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  • 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 3
  • OshayAway
    Thanks, OA.

    I've just been reading Legal and General's life cover T+C's (zzzz!) and they increase the premiums by 1.5 x the RPI% each year, whereas the cover goes up by just 1 x the RPI. So over the years the premiums become an increasingly bigger proportion of the payout (due to compounding).

    I wonder if there is any way of checking how other insurers do this, short of trawling through all of the T+C's! If there are differences they coud make a big difference to the cover's cost over the length of the term...
    Originally posted by Craig W
    You're welcome. I would encourage you to use a whole of market broker to do the research for you. There is a third method which is a bit difficult to explain but doesn't cost more from outset or adopt the 1.4/5 etc.
  • Craig W
    Where would I find a "whole market broker"? Do you mean like Cavendish and Moneyworld?

    The third method sounds intriguing. Any clues, links, etc?

    Thanks again.
  • Siobhan-louise
    Hi, have just been reading up on life assurance and am so confused right now. I am 25 years old and have a partner and two children, my partner already had life assurance so am only looking for myself. I read on the money saving website about brokers and commission and fees and was a bit confused. I went onto One of the sites and it said I paid an admin fee and got the cheapest price available, or I could do the commission based one where they keep a percentage of the commission but use the rest of it to lower the premiums but the premiums a actually more! How is this?? I really have mo idea what kind of assurance I need or how much etc etc so if any one could help I would really appreciate it,

    Zionism
    • stephenni1971
    • By stephenni1971 9th Mar 11, 12:05 PM
    • 872 Posts
    • 512 Thanks
    stephenni1971
    Hi, have just been reading up on life assurance and am so confused right now. I am 25 years old and have a partner and two children, my partner already had life assurance so am only looking for myself. I read on the money saving website about brokers and commission and fees and was a bit confused. I went onto One of the sites and it said I paid an admin fee and got the cheapest price available, or I could do the commission based one where they keep a percentage of the commission but use the rest of it to lower the premiums but the premiums a actually more! How is this?? I really have mo idea what kind of assurance I need or how much etc etc so if any one could help I would really appreciate it,

    Zionism
    Originally posted by Siobhan-louise
    If that is the case then buying from a website could be a poor choice, however cheap it is.

    To put it simply:

    If you use an Independent FInancial Adviser they will research the whole of the market, after finding out your individual circumstances, and recommend a policy that suits you. Generally speaking for business like this the adviser gets paid a commission from the insurer ( which is built into your premiums ). The adviser can however remove the commission and charge a fee for his services but on protection business this is a rarely chosen option.

    If you use a website as Martin suggests - then you have to find the best policy, choose from the options available and you have very little consumer protection if it it the wrong choice. YOu benefit from a cheaper policy as there is no commission built in but you get no advice and take all the responsibility yourself. Thats fine if you know what you are doing but you clearly dont.

    Where protecting your family or yourself is important, picking the RIGHT policy is much more important that picking the CHEAPEST policy.
    I am a Financial Adviser specialising in Mortgages, Protection, Health and Medical Insurance. I also write wills. All information posted on this site is for discussion only, and should not be taken as advice.
    • moneykev
    • By moneykev 29th Mar 11, 11:33 AM
    • 12 Posts
    • 6 Thanks
    moneykev
    The more I read the less I know.

    Thought about DIY but it seems a little more complicated than buying car insurance etc given the need to setup trusts, inheritence tax implications etc.

    Before I started reading I was of the mind to buy one policy to cover all eventualities but now realise this may not be the best solution.

    I am now thinking of getting:
    To cover mortgage - decreasing term cover - 2 single policies (2 lifes)

    To cover kids - level term cover increase with inflation put into a trust - 2 single policies (2 lifes)

    Tell me if I'm on the right track. Where is the best place to find an IFA with a good track record?
  • m0gw41
    My wife and I are both in our early 30s with no children and 3 years into a reasonably large 25 year mortgage on our home. I'd like to get the Decreasing Term Insurance to pay off the mortgage if one of us dies before it is repaid. At this stage I'm not interested in critical illness or level term amounts as we both have jobs that can support ourselves should one of us die. I am going to go through the Cavendish route but I have a few questions regarding this type of cover:

    1. I've put in the amount on money left on the mortgage and the remaining 22 year term, is that right? Does this have to be exact or can I overestimate?

