Life Insurance question!

Blodhemn

Hi there all

In the section on life insurance on the Moneysavingexpert . com website, it says

'Level term life insurance pays out a set amount if you die within a fixed term'

So I am wondering, what happens if I choose to set the end date for an age of 75, and I happen to live beyond that age? would the insurance then end & I lose all that money I have paid in?

It's like I am having to guess at what age I am likely to die.

Any suggestions?

I am trying to be quick about this as I hit 50 next week, and wife keeps saying to get my life insurance sorted.

Any advice will be greatly received, thanks all.

Best regards
Rob.

rs65

You wouldn't lose the money as such. You'd have had 25 years protection for the money.

hcb42

It's not a savings plan - it insures you for a length of time

What do you need the cover for - that's not a daft question BTW.

dunstonh

So I am wondering, what happens if I choose to set the end date for an age of 75, and I happen to live beyond that age? would the insurance then end & I lose all that money I have paid in?

Much the same as house insurance, car insurance and every other insurance out there.

It's like I am having to guess at what age I am likely to die.

No. You look to cover the need. Level term covers a need that exists for a defined period. Such as loss of income during working life.

The UK has around 13 different types of life assurance. Although 4 are only ones in the mainstream nowadays.

I am trying to be quick about this as I hit 50 next week, and wife keeps saying to get my life insurance sorted.

your price will not suddenly increase over 49.

Sparx

Life insurance is there to help cover your funeral/debts/costs and any financial burden left behind for your family/partner.

It's not intended to leave your family with a lump sum of money to live a lavish lifestyle on. That's not to say it doesn't happen though!

By the age of 75 - you'd like to think the mortgage is cleared and you have little to no debts!

ACG

You are not trying to guess when you will die to get a payout, you are insuring against a financial loss.

No different to having home insurance. If your home falls down it pays out. If it doesnt you have still been protected.

Do you really need to cover yourself to 75? It will cost more each more the older you are when the policy finishes.
If you want funeral cover, then you probably want a funeral plan policy or whole of life insurance, DTA is taken out to protect a debt if you pass away -ie it will need paying either from your estate or by another party.

Aretnap

I've lost all the money I've paid in into my home insurance over the years and I'm bloody glad about it - it's because my house hadn't burned down.

Likewise I hope that every penny I pay into my life insurance turns out to be wasted - I want to live to a ripe old age. The life insurance is just there to protect my family in the event that I don't - like any other sort of insurance I hope it never gets used.

In days of yore there were products marketed as life insurance which were actually hybrid insurance/investment products and it may be these which people are thinking of when they assume that you should expect to 'get back' some of the money you pay in regardless. However they have been obsolete for many years - they were not tax efficient, the fee structures we often opaque and there are better investment products available now.

If you really want to be guaranteed a payout you can get a 'whole of life'policy, but for obvious reasons they are significantly more expensive than term policies. If you want to leave your family a lump sum you are probably better off getting a term policy for a number of years (which will pay out of you die young) and put the money you save on premiums in the bank or an investment ISA (which will add up to a nice little nest egg if you make it to 100).

Blodhemn

Cheers everyone for the replies. Yeah i totally get it now. I was looking at it all wrong. What you all say makes perfect sense.

So thanks again to you all.

Best regards
Rob.