Life Insurance

SavingStudent1

Hi guys,

For those of you who have got life insurance, I was wondering:

1. what are the reasons as to why you got it?
2. Which company have you insured yourself with and why if specifically you chose them?

I've heard that people get it to protect their loved ones from financial commitments such as any mortgages left to pay, cost of raising a child to protect them from the unexpected whilst they are growing up.

I am thinking of it now because when you get it at an early age, you get cheaper premiums. But, I haven't really got any quotes from insurance providers so I don't know how much it costs.

For example, I don't want to spend too much and then not get any money e.g. policy covers till age of 50 and then I die after 50, so there is no payout despite me paying out for many years. Unless it is something small, like under £10 a month, I am happy to do that - but it is more, because money is hard to save, I don't want to be paying out high amounts like £25 per month with no guaranteed return/payout in the future.

This is why I was thinking of whole-of-life insurance but I've heard they are so expensive.

Thanks: age 21, marriage status: single/unmarried.

user1977

It's a waste of money if you have no need for it - and might never need it (I'm over twice your age and have never had a real need for it so far!).

dunstonh

1. what are the reasons as to why you got it?
2. Which company have you insured yourself with and why if specifically you chose them?

1 - where there is a financial need for it, then you should get it. Where there isn't then you shouldnt.
2 - The company chosen will either be the best option available that meets the needs  (if using a whole of market broker or IFA) or the best a particular company offers (if they are panel based) or the only product they offer (if single provider) or if someone fell for the marketing and picked it because they didn't look at any others.

I am thinking of it now because when you get it at an early age, you get cheaper premiums. But, I haven't really got any quotes from insurance providers so I don't know how much it costs.

If you have no financial need for it then do not waste your money on it.  Plus, if you were to buy some now, then by the time you do have a financial need, the term and sum assured are unlikely to match your financial need.  You will just end up cancelling the useless pan and buying a new one that meets that need.

This is why I was thinking of whole-of-life insurance but I've heard they are so expensive.

What financial need do you have for a whole of life assurance policy?

Thanks: age 21, marriage status: single/unmarried.

Focus on more important things.  Like your pension and saving for your first house.

SavingStudent1

dunstonh said:

1. what are the reasons as to why you got it?
2. Which company have you insured yourself with and why if specifically you chose them?

1 - where there is a financial need for it, then you should get it. Where there isn't then you shouldnt.
2 - The company chosen will either be the best option available that meets the needs  (if using a whole of market broker or IFA) or the best a particular company offers (if they are panel based) or the only product they offer (if single provider) or if someone fell for the marketing and picked it because they didn't look at any others.

I am thinking of it now because when you get it at an early age, you get cheaper premiums. But, I haven't really got any quotes from insurance providers so I don't know how much it costs.

If you have no financial need for it then do not waste your money on it.  Plus, if you were to buy some now, then by the time you do have a financial need, the term and sum assured are unlikely to match your financial need.  You will just end up cancelling the useless pan and buying a new one that meets that need.

This is why I was thinking of whole-of-life insurance but I've heard they are so expensive.

What financial need do you have for a whole of life assurance policy?

Thanks: age 21, marriage status: single/unmarried.

Focus on more important things.  Like your pension and saving for your first house.

Thanks both, that makes a lot of sense. I don't know why, I've just heard many people are going for life insurance so I looked into it. But yeah, I actually have no reason at all to get it, so I won't!

Yes, I am primarily going to focus on pension and saving for my first house

csgohan4

my other half doesn't work so she would not be able to pay the mortgage. So a no brainer really. We also have Income protection maxed to the hilt but no CIC as not value for money imo

SavingStudent1

csgohan4 said:

my other half doesn't work so she would not be able to pay the mortgage. So a no brainer really. We also have Income protection maxed to the hilt but no CIC as not value for money imo

Makes sense, thank you!

IdrisJazz

SavingStudent1 said:

For example, I don't want to spend too much and then not get any money e.g. policy covers till age of 50 and then I die after 50, so there is no payout despite me paying out for many years. Unless it is something small, like under £10 a month, I am happy to do that - but it is more, because money is hard to save, I don't want to be paying out high amounts like £25 per month with no guaranteed return/payout in the future.

This is why I was thinking of whole-of-life insurance but I've heard they are so expensive.

Interesting comments on getting nothing back...

Some thoughts....

If it costs £10pm to get the level of cover you want, and £25 for something that will give you something back at the end, you would be better off paying the difference into some sort of separate investment product.

