

BatchedMetting

Thanks for your replies, I will start shopping around. Any recommendations?

dunstonh wrote: »

It can be a matter of opinion but the youngest to around 25-30. Cover for debts should match the debts.

Until the youngest child is 25-30? Is there are reasoning behind this age or is it just a good age to cover them for? So I'd be looking at a 29 to 34 length option.

Do any give you some money back if you don't die?

What sort of amounts do people go for if they are on a budget? Say I'm earning £30k a year, would 10X be considered reasonable or over/under a good amount?

BatchedMetting

ACG wrote: »

Usually murder and suicide are included.

If your family are going to up a creek if you were gone, then it is worth looking at some cover. There is a saying that some cover is better than none.

Thanks. Yes, I think some cover is better than none!

What if my spouse murders me? Does she still get the money?

dunstonh

Until the youngest child is 25-30? Is there are reasoning behind this age or is it just a good age to cover them for? So I'd be looking at a 29 to 34 length option.

You are aiming to cover yourself until the child is no longer financially dependent. Nowadays that is mid to late 20s.

Do any give you some money back if you don't die?

No. Does your car insurance give you money back?

What sort of amounts do people go for if they are on a budget? Say I'm earning £30k a year, would 10X be considered reasonable or over/under a good amount?

10x income plus debts is a starting point. However, it is a bit crude. You would also factor things like pension benefits built up or pension benefits lost, any savings, investments etc.

What if my spouse murders me? Does she still get the money?

No

ACG

BatchedMetting wrote: »

Thanks. Yes, I think some cover is better than none!

What if my spouse murders me? Does she still get the money?

She does! She will just have to spend the money from a cell.

There used to be things like endowments which were invesmtnts and life policies combined, but they turned out not to be as good as hoped.

There are many different ways to calculate how much you need, but as it sounds like you want to spend around £10 a month, I do not think you are going to spend too much looking in to this, it will just be a case of what you get is what you get. The longer the term, the less cover you will get or reduce the term to get more cover. There is not a lot to play with at £10 a month.

Chris_Pollard

ACG - whilst a bit of a tangent, you are wrong and should OP's spouse murder, or arranging for the death, of her spouse she would receive nothing. Whilst the insurer would still pay the benefit any monies would likely be paid to the Court who would ensure the proceeds went to the children.

Just wouldn't want the type of people to get the wrong idea

BatchedMetting

Thanks. Hopefully it won't come to that ;-)

ACG

Chris_Pollard wrote: »

ACG - whilst a bit of a tangent, you are wrong and should OP's spouse murder, or arranging for the death, of her spouse she would receive nothing. Whilst the insurer would still pay the benefit any monies would likely be paid to the Court who would ensure the proceeds went to the children.

Just wouldn't want the type of people to get the wrong idea

Interesting, is every insurer the same on that front? The reason I ask is I used to work for a life office and in our training that question came up and we were told they would. The life office I worked for no longer exists, it has merged and merged and merged again since I left.

Also on a side note, what if 2 people cohabiting had life policies in trust for one another?

Chris_Pollard

ACG. I too have heard this question answered incorrectly in training and other environments - so I'm sadly not surprised, however, the "trainer" might not have been a claims specialist.

It is a point of law that no person benefit from insurance where their actions deliberately created said event. The insurer is still obliged to pay the liability but if they pay the money to a party who was known to have created the event they are complicit. Not only are they rewarding crime, but they also face the risk of having to pay out twice. The insurer is responsible for ensuring they paid the proceeds to the right person. If they don't, they have to pay again. Hope this helps.