Yet another life assurance question, sorry.

David_B_2

After reading the related threads I have a couple or life assurance questions of my own.

Looking at taking out a new joint life assurance policy for my wife and I. This is a term based policy for a period of 18 years to cover the school years. We have one child and plans for another. Based on Martins article I've based quotes on a payout on death of x10 times my salary which is in the region of £300k.

What concerns me is that’s a hell of a lot of money so what happens if:-

1. One of us was to die, would the other get the full amount or does the tax man take a large share? How can I avoid this?

2. What happens if myself and wife die at the same time. Will the payout be put in trust for our son or this something I should be stating when taking out the policy or in our wills? Again any advise very much welcomed.

Many thanks in advance and sorry for noddy questions :-)

dunstonh

Based on Martins article I've based quotes on a payout on death of x10 times my salary which is in the region of £300k.

It should be noted that the 10x salary is Martins opinion and matches some of the very basic calculations that the old tied salesforces used to use years ago.

My opinion is that this could easily overstate your real position and actually end up costing you more than if you had a proper evaluation of your position. 10x is not personalised and takes no account of your pensions, death in services, state benefits or uneven requirements that you and your spouse will have.

1. One of us was to die, would the other get the full amount or does the tax man take a large share? How can I avoid this?

There is no tax on first death but there maybe on second death depending on the value of the estate and IHT limits at the time as well as any trusts/will that exist.

2. What happens if myself and wife die at the same time. Will the payout be put in trust for our son or this something I should be stating when taking out the policy or in our wills?

If its joint life, first death it will only pay out once. It would potentially suffer IHT if not in trust and would follow the instructions of the will (if not in trust).

David_B_2

Many thanks for your valued comments.