That way you are paying the minimum needed for the pure cover you need, and still guaranteeing you get something back at the end. Although it's always tempting to see a return, I think it's generally better to keep your insurance and investment products separate.

Whole of life cover is expensive when you are young, as by comparison pure level term assurance is really cheap.

But you shouldn't really need life insurance beyond retirement age, as your dependents shouldn't be suffering from a loss of income as a result. There are other ways to pass on an inheritance, through investments, pensions and property, that will be far more profitable (generally speaking) than paying for whole of life cover into your eighties.

Sandtree

SavingStudent1 said:

For example, I don't want to spend too much and then not get any money e.g. policy covers till age of 50 and then I die after 50, so there is no payout despite me paying out for many years. ]

And what do you get back from your Car or Home insurance if you don't claim?

The base principle of insurance is that you exchange the possibility of a big loss (crashing your car, house burning down, you dying) for the certainty of a small loss (ie the premiums). Whilst you may think its a "waste" that you didnt knock a cyclist off their bike or die during the policy term in reality its generally a fairly good thing that these negative events havent occurred 

Whole of Life really should be called "assurance" instead, though we are lax with terminology these days, as its not a question of if you will get the money but when will you get it. On the basis that all policies other than those cancelled (eg for non-payment) pay out it is a naturally much more expensive product.

The question for you is if there would really be a monetary loss for anyone in the event of your death? Most want to cover the lost income for their spouse or kids hence term insurance tied to their hoped retirement age is a good option or pay off the mortgage to give freedom so decreasing cover matches that need. Generally if you are single, no kids its not necessary but getting cover when young and fit is cheaper than old and unwell and so some do buy a little early to avoid risk of being diagnosed with something that would make insurance hard to get. 

It used to be that life insurance and investments were packaged together but customer understanding was low and this is probably why so many think that life insurance has a surrender value etc. Modern thinking is to decouple them so you can get best in breed of both products independently 

To answer the first two questions... yes I have life insurance because my income represents the vast majority of the household and my widow wouldnt be able to afford the mortgage etc were I to die.

Insurance happens to be with Vitality (technically in part with the M&G/Pru) but thats less about "choosing them" and more about having a congenital medical condition and my broker securing best terms with them. 

SavingStudent1

IdrisJazz said:

SavingStudent1 said:

For example, I don't want to spend too much and then not get any money e.g. policy covers till age of 50 and then I die after 50, so there is no payout despite me paying out for many years. Unless it is something small, like under £10 a month, I am happy to do that - but it is more, because money is hard to save, I don't want to be paying out high amounts like £25 per month with no guaranteed return/payout in the future.

This is why I was thinking of whole-of-life insurance but I've heard they are so expensive.

Interesting comments on getting nothing back...

Some thoughts....

If it costs £10pm to get the level of cover you want, and £25 for something that will give you something back at the end, you would be better off paying the difference into some sort of separate investment product.

That way you are paying the minimum needed for the pure cover you need, and still guaranteeing you get something back at the end. Although it's always tempting to see a return, I think it's generally better to keep your insurance and investment products separate.

Whole of life cover is expensive when you are young, as by comparison pure level term assurance is really cheap.

But you shouldn't really need life insurance beyond retirement age, as your dependents shouldn't be suffering from a loss of income as a result. There are other ways to pass on an inheritance, through investments, pensions and property, that will be far more profitable (generally speaking) than paying for whole of life cover into your eighties.

Thank you, this makes sense. Sorry, it came across a bit different to what I intended. It is more that, since insurance can be quite costly in order to get a lump sum which you'd feel covers you appropriately in the case of an unexpected event, I'd rather save that cash instead or as you mention, to invest with the potential of it growing. Although with investments, you could also face a similar situation where you could lose everything.

Sandtree said:

SavingStudent1 said:

For example, I don't want to spend too much and then not get any money e.g. policy covers till age of 50 and then I die after 50, so there is no payout despite me paying out for many years. ]

And what do you get back from your Car or Home insurance if you don't claim?

The base principle of insurance is that you exchange the possibility of a big loss (crashing your car, house burning down, you dying) for the certainty of a small loss (ie the premiums). Whilst you may think its a "waste" that you didnt knock a cyclist off their bike or die during the policy term in reality its generally a fairly good thing that these negative events havent occurred 

Whole of Life really should be called "assurance" instead, though we are lax with terminology these days, as its not a question of if you will get the money but when will you get it. On the basis that all policies other than those cancelled (eg for non-payment) pay out it is a naturally much more expensive product.

