Taking life insurance for my daughter

intex310

We, as a parent, both have life insurance which we took out bit late and obviously with high premiums.

Just to avoid that scenario, can we take one for my daughter who just turned adult? Using the sites on MSE, found them much cheaper or just say affordable. Can I use my account to pay for direct debit until she makes her own income? Also, any advice for putting it on a trust please?

QrizB

Just to avoid that scenario, can we take one for my daughter who just turned adult?

What exactly are you hoping to achieve?

Insurance companies make profits. In order to make profits, they charge more in premium than they pay out in payments.

18 year olds rarely have life insurance as they're quite unlikely to die and don't generally have dependants or mortgages.

dunstonh

What is the point of asking an 18-year-old to pay money for something they don't need?

You don't know how much she's going to need when she does eventually need one. She may never need one. You also don't know the required term. So chances are it would need to be cancelled at some point, and it would just be a waste of money.

intex310

https://forums.moneysavingexpert.com/discussion/comment/82009457#Comment_82009457

I was thinking about paying it myself for her. Other rational is it might be helpful for her in the future with her own family as it is much cheaper to take it now. £13 a month for 60 yrs.

sheramber

https://forums.moneysavingexpert.com/discussion/comment/82009524#Comment_82009524

How much does it pay out and in what circumstances?

QrizB

Other rational is it might be helpful for her in the future with her own family as it is much cheaper to take it now.

It might be cheaper to take it out now, but you'll be paying it for longer.

You've not yet given a good reason for your daughter to need life insurance now, at this point in her life. "Because it's cheaper" isn't a reason.

How much does it pay out and in what circumstances?

Yes, this would be good to know.

£13 a month for 60 yrs.

Compounded at 4%pa, that's ~£37k.

Brie

Given that many large organisations have some sort of life assurance or death benefits for their employees I would wonder how necessary this is.

May I offer an alternative suggestion? When myself and my siblings became independent adults my parents knew they no longer needed life insurance for themselves so cancelled their policies and instead started paying into income protection schemes for us. Of the 4 of us only 1 needed to make a claim after a bad accident but it was very useful and reassuring to the rest of us to know there was that safety net.

poseidon1

Although I concede substantial life insurance cover for 18 year old can be very cheap, I would consider it to be pointless unless they are burdened with dependants or a mortgage.

If you want to do something really meaningful for her to age 60, then increase your monthly spend to £20 per month and get a SIPP set up on her behalf .

Pension prospects for that age group are bleak to say the least, with state pensions probably not coming on stream until age 70+, and employer's DC pensions may struggle with lower investment returns in future than seen in the past. Giving her a little bit of a head start in this regard would seem to make more sense than life cover.

dunstonh

https://forums.moneysavingexpert.com/discussion/comment/82009524#Comment_82009524

Unless you go for an annually increasing plan it will be worth a pittance in later years.

Will she have a life assurance need to age 78, assuming she can get a policy to 78 because you can't normally go that far on a term assurance.

RogerPensionGuy

This sounds a bit like getting the cheapest car insurance possible at age 17,18 & 19 and then at 20 with NCD and experience it may work out cheaper.

Probably need to know the basics, is it £13 PM for the next 60 years and it pays out what at what points of time?

In my experience a life & CI insurance taken out very early can certainly feel okay and comforting.

If the numbers feel right, I see no issue in this, but just ensure premiums are always paid to avoid any issues down the next 60 years.

Good thread.

intex310

£13 pm for next 62 yrs, which takes her to +80 yrs with £200k on death wt protected premiums. She is my only kid.

Thats approx £11k in 62 yrs expenses considering inflation is well not much right?

I can assure my future grandkids and would be appreciative.

Could someone shed the light about trust and future beneficiaries?