Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@. Skimlinks & other affiliated links are turned on

Search
  • FIRST POST
    • Former MSE Wendy
    • By Former MSE Wendy 1st Oct 10, 12:20 PM
    • 868Posts
    • 1,782Thanks
    Former MSE Wendy
    Level Term Life Insurance Guide Discussion
    • #1
    • 1st Oct 10, 12:20 PM
    Level Term Life Insurance Guide Discussion 1st Oct 10 at 12:20 PM
    This thread is to discuss the Level Term Life Insurance guide.

    Click reply to discuss.
    Last edited by Former MSE Wendy; 05-10-2010 at 8:26 PM.
Page 4
    • kingstreet
    • By kingstreet 13th May 11, 2:38 PM
    • 35,765 Posts
    • 19,577 Thanks
    kingstreet
    VJ - you've bought cover for 40 years but seem to have decided to ignore the other relevant issues which should have been considered at the time.

    A will is a very good idea as it ensures your assets will pass to those you wish to receive them. Probate is something which is only required after your death and it is a task your executor has to undergo before he/she can distribute your will.

    As things stand, your life cover will pass into your estate and will be distributed according to intestacy rules only when probate is settled. During that time, your home may well have been repossessed, so it's not an ideal scenario if you'd like to leave it to someone in particular.

    Writing the policy in trust, as I mentioned, has FUTURE Inheritance Tax benefits when you may have other assets and other properties, as you are planning for the long term. Indeed, if you don't take precipitate action, the 200k from this policy is actually using up over half your IHT nil rate band, so it isn't going to take a lot to give you an IHT problem you could easily avoid.

    Before the IHT benefits are apparent, the trust also ensures the life cover is paid directly to those you wish to receive the money without the need for probate, so it's made quick and easy and the person you wish to inherit your home can do so while settling the mortgage from the proceeds.

    Trusts can accommodate changes in beneficiaries at any future point, so naming someone now doesn't mean they will always have to benefit, if for example you want to remove them if (for example) you get married in the future.

    Writing a trust is free and it makes sense.
    Last edited by kingstreet; 13-05-2011 at 2:40 PM.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
    • ExpertAdvice
    • By ExpertAdvice 13th May 11, 2:45 PM
    • 156 Posts
    • 50 Thanks
    ExpertAdvice
    Thats right VJ.

    I have a few clients between 60-65 who have to pay a high price to exten their policy or get a new one at this age. If they had got cover for longer term while they were young by paying a couple of quids extra, they wouldn't be in this situation especially now when they have developed medical conditions.

    But, I guess they got advice from "OVERSMART" advisers like step****** who probably believe in copy book style rather than being practical.

    So, its realy how you view things. You shouldn't judge others. People have more peace of mind sine they know they are covered till 75-80 thats when they will most prabably die as per stats.
    Last edited by ExpertAdvice; 13-05-2011 at 2:49 PM. Reason: typing error
    • kingstreet
    • By kingstreet 13th May 11, 2:56 PM
    • 35,765 Posts
    • 19,577 Thanks
    kingstreet
    So we should all be buying whole life policies at the age of 18 then?

    Genuine question. Not designed to be a wind-up.

    VJ has his cover until 68 and drops down dead at 69. He's still married and his widow, who would have been in for a big lump sum (subject to inflation, of course) then gets nothing.

    I'm not saying what VJ is doing is wrong - as long as he continues to consider his changing needs and how affordability for cover isn't just a function of cost, but is also a function of disposable income which will change over time.

    I'm glad we can discuss issue like this here. I'd get thrown out of some of the other fora I use for boring everyone to death.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
    • kingstreet
    • By kingstreet 13th May 11, 3:02 PM
    • 35,765 Posts
    • 19,577 Thanks
    kingstreet
    Just one more thing.

    As AIDS never really materialised as the massive factor it was suggested it would be in 1988, I wonder why we've never seen the re-introduction of wonderful and innovative contracts like we had in the 1980s?

    Phoenix Assurance's Increasing Protection Plan was a ten year increasing term assurance which doubled in sum assured over the term. At the end of the ten years you could renew it, or convert it to a level term or whole life.

    There were conversion, increase and renewal options on most level term assurance contracts and being able to change term to whole life today would be a useful add-on.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
    • VJ_
    • By VJ_ 13th May 11, 3:03 PM
    • 60 Posts
    • 24 Thanks
    VJ_
    YOu get confused between a NEED and a WISH. You WISH to leave the house to your family but you dont NEED to.
    Originally posted by stephenni1971
    I don't NEED to get contents insurance either, I could just re-buy everything should I be burgled. I WISH to, as it gives me peace of mind.
    On the other hand if you have a family you have a NEED to cover yourself for their benefit if you died.
    I have a family, brothers, sisters, nieces, parents. They are no less important than any future spouse\children - who will benifit from this policy at a cheap rate, rather than an expensive one taken out later...