The question for you is if there would really be a monetary loss for anyone in the event of your death? Most want to cover the lost income for their spouse or kids hence term insurance tied to their hoped retirement age is a good option or pay off the mortgage to give freedom so decreasing cover matches that need. Generally if you are single, no kids its not necessary but getting cover when young and fit is cheaper than old and unwell and so some do buy a little early to avoid risk of being diagnosed with something that would make insurance hard to get. 

It used to be that life insurance and investments were packaged together but customer understanding was low and this is probably why so many think that life insurance has a surrender value etc. Modern thinking is to decouple them so you can get best in breed of both products independently 

To answer the first two questions... yes I have life insurance because my income represents the vast majority of the household and my widow wouldnt be able to afford the mortgage etc were I to die.

Insurance happens to be with Vitality (technically in part with the M&G/Pru) but thats less about "choosing them" and more about having a congenital medical condition and my broker securing best terms with them. 

Thank you, this was also a great explanation. I do understand it thank you :). I decided not to go for life insurance from earlier posts, and I think it makes sense to re-evaluate this thought potentially when I have dependants, as currently there is no 'monetary' loss for anyone if such an event was to occur.

csgohan4

SavingStudent1 said:

IdrisJazz said:

SavingStudent1 said:

For example, I don't want to spend too much and then not get any money e.g. policy covers till age of 50 and then I die after 50, so there is no payout despite me paying out for many years. Unless it is something small, like under £10 a month, I am happy to do that - but it is more, because money is hard to save, I don't want to be paying out high amounts like £25 per month with no guaranteed return/payout in the future.

This is why I was thinking of whole-of-life insurance but I've heard they are so expensive.

Interesting comments on getting nothing back...

Some thoughts....

If it costs £10pm to get the level of cover you want, and £25 for something that will give you something back at the end, you would be better off paying the difference into some sort of separate investment product.

That way you are paying the minimum needed for the pure cover you need, and still guaranteeing you get something back at the end. Although it's always tempting to see a return, I think it's generally better to keep your insurance and investment products separate.

Whole of life cover is expensive when you are young, as by comparison pure level term assurance is really cheap.

But you shouldn't really need life insurance beyond retirement age, as your dependents shouldn't be suffering from a loss of income as a result. There are other ways to pass on an inheritance, through investments, pensions and property, that will be far more profitable (generally speaking) than paying for whole of life cover into your eighties.

Thank you, this makes sense. Sorry, it came across a bit different to what I intended. It is more that, since insurance can be quite costly in order to get a lump sum which you'd feel covers you appropriately in the case of an unexpected event, I'd rather save that cash instead or as you mention, to invest with the potential of it growing. Although with investments, you could also face a similar situation where you could lose everything.

Sandtree said:

SavingStudent1 said:

For example, I don't want to spend too much and then not get any money e.g. policy covers till age of 50 and then I die after 50, so there is no payout despite me paying out for many years. ]

And what do you get back from your Car or Home insurance if you don't claim?

The base principle of insurance is that you exchange the possibility of a big loss (crashing your car, house burning down, you dying) for the certainty of a small loss (ie the premiums). Whilst you may think its a "waste" that you didnt knock a cyclist off their bike or die during the policy term in reality its generally a fairly good thing that these negative events havent occurred 

Whole of Life really should be called "assurance" instead, though we are lax with terminology these days, as its not a question of if you will get the money but when will you get it. On the basis that all policies other than those cancelled (eg for non-payment) pay out it is a naturally much more expensive product.

The question for you is if there would really be a monetary loss for anyone in the event of your death? Most want to cover the lost income for their spouse or kids hence term insurance tied to their hoped retirement age is a good option or pay off the mortgage to give freedom so decreasing cover matches that need. Generally if you are single, no kids its not necessary but getting cover when young and fit is cheaper than old and unwell and so some do buy a little early to avoid risk of being diagnosed with something that would make insurance hard to get. 

It used to be that life insurance and investments were packaged together but customer understanding was low and this is probably why so many think that life insurance has a surrender value etc. Modern thinking is to decouple them so you can get best in breed of both products independently 

To answer the first two questions... yes I have life insurance because my income represents the vast majority of the household and my widow wouldnt be able to afford the mortgage etc were I to die.

Insurance happens to be with Vitality (technically in part with the M&G/Pru) but thats less about "choosing them" and more about having a congenital medical condition and my broker securing best terms with them. 

Thank you, this was also a great explanation. I do understand it thank you . I decided not to go for life insurance from earlier posts, and I think it makes sense to re-evaluate this thought potentially when I have dependants, as currently there is no 'monetary' loss for anyone if such an event was to occur.

