Do I need life insurance?

AdmanPea

Hi

So my current job/pension offers a 4x salary pay out in terms of death in service which would more than cover my mortgage. I have a long term partner (not going to be having kids) so anything I do is to help protect her. 

Ideally I wanted critical illness cover but once asthma and a couple of other admissions to lifestyle over the years were given the cost went from life/critical at £34 to £76 which was massively prohibitive. 

I was, however, offered life insurance for £18 a month which reduces over the length of my mortgage term. I've signed up to this (but in cooling off period now) but I can't help but feel it's unnecessary given my workplace situation. 

What do you think? I'm 37 and in good health (unless you ask the insurance companies clearly). I recognise that to get the insurance now protects in case I ever leave my job and don't have such favourable terms. So there is that....

Mark_d

I believe that a life assurance policy is an unnecessary expense.  If I was to die, my partner would get my 4x salary benefit from my employer, plus my savings/investment portfolio, plus my pension pot.  That is more than enough to give my partner a very comfortable life if anything happened to me.  Likewise my partner has arrangements which are similar.
Critical illness cover typically gives you a lump sum payout if your are diagnosed with something serious.  I don't think this is necessary.  If either my partner or I are diagnosed with something serious, private medical insurance would look after the medical side of things whilst my emergency fund could support us whilst out of work.  Receiving a lump sum might cheer you up - like winning the lottery - but it's certainly not necessary and hence I consider it a waste of money.

Flugelhorn

how long would the right to DIS last for?  If you left the job / too unwell to work etc etc - how long would you be eligible ? Appreciate that the pension might kick in then but worth checking amounts 

dunstonh

So my current job/pension offers a 4x salary pay out in terms of death in service which would more than cover my mortgage. I have a long term partner (not going to be having kids) so anything I do is to help protect her. 

Death in service exists to replace the reduced pension entitlement that the spouse would get on your death.  i.e. your full working life maybe 40 years and if you live your pension would be based on that service.  However, if you die during your working life, your spouse/partner won't have 40 years of entitlement but a reduced number of years.

Your partner can use the DIS for whatever they want but its worth remembering that if its used for the mortgage, there will be shortfalls in other areas.

Ideally I wanted critical illness cover but once asthma and a couple of other admissions to lifestyle over the years were given the cost went from life/critical at £34 to £76 which was massively prohibitive. 

Statistically you are more likely to claim on a CIC than you are life assurance.      And then you have PHI (permanent health insurance) which is the best form of income protection.  Most people put that ahead of CIC in terms of the pecking order.   However, cost is likely to be an issue because the underwriting rating on the CIC is likely to occur on PHI.

I was, however, offered life insurance for £18 a month which reduces over the length of my mortgage term. I've signed up to this (but in cooling off period now) but I can't help but feel it's unnecessary given my workplace situation. 

What do you think? I'm 37 and in good health (unless you ask the insurance companies clearly). I recognise that to get the insurance now protects in case I ever leave my job and don't have such favourable terms. So there is that....

You haven't given sufficient details for an opinion on shortfall, but 4x your salary is almost certainly going to be insufficient unless your partner is self-sufficient.

DullGreyGuy

AdmanPea said:

So my current job/pension offers a 4x salary pay out in terms of death in service which would more than cover my mortgage. I have a long term partner (not going to be having kids) so anything I do is to help protect her. 

Ideally I wanted critical illness cover but once asthma and a couple of other admissions to lifestyle over the years were given the cost went from life/critical at £34 to £76 which was massively prohibitive. 

I was, however, offered life insurance for £18 a month which reduces over the length of my mortgage term. I've signed up to this (but in cooling off period now) but I can't help but feel it's unnecessary given my workplace situation. 

What do you think? I'm 37 and in good health (unless you ask the insurance companies clearly). I recognise that to get the insurance now protects in case I ever leave my job and don't have such favourable terms. So there is that....

Assuming your partner is female and the same age as you then she is likely to have another 43 years of life were you to die tomorrow. Would your 4 years salary be sufficient to last her 43 years?

A lot depends on your financial situation, lifestyles, plans if the worst were to happen etc. Some really dont care about their partner after they pass and so would prefer cash now to enjoy life than ensure their wife can still stop working at 55 as currently planned. Others, particularly where one earns vastly more than the other, feel the need to provide much more as going from a house hold income of £200k down to a part time NMW would have a vast impact on lifestyle that won't be recoverable without further assistance. 

You have to consider other things like... what happens if your employer goes bust and your new employer doesn't offer DiS?

Per others above, I am not that keen on Critical Illness unless you've just got nothing else to do with your money. It only covers certain conditions at certain levels and the policies dont age well as they are static whereas medical treatments move on. So one uncle got a payout for a heart condition as it required open chest surgery. His brother had the identical condition a few years later but didnt get a payout as they now use keyhole surgery for the same procedure so didnt meet the requirement. 

A much more important product to me is PHI which is a full fat income protection which will cover pay you an income until retirement if you are too ill to do your own job.