    Obviously I hardly need to mention the net effect of inflation on 200,000 over 40 years as you will have already done your research and considered the ned for indexation on the policy to counter the effect.
    I looked at indexation, and decided against it on the basis that I'd have to be earning 50,000\year to get a 200,000 mortgage by my-self. As a Librarian, this is highly unlikely & should my needs go up, I can always purchase more cover when I need it.

    However, I'm looking into getting index-linked PHI.

    VJ - you've bought cover for 40 years but seem to have decided to ignore the other relevant issues which should have been considered at the time.
    Originally posted by kingstreet
    I'm not ignoring it, I still haven't completed on the flat. I'm just doing one thing at a time; thanks for the advice though; certainly things to think about.

    BTW I know what probate is; I just had my solicitors wills & probate site up in another tab so typed it on auto-pilot, as I was reading...
    ~share and enjoy~
    • dunstonh
    • By dunstonh 13th May 11, 3:16 PM
    • 98,579 Posts
    • 67,061 Thanks
    dunstonh
    I don't NEED to get contents insurance either, I could just re-buy everything should I be burgled. I WISH to, as it gives me peace of mind.
    need means financial need. Not wish. You have a financial need for contents insurance.

    You have a financial need for life assurance but you are choosing to go with terms that exceed that need and paying more for doing so. Are you also paying more on all your other financial needs or are you compromising on them?

    The average of a term assurance policy is just 7 years. Mainly as requirements change. You will have the same life policy for 40 years.
    Last edited by dunstonh; 13-05-2011 at 3:19 PM.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • magpiecottage
    • By magpiecottage 13th May 11, 5:11 PM
    • 9,114 Posts
    • 5,584 Thanks
    magpiecottage
    Your expert advice would be pretty easily be classed as a mis-sale if it was professional advice.
    Originally posted by dunstonh
    I know of a case where the FSA has told an adviser to review their past sales to all clients having found out they have done this.

    Let me know if when you need a skilled person's report, ExpertAdvice.

    (Message to MODS - this is intended as a warning, not an advertisement!)
    • VJ_
    • By VJ_ 13th May 11, 7:13 PM
    • 60 Posts
    • 24 Thanks
    VJ_
    need means financial need. Not wish. You have a financial need for contents insurance.
    Originally posted by dunstonh
    I also have a financial need to (in the event of my death), cover my mortgage, any outstanding debt at time of my death, funeral expenses, air-plane tickets for family members in other countries to attend my funeral etc. ideally, I'd also like to end up in space as well - all this will cost quite a lot. Any left over will be a gift to various relatives to remember me by...
    You have a financial need for life assurance but you are choosing to go with terms that exceed that need and paying more for doing so. Are you also paying more on all your other financial needs or are you compromising on them?
    I'll be forgoing about 3 Starbucks mochas a month to pay for it, doesn't sound like compromising a 'financial need' to me.
    The average of a term assurance policy is just 7 years. Mainly as requirements change. You will have the same life policy for 40 years.
    My need will never decrease, so I looked around and saw that it's cheaper to take a large amount out now, than it is to take the same or less in my 40s or 50s etc. Keeping it for just 7 years would mean that my premium would increase every 7 years as the need will remain the same or increase.

    If my need increases, I can then talk to my insurers and see if they'll insure me at an increased amount, or take out a secondary policy with another insurer (whichever is the cheaper option). But taking out a policy of say, 250,000 at 45 would be much, much more costly than a policy of 50,000. I've fixed the majority of of any payout at the lowest possible cost - what's wrong here, how is this in any way controversial?

    Especially for the one type of insurance I don't ever want to have pay out!
    Last edited by VJ_; 13-05-2011 at 7:16 PM.
    ~share and enjoy~
  • oilit
    question
    Looking for some thoughts here - from those that have actually done this rather than those that havent...

    I read earlier in the thread that setting up a trust is free - which I am guessing was really referring to policy in trust - as opposed to a physical stand alone trust.

    I have 2 kids, and want to take out two individual policies for equal amount x payout each, thus if either i or my wife die first or have critical illness, the other party is the beneficiary.

    Now, assuming death for a minute, this would leave the remaining policy active and obviously set up to pay a dead person, so is it easier to set up a trust so that either policy pays to the surviving party and if that party is dead then it goes to the trust - or should we rely on the surviving party changing the beneficiary on their policy upon the death of the first party (i hope that makes sense !)

    The thought being - if either parent is alive then they should be the beneficiary - if not then it needs to be split between the two children.

    Its safe to assume that the payout and other items would break thru the IHT threshold.

