life insurance and death!

LillyJ

Just a quick question about life insurance

My partner and I are about to buy a house tennants in common. He has enough cover from work to pay off his half if he was to die.
I haven't checked what my work offers yet, but, say if I was to die, would my debt be passed to my parents as my NOK?

We have no children so this would not be an issue at present.

My question is, what happens if I die, do I need a will, and do I need life insurance??? SOOO confused, as broker just wants our commission.

TEDDYRUKSPIN

Your financial advisor is not just after your commission.

Major problem! Tennancy in common! If either of you pass away, the remaining 50% will go to either your surviving parents or brother or sisters. Major.............. problem. Now, as the surviving partner will be still there, he or she will need to find another 50% to buy out the 50% share of the profit.

I suggest you both to obtain to single life cover of at least the 50% amount put in trust of either of you. This will allow who ever survives to buyout the remaining share.

Next, why did'nt you put it in joint names? Very strange.

Life insurance will only cost around £10 to £15 per month. Death in service was never mean't to be used to pay off death! It is there to allow the surviving spouse a standard of living equivalent to the multiple allowed. For example, 5 x salary equates to 5 years.

Good luck.

Dan_Collins_2

A will will make the process a lot easier. Your share will go to your estate and be dealt with as per your will. If you dont have a will it will, or should go to your NOK. What you need to think of though is how will that share go to your family if you die. You OH may not be able to sell in this climate for example and he may not be able to borrow enough to give the share to your family.

Its always worth talking to your or a solicitor about this. You may want to take out enough cover to have some to pay off the mortgage and then your oh may want to cover you to pay your family.

I hope that makes sense? Its sat night and the beer is cold!

LillyJ

TEDDYRUKSPIN wrote: »

Your financial advisor is not just after your commission.

Major problem! Tennancy in common! If either of you pass away, the remaining 50% will go to either your surviving parents or brother or sisters. Major.............. problem. Now, as the surviving partner will be still there, he or she will need to find another 50% to buy out the 50% share of the profit.

I suggest you both to obtain to single life cover of at least the 50% amount put in trust of either of you. This will allow who ever survives to buyout the remaining share.

Next, why did'nt you put it in joint names? Very strange.

Life insurance will only cost around £10 to £15 per month. Death in service was never mean't to be used to pay off death! It is there to allow the surviving spouse a standard of living equivalent to the multiple allowed. For example, 5 x salary equates to 5 years.

Good luck.

We don't want it in joint names as there is always the possibility (although I find it unlikely) that we would split up. We have also each had some money given to us by our parents for the deposit.

I am not sure I really understand what you are saying about death in service thing. If he dies, then his estate gets paid more than what he owes on the house. I would not benefit from his death in service payout, his parents would as NOK.

Surely we could be tennants in common with a clause in the will to state each of us could stay in the house in the event of the other's death? Bearing in mind we are only in our early twenties and are likely to find another partner should this awful thing happen. When and if we have children, we will obviously rethink this.

It is not that I am unwilling to pay for the insurance, I just don't want to get something that would not be needed.

Also as I understand it, it is very common for unmarried couples to be tennants in common now days?

dunstonh

It is not that I am unwilling to pay for the insurance, I just don't want to get something that would not be needed.

Sounds like it is needed though.

LillyJ

Yep, fair enough, that is what I was trying to ascertain by posting this question. However I am still confused as to why my partner needs it when he would get enough money from work to cover his part of the loan?

Dan_Collins_2

To pay your your NOK without having to sell the home?

LillyJ

OK I am still not understanding this, if he dies, his part of the loan will be paid off by his death in service payment and go to NOK.
If I die, I will have bought insurance, and the same will happen.

We have a clause in the will that the remaining partner can stay in the house rent free, (so tennants in common but with each other's parents rather than each other), so our parents own a share of the house, as they put in the money for deposit.

I am not named on his death in service payout so I will not benefit from this.

I can see that I need it but cannot see how he does.

Sorry have never had anything worth making a will for before, so am completely new to this

Dan_Collins_2

OK, well as long as there is no limit on the period that you can rent the other share and the parents wont call in the deposit. Life insurance is very cheap though, so get some good advice and make sure you both covered.

LillyJ

Ok thanks for the advice. My dad is actually a chartered accountant so a little bit more knowledgable than me on such matters, so I will ask him what he thinks. I will also talk to the solicitors about the legal stuff.

dunstonh

The problems are:

1 - is the death in service able to nominate a beneficiary. If not, will it go to parents?
2 - If falling out occurs (and it does often) will parents force you to move out or make you buy his share of the property which they would own.

It does seem a little daft to rely on his death in service though because the cost of a joint life policy for the amounts involved is likely to be only fractionally more than single life if you are in your 20s.