    2. Does the payout follow the mortgage exactly or do they just guess based on an assumed percentage? As we are on a tracker the overall value of the mortgage can't be predicted.

    3. What happens if we upsize our mortgage, can you usually modify these policies or do you get a new one to cover the difference?

    4. What happens if we sell the house and decide to rent, is it possible to terminate these contracts easily, if we had no home and kept it would it still payout a lump sum if it was within the original term?

    5. If circumstances change (such as an illness) do we have to inform the life insurance company if it is a guaranteed type?

    Thanks in advance for the advice!
  • abbyr
    Please help!!!!
    Can anyone help. I have just purchased my first home and have no idea what life assurance I need. The mortgage is about 120,00 and so far I will be paying this off for the next 35 years unless I am lucky somehow. I am confused as to how it works. I am not married but living with my partner. If I were to die my 'estate' would go to my parents which is fine as I don't have a ring on my finger yet, although they would pay off my mortgage so my partner were not left with a huge mortgage on his own.

    what confuses me is that if I take cover out now for the 35 years until my mortgage ends I have no idea what will happen in my life up until then. If I buy a new house which is worth more money would I need to change life assurance to cover the extra cost. If I have children will I need to change it again to cover their standard of living? How can I predict what will happen in the next 35 years?

    How much cover would I need to cover the mortgage, funeral expenses, children, loans. Am i committed to a single policy for the next 35 years are can they be changed and adapted to suit a changing life.

    Any advice would be appreciated.

    thanks
    • kingstreet
    • By kingstreet 11th May 11, 12:04 AM
    • 35,670 Posts
    • 19,513 Thanks
    kingstreet
    Did you buy the property as joint tenants, or tenants in common? Your share of the property only passes into your estate in the latter case. Joint tenants receive the deceased's share on death.

    You can cancel policies and take out new ones, subject to your health, at any time, so you won't be buying a policy for the next 35 years. As your circumstances change, your needs change, so your cover will need to change too.

    If you both want the mortgage paid off on death you could take a joint mortgage protection policy with cover which falls as the mortgage debt falls. This is the cheapest form of cover.

    Alternatively, you could take level cover which could then provide funds over and above the mortgage repayment (as it stays the same as the debt falls). Separate policies on each of you, written in trust for the other, would be both tax efficient and helpful as the benefits are paid outside your estate and directly to the beneficiary.
    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.
    • dunstonh
    • By dunstonh 11th May 11, 2:10 AM
    • 98,581 Posts
    • 67,058 Thanks
    dunstonh
    what confuses me is that if I take cover out now for the 35 years until my mortgage ends I have no idea what will happen in my life up until then. If I buy a new house which is worth more money would I need to change life assurance to cover the extra cost. If I have children will I need to change it again to cover their standard of living? How can I predict what will happen in the next 35 years?
    You cover the financial need. If the need changes then you can change it. oVer time the need will change or you will get more needs (which means you get more policies/segments to cover them)

    How much cover would I need to cover the mortgage, funeral expenses, children, loans.
    Best not to try and bundle it into one policy. It wont work and you will just end up paying more than you need to.

    Treat each of the major needs individually.
    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.
    • VJ_
    • By VJ_ 12th May 11, 3:45 PM
    • 60 Posts
    • 24 Thanks
    VJ_
    Best not to try and bundle it into one policy. It wont work and you will just end up paying more than you need to.
    Originally posted by dunstonh
    Not necessarily - If you're getting level term life assurance (as I'm doing as part of buying my first flat), the cheapest way seems to be to take it out for as long as possible; my mortgage is only 63,000 over 25 years, but I can get 40 years of 200,000 cover for under 10\month as I'm only 28.

    If I get run over tomorrow, that insurance will cover my mortgage, funeral, cremation & any unforeseen costs* with plenty to spare.
    Hopefully the same policy will still cover most\all of that in 5\10\15 years time when I'll (hopefully) have a bigger house, family etc. but I'll still only be paying under 10\month.

    Why bother with many separate policies that only get more expensive as I get older, when I can have one fixed at a very low rate until I'm 68?



    *Currently, my only other debt is my student which is written off at death.
    ~share and enjoy~
    • stephenni1971
    • By stephenni1971 12th May 11, 6:58 PM
    • 872 Posts
    • 512 Thanks
    stephenni1971
    Not necessarily - If you're getting level term life assurance (as I'm doing as part of buying my first flat), the cheapest way seems to be to take it out for as long as possible; my mortgage is only 63,000 over 25 years, but I can get 40 years of 200,000 cover for under 10\month as I'm only 28.