    I find that if I speak to my accountant they point me to a lawyer for a trust, if I speak to financial advisors I use for pensions they seem to want to know everything about everything - which I dont particularly want to do. Finally, to try to mitigate risk, I am considering having the two policies with two different providers - any thoughts as to why this isnt a good route to go also welcome!

    thanks - and sorry if the opening sentence is a bit abrupt - but it looks like there are some knowledgable people on this thread - who probably have experience in these matters.
    Last edited by oilit; 17-05-2011 at 9:04 AM.
    • dunstonh
    • By dunstonh 17th May 11, 9:13 AM
    • 98,579 Posts
    • 67,061 Thanks
    dunstonh
    I find that if I speak to my accountant they point me to a lawyer for a trust, if I speak to financial advisors I use for pensions they seem to want to know everything about everything - which I dont particularly want to do.
    What you want doesnt fall under the remit of an accountant. A solicitor can be useful if you want your own trust but they would need to know about you and you dont want to do that. A financial adviser can do it but needs to know about you but you dont want to do that.

    There are multiple trusts to cater for different scenarios. If you are not prepared to give information then you are not going to get the best advice or really any advice that is going to be helpful beyond "you should use a trust". When you ask "what trust" you will get the answer that it will depend on your circumstances. Circumstances that you dont want to give.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • kingstreet
    • By kingstreet 17th May 11, 9:32 AM
    • 35,765 Posts
    • 19,577 Thanks
    kingstreet
    Looking for some thoughts here - from those that have actually done this rather than those that havent...

    I read earlier in the thread that setting up a trust is free - which I am guessing was really referring to policy in trust - as opposed to a physical stand alone trust.

    I have 2 kids, and want to take out two individual policies for equal amount x payout each, thus if either i or my wife die first or have critical illness, the other party is the beneficiary.

    Now, assuming death for a minute, this would leave the remaining policy active and obviously set up to pay a dead person, so is it easier to set up a trust so that either policy pays to the surviving party and if that party is dead then it goes to the trust - or should we rely on the surviving party changing the beneficiary on their policy upon the death of the first party (i hope that makes sense !)

    The thought being - if either parent is alive then they should be the beneficiary - if not then it needs to be split between the two children.

    Its safe to assume that the payout and other items would break thru the IHT threshold.

    I find that if I speak to my accountant they point me to a lawyer for a trust, if I speak to financial advisors I use for pensions they seem to want to know everything about everything - which I dont particularly want to do. Finally, to try to mitigate risk, I am considering having the two policies with two different providers - any thoughts as to why this isnt a good route to go also welcome!

    thanks - and sorry if the opening sentence is a bit abrupt - but it looks like there are some knowledgable people on this thread - who probably have experience in these matters.
    Originally posted by oilit
    Are you asking for advice from consumers who have set up trusts, or professionals who do them regularly?

    As you can see, this is the insurance forum and this is the level term assurance thread, so any reference to a trust would be consistent with the subject of the thread.

    Any adviser - tied, multi or independent should be able to write a life policy in trust without making a charge for it. If it's an existing policy, an IFA may wish to make a charge for drawing a trust, based on the time it will take to do so. You could even get hold of the Insurer's trust form and make a decent go of it yourself.

    Discretionary and accumulation trusts would indeed be best drawn by a solicitor.

    I can understand you not wishing to disclose some information to a third party. You are at liberty to do that, although the quality of the advice you receive my be limited as a result. Advisers are required to satisfy the Know Your Customer requirements, hence the questions.

    Your single policy idea is a good one. This will ensure the survivor doesn't lose their cover on the death of the other. The other issue you mention is actually mitigated in the trust documentation. You nominate classes of beneficiary who will only benefit on a contingency.

    For example, your main beneficiary could be "my spouse at date of death" or you could actually name your wife. You would then have contingent beneficiaries, such as "my children at date of death" (or you could name your children) so in the event of her death, the children would then get the money.

    You've noted the IHT implications of having the cover and the trust is a simple way of getting the money out of your estate for tax purposes and making sure the benefits can be paid quickly and without the need for probate.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
  • oilit
    dunston, kingstreet,

    thank you for both the answers - I realise it may seem strange that I dont want to answer all the questions, but I get so annoyed that people always want to collect so much information that it only helps them to profile me for what else they can sell me !! (I guess we are all different....)

    FWIW I am happy to talk about it with a lawyer to set up a trust - I just dont want to get endless bombardment from financial companies trying to sell me stuff in the future ;-)

    You have helped focus the issues tremendously - thanks !
    • dunstonh
    • By dunstonh 17th May 11, 12:58 PM
    • 98,579 Posts
    • 67,061 Thanks
    dunstonh
    thank you for both the answers - I realise it may seem strange that I dont want to answer all the questions, but I get so annoyed that people always want to collect so much information that it only helps them to profile me for what else they can sell me !! (I guess we are all different....)
    The adviser is profiling you so when you complain, they can prove that the advice they gave was correct for the circumstances. if you want best advice then you cannot expect to get it if the adviser doesn't know your circumstances.

