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Life Assurance for childcare
full-time-mum
Posts: 1,962 Forumite
When DD2 was born, we decided that we should get some very basic life cover so that should anything happen to me, there would be a pot of money to pay for childcare so that OH could continue to work.
We went for the cheapest, which happened to be tesco (plus we got loads of clubcard points into the bargain). Of course, the trouble with supermarket finance is that you don't get any advice.
We have now been told that the money should go into some sort of trust fund to ensure that it will go to the children and won't get divided up to other people and to prevent it being taxable. It was also suggested that we should consider looking for a policy that provides a monthly income rather than a lump sum, if the worst should happen, as it will probably be cheaper.
Does this advice seem reasonable?
If so, should we start and look for another policy with a trust fund option or can we organise one and attach it to our existing policy?
We went for the cheapest, which happened to be tesco (plus we got loads of clubcard points into the bargain). Of course, the trouble with supermarket finance is that you don't get any advice.
We have now been told that the money should go into some sort of trust fund to ensure that it will go to the children and won't get divided up to other people and to prevent it being taxable. It was also suggested that we should consider looking for a policy that provides a monthly income rather than a lump sum, if the worst should happen, as it will probably be cheaper.
Does this advice seem reasonable?
If so, should we start and look for another policy with a trust fund option or can we organise one and attach it to our existing policy?
7 Angel Bears for LovingHands Autumn Challenge. 10 KYSTGYSES. 3 and 3/4 (ran out of wool) small blanket/large square, 2 premie blankets, 2 Angel Claire Bodywarmers
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Comments
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Hi full-time mum.
Firstly I am an IFA so please do not take this post as advice as this has a specific meaning for a person like me.
To answer your question then ordinarily ( remembering I do not know your exact circumstances) for family protection I would recommend Family Income Benefit.This is usually cheaper than a lump sum because the amount you pick is annual. So if you choose £15000 a year and do not die for 6 years then the pay-out by the insurance company is reduced whereas if you choose a lump sum it has to pay that out at any point in the term. So this type of policy is usually cheaper.
As for a trust then yes it is a good idea. It can save on inheritance tax depending on your circumstances. The other gain is that you dependents will get the money faster as wills take time to settle and if you die without a will then it can take quite some time. A trust should pay -out within a month and maybe quicker.
It might be worth asking Tesco if they have a trust for your cover.
To look at which is best between an income and a lump sum would require a few more details about you and your Tesco policy.I am an Independent Financial Adviser. For regulated individuals like me there are rules on giving financial advice. Therefore any posts I make are meant to be helpful but are not financial advice.0
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