    If I get run over tomorrow, that insurance will cover my mortgage, funeral, cremation & any unforeseen costs* with plenty to spare.
    Hopefully the same policy will still cover most\all of that in 5\10\15 years time when I'll (hopefully) have a bigger house, family etc. but I'll still only be paying under 10\month.

    Why bother with many separate policies that only get more expensive as I get older, when I can have one fixed at a very low rate until I'm 68?



    *Currently, my only other debt is my student which is written off at death.
    Originally posted by VJ_
    I think people get too hung up on the 'cheap' way and not the 'right' way.

    Segmented polices are a sensible idea, circumstances and priorities change and rather than having to rewrite your whole protection policy you can amend what you need to.

    Looking back through this thread it is sad that so many claim to have found the perfect route to getting cover through a non advised route like Cavendish and then come on here to ask the opinions of anonymous posters as to how much/how long/do I need CIC and other important questions.

    Cavendish and others give you the tools to do it but without the knowledge of what you need it opens a whole variety of pitfalls - most of which will only be discovered if you die or suffer a serious illness.
    Last edited by stephenni1971; 12-05-2011 at 7:50 PM. Reason: Mistake
    I am a Financial Adviser specialising in Mortgages, Protection, Health and Medical Insurance. I also write wills. All information posted on this site is for discussion only, and should not be taken as advice.
    • Annisele
    • By Annisele 12th May 11, 7:27 PM
    • 4,339 Posts
    • 4,536 Thanks
    Annisele
    I think VJ is saying that he's taken a policy for 200k at under 10 per month - but if he has, then I'm curious as to whether or not the premium is reviewable.
    • kingstreet
    • By kingstreet 13th May 11, 12:41 AM
    • 35,670 Posts
    • 19,513 Thanks
    kingstreet
    Not necessarily - If you're getting level term life assurance (as I'm doing as part of buying my first flat), the cheapest way seems to be to take it out for as long as possible; my mortgage is only 63,000 over 25 years, but I can get 40 years of 200,000 cover for under 10\month as I'm only 28.

    If I get run over tomorrow, that insurance will cover my mortgage, funeral, cremation & any unforeseen costs* with plenty to spare.
    Hopefully the same policy will still cover most\all of that in 5\10\15 years time when I'll (hopefully) have a bigger house, family etc. but I'll still only be paying under 10\month.

    Why bother with many separate policies that only get more expensive as I get older, when I can have one fixed at a very low rate until I'm 68?



    *Currently, my only other debt is my student which is written off at death.
    Originally posted by VJ_
    ... and you've written it in trust, of course, to speed the claim process and to avoid future inheritance tax liabilities?
    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, 8:17 AM
    • 156 Posts
    • 50 Thanks
    ExpertAdvice
    I absolutely agree with VJ. I dont see any point getting cover just to cover the mortgage especially when you are young and can get cheaper cover. One should try to go for longer coover till 70-75 or even 80. That gives more chances of a payout. Life expectancy in UK is almost 80 and these things work on probabilities.

    Since you would be paying for 30-40 years, you should give yourself a maximum chance of payout.

    Thats my view.
    • magpiecottage
    • By magpiecottage 13th May 11, 8:52 AM
    • 9,114 Posts
    • 5,584 Thanks
    magpiecottage
    I think VJ is saying that he's taken a policy for 200k at under 10 per month - but if he has, then I'm curious as to whether or not the premium is reviewable.
    Originally posted by Annisele
    I reckon there is (very roughly) a 15% chance he won't survive the 40 years.

    The premium paid if he survives the whole term equates to under 2.5% of the death benefit (assuming it is not reviewable). That ignores the fact that there are charges incurred by the insurer and that those policyholders who do not survive will not pay their premiums after they die.

    It also ignores the fact that the insurer can invest them money not being used to pay out but I do not think this would be commercially viable as a non-reviewable premium.
    • stephenni1971
    • By stephenni1971 13th May 11, 9:25 AM
    • 872 Posts
    • 512 Thanks
    stephenni1971
    I absolutely agree with VJ. I dont see any point getting cover just to cover the mortgage especially when you are young and can get cheaper cover. One should try to go for longer coover till 70-75 or even 80. That gives more chances of a payout. Life expectancy in UK is almost 80 and these things work on probabilities.