    FWIW I am happy to talk about it with a lawyer to set up a trust - I just dont want to get endless bombardment from financial companies trying to sell me stuff in the future ;-)
    For most people, a solicitor arranged trust is not required and would be an unnecessary cost. An off the shelf trust can suit many needs and the insurers usually have a range available. If you dont want mailshots then you opt out of them. Most local IFA firms dont waste their budget on pointless mailshots as they dont need to get business that way. its the larger regional and national firms that need to do that.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • kingstreet
    • By kingstreet 17th May 11, 5:18 PM
    • 35,765 Posts
    • 19,577 Thanks
    kingstreet
    I just dont want to get endless bombardment from financial companies trying to sell me stuff in the future
    Originally posted by oilit
    I think you're missing the point here. You're going to take out two life policies. It is this which may end up with you under endless bombardment, not the issue of the trusts.

    Why not simply take out your cover with your choice of insurer(s) then pay an IFA to write the trust forms for you on an execution only basis? You tell the IFA your trustees and beneficiaries and that's it - forms written up and you get the trustees to sign, then you sign them.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
  • oilit
    hi

    thanks for your reply.

    re:- I think you're missing the point here. You're going to take out two life policies. It is this which may end up with you under endless bombardment, not the issue of the trusts.

    why would two life policies each on a different life result in more bombardment?

    I just consider this for the minimal incremental cost over joint cover on a single policy to be a 'no brainer'.

    re- Why not simply take out your cover with your choice of insurer(s) then pay an IFA to write the trust forms for you on an execution only basis? You tell the IFA your trustees and beneficiaries and that's it - forms written up and you get the trustees to sign, then you sign them.

    This is along the lines I am thinking - the costs from the likes of Cavendish are considerably better than I have seen from the likes of SJP and my pension IFA etc. As I have eluded to before, its the whole 'how much do you earn/what assets' BS that puts me off going down the advised route.
    Last edited by oilit; 17-05-2011 at 7:52 PM.
    • kingstreet
    • By kingstreet 17th May 11, 11:29 PM
    • 35,765 Posts
    • 19,577 Thanks
    kingstreet
    I don't know if we're talking at cross-purposes here. I assumed your comment "I just dont want to get endless bombardment from financial companies trying to sell me stuff in the future" meant you wanted to avoid marketing and junk mail?

    The trusts (and who writes them for you) aren't going to create the junk mail, it will be taking out the life cover that does. You'll have to give some information to the life offices you use, such as your name, address etc and unless you opt out of whatever marketing schemes they run, you'll get the bombardment.

    So going to a solicitor for a trust will cost you considerably more and won't reduce the risk of the marketing junk you get. I'd say the same about IFAs. As dunston has said, IFA practices aren't normally the kind of people who cold-call their clients with marketing ideas. They don't have to do that.

    Hope that clears it up.

    When you decide which insurers you'll use for your cover, ask them for a copy of their form and see if you feel you could complete it yourself.

    Cavendish has a copy of the old Axa form on its site, I've just googled it. Have a look and see what you think. Don't try and use it though. Axa is now Friends Life and I think the trust has been replaced.

    http://www.cavendishonline.co.uk/media/pdf/life_assurance_trust/AXA%20Trust%20and%20Guide.pdf
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
  • myshall
    life assurance
    i have had life assurance since 1992 ,terms of assurance 20 years,what happens when the 20 years expires.
    • kingstreet
    • By kingstreet 28th May 11, 9:40 AM
    • 35,765 Posts
    • 19,577 Thanks
    kingstreet
    Assuming is has no option to convert it to something else (see policy documentation) it will cease with no value on the expiry date.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
    • N Hall
    • By N Hall 22nd Jun 11, 12:00 PM
    • 7 Posts
    • 0 Thanks
    N Hall
    Life insurance excisting medical conditions
    Hi I was wondering if you could help. My wife has recently had her life insurance cancelled by her provider as she has been diagnosed with Fybromyalgia. She also has to go into hospital for an operation because of the Fybromyalgia in the next 2 months and is trying to find cover incase something happens. Most companies so far will not insure her as she is going into hospital. Do you know of any companies who provide cover for these situations.
    Many Thanks
    • dunstonh
    • By dunstonh 22nd Jun 11, 12:47 PM
    • 98,579 Posts
    • 67,061 Thanks
    dunstonh
    My wife has recently had her life insurance cancelled by her provider as she has been diagnosed with Fybromyalgia.
    Life companies dont cancel policies because of a medical condition that occurs after you start a policy unless the medical condition was pre-existing and you didnt declare it on application.

    So, why did they cancel it?
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

375Posts Today

4,239Users online

Martin's Twitter