Life Insurance / Assurance Totally confused

shockerdaq

Hello

I'm probably being 100% stupid but I just don't understand what type,amount, or for how long I need to get a life insurance / assurance out for.

I'm male 27 married to a 26 yr old (wife).
2 children aged 7 and 4
no mortgage (council tenant)
Loan borrowings of around £25,000.

Trying to get a quote as someone pointed out that i should really get some kind of life cover, incase the unexpected happened to me or my wife...

But i haven't got a clue what to put when filling out the quote.

How long do you want the cover (Isn't it just a yearly renewal like car insurance???)

How much. (How much is someone worth, how can i work this out is there a rule of thumb??)

what type gauranteed, reviewable, lump sum, decreasements???? How do i know....

If anyone has any advice on any of the above I would be extremely greatfull...

brummiebabe

When we looked into this, we were advised that a level term assurance policy would be best. Basically, if the worst happens (i.e. policy holder dies!) during the term of the policy then a lump sum is paid out. You can have the policy over any length of time (I think!) We were advised to have ours until youngest child was aged 21 - therefore taking account of any uni costs etc. The amount of cover you require is really dependent on your circumstances - we were encouraged to think about maybe needing to take some time off work etc, should your partner die i.e.to be with kids.

I think our life cover (2 individual policies) is over £100,000 each. We also have seperate life cover for the mortgage (although you don't currently need that.)

Don't know if this is helpful. Obviously some independent advice for your situation may be best.

dunstonh

Currently, level term assurances are the popular option although that is very likely to change next April when Pension Term Assurance is more likely to take over.

Obviously, we cannot give advice here but you should look at how much your family would be financially worse off in the event of your death. This usually applies to liabilities, such as mortgage and loans, and loss of income.

So, an example, £25k debt and loss of £10k income would roughly work out as needing £225,000 sum assured. Savings, investments and pensions would reduce that figure and the income needed (assumed 10k here) could be altered to remove the bit that you spend (as you wont be around!). Benefits may also be included if you wish.

Partner/Wife is just as important to cover if you have children. If she was to die then who would look after the children whilst you are working? This would involve child care costs potentially or you may prefer to do that yourself and you would lose your income as well.

what type gauranteed, reviewable, lump sum, decreasements???? How do i know....

guaranteed is most desirable as the premiums and exclusions cannot be altered. Reviewable allows the insurance company to alter the premiums or terms on reviewable dates. Level lump sum is the norm nowadays (for family protection) although some family income benefits still exist but they are not competitively priced and most used to get commuted to lump sum at a loss to the beneficiary.

The term should be until no-one is financially worse off in the event of your death. With children, you could be looking until age 25 (assuming university). If wife doesnt work, you could be looking until retirement. Sometimes split plans are required to cover different goals, although life cover generally gets cheaper, the more you have on one plan, as cost per £000 so splitting may not always be best.

Buying it yourself online may save a pound or two but you will be fully responsible for everything. Getting advice will help find the required sum assured. Independent or Whole of market advice is best but you should insist in seeing the premium research if you do this. Protection only advisors can pick a company to give a quote on, even if they are whole of market. If you see the price research, which you are entitled to see, then you can verify if the recommended company is competitive.

It doesnt always pay to go with the cheapest. Sometimes the company that is top will have exclusions that are not present on number 2 in the list or they have really slow underwriting or claims experience.