Do bare in mind, it gets more expensive the more older and potentially medical issues arise. 

I just did a similar comparison quote for my current cover 6 years on, it's almost double now for the same amount of cover. 

Don't procrastinate on something which may cost you more in the long run,

In hindsight I wished I had double my cover 6 years ago, but I had to look at costs at the time as well. 

Weighty1

csgohan4 said:

SavingStudent1 said:

IdrisJazz said:

SavingStudent1 said:

For example, I don't want to spend too much and then not get any money e.g. policy covers till age of 50 and then I die after 50, so there is no payout despite me paying out for many years. Unless it is something small, like under £10 a month, I am happy to do that - but it is more, because money is hard to save, I don't want to be paying out high amounts like £25 per month with no guaranteed return/payout in the future.

This is why I was thinking of whole-of-life insurance but I've heard they are so expensive.

Interesting comments on getting nothing back...

Some thoughts....

If it costs £10pm to get the level of cover you want, and £25 for something that will give you something back at the end, you would be better off paying the difference into some sort of separate investment product.

That way you are paying the minimum needed for the pure cover you need, and still guaranteeing you get something back at the end. Although it's always tempting to see a return, I think it's generally better to keep your insurance and investment products separate.

Whole of life cover is expensive when you are young, as by comparison pure level term assurance is really cheap.

But you shouldn't really need life insurance beyond retirement age, as your dependents shouldn't be suffering from a loss of income as a result. There are other ways to pass on an inheritance, through investments, pensions and property, that will be far more profitable (generally speaking) than paying for whole of life cover into your eighties.

Thank you, this makes sense. Sorry, it came across a bit different to what I intended. It is more that, since insurance can be quite costly in order to get a lump sum which you'd feel covers you appropriately in the case of an unexpected event, I'd rather save that cash instead or as you mention, to invest with the potential of it growing. Although with investments, you could also face a similar situation where you could lose everything.

Sandtree said:

SavingStudent1 said:

For example, I don't want to spend too much and then not get any money e.g. policy covers till age of 50 and then I die after 50, so there is no payout despite me paying out for many years. ]

And what do you get back from your Car or Home insurance if you don't claim?

The base principle of insurance is that you exchange the possibility of a big loss (crashing your car, house burning down, you dying) for the certainty of a small loss (ie the premiums). Whilst you may think its a "waste" that you didnt knock a cyclist off their bike or die during the policy term in reality its generally a fairly good thing that these negative events havent occurred 

Whole of Life really should be called "assurance" instead, though we are lax with terminology these days, as its not a question of if you will get the money but when will you get it. On the basis that all policies other than those cancelled (eg for non-payment) pay out it is a naturally much more expensive product.

The question for you is if there would really be a monetary loss for anyone in the event of your death? Most want to cover the lost income for their spouse or kids hence term insurance tied to their hoped retirement age is a good option or pay off the mortgage to give freedom so decreasing cover matches that need. Generally if you are single, no kids its not necessary but getting cover when young and fit is cheaper than old and unwell and so some do buy a little early to avoid risk of being diagnosed with something that would make insurance hard to get. 

It used to be that life insurance and investments were packaged together but customer understanding was low and this is probably why so many think that life insurance has a surrender value etc. Modern thinking is to decouple them so you can get best in breed of both products independently 

To answer the first two questions... yes I have life insurance because my income represents the vast majority of the household and my widow wouldnt be able to afford the mortgage etc were I to die.

Insurance happens to be with Vitality (technically in part with the M&G/Pru) but thats less about "choosing them" and more about having a congenital medical condition and my broker securing best terms with them. 

Thank you, this was also a great explanation. I do understand it thank you . I decided not to go for life insurance from earlier posts, and I think it makes sense to re-evaluate this thought potentially when I have dependants, as currently there is no 'monetary' loss for anyone if such an event was to occur.

Do bare in mind, it gets more expensive the more older and potentially medical issues arise. 

I just did a similar comparison quote for my current cover 6 years on, it's almost double now for the same amount of cover. 

Don't procrastinate on something which may cost you more in the long run,

In hindsight I wished I had double my cover 6 years ago, but I had to look at costs at the time as well. 

Unfortunately though, an adviser recommending cover for someone with no financial need but a want for something just in case X, Y or Z happens in the future would be on a sticky wicket if a complaint was put forward.  I'd certainly not do it, unless the cover inlcuded some benefit for the life assured, such as accelerated critical illness cover.