    Since you would be paying for 30-40 years, you should give yourself a maximum chance of payout.

    Thats my view.
    Originally posted by ExpertAdvice
    I'm afraid your username falls rather short of what you actually say in your posts.

    VJ has no current need for life cover until 70 or 80. He is saying he will take it just in case. That is a hard point to argue and certainly any QUALIFIED adviser who would give EXPERT ADVICE would find it difficult to justify recommending a policy over and above the clients need 'just in case' he needs it in the future.
    I am a Financial Adviser specialising in Mortgages, Protection, Health and Medical Insurance. I also write wills. All information posted on this site is for discussion only, and should not be taken as advice.
    • lisyloo
    • By lisyloo 13th May 11, 9:44 AM
    • 25,526 Posts
    • 13,725 Thanks
    lisyloo
    I dont see any point getting cover just to cover the mortgage especially when you are young and can get cheaper cover. One should try to go for longer coover till 70-75 or even 80. That gives more chances of a payout. Life expectancy in UK is almost 80 and these things work on probabilities.

    Since you would be paying for 30-40 years, you should give yourself a maximum chance of payout.
    I disagree with this although I fully accept both peoples cirucmstanecs and views vary.
    There is a lot of point in having insurance when you need it (at the time you are exposed to risk) and not paying for it when it's completely unnecessary.

    Getting cover for longer will be more expensive, doesn't guarantee a payout simply to provide a payout when you probably don't need it.
    I accept it's completely down to personally choice, but I would not pay my money for that option.
    • dunstonh
    • By dunstonh 13th May 11, 9:47 AM
    • 98,581 Posts
    • 67,058 Thanks
    dunstonh
    I absolutely agree with VJ. I dont see any point getting cover just to cover the mortgage especially when you are young and can get cheaper cover. One should try to go for longer coover till 70-75 or even 80.
    Which will increase the cost of the monthly premium from day 1. Plus, chances are the policy will be long gone before age 70 (or older).

    Your expert advice would be pretty easily be classed as a mis-sale if it was professional advice.
    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.
    • VJ_
    • By VJ_ 13th May 11, 2:15 PM
    • 60 Posts
    • 24 Thanks
    VJ_
    ... and you've written it in trust, of course, to speed the claim process and to avoid future inheritance tax liabilities?
    Originally posted by kingstreet
    My combined assets are currently no where near the death tax threshold; but I'm going to get my will & probate sorted out by my solicitor once this sale is completed
    I do not think this would be commercially viable as a non-reviewable premium.
    Originally posted by magpiecottage
    The premium is fixed for the 40year term of the protection. It's simple level term life assurance for as long as they would let me take it out. I suspect that it's worked out on the basis I'm not going to die until my 70s or 80s, after the policy is over (it's unavailable for people over 65 & there's a minimum of 5 years cover you have to take). By taking it out now, I'm covered until 68 due to the maximum 40yr period.

    VJ has no current need for life cover until 70 or 80.
    Originally posted by stephenni1971
    Wrong - If I got run over by a bus tomorrow, the flat I'm buying would have to be sold to pay off the mortgage without the life cover. This way, the mortgage can be paid off, any other outstanding bills etc. paid, my funeral arranged etc. & the flat can remain with my family.
    He is saying he will take it just in case.
    All insurance is taken out 'just in case'. I'm simply extrapolating the principles.
    any QUALIFIED adviser who would give EXPERT ADVICE would find it difficult to justify recommending a policy over and above the clients need 'just in case' he needs it in the future.
    It's called long term planning - it's cheaper to over-insure now than it would be to add extra insurance in my 30s\40s\50s for each step up the housing ladder & stage in life I go.
    If qualified expert advisers aren't allowed to help you with long term planning I won't bother with them & I'll do my own research instead as their advice would be pointless short-termism.
    ~share and enjoy~
    • stephenni1971
    • By stephenni1971 13th May 11, 2:38 PM
    • 872 Posts
    • 512 Thanks
    stephenni1971
    My combined assets are currently no where near the death tax threshold; but I'm going to get my will & probate sorted out by my solicitor once this sale is completed

    The premium is fixed for the 40year term of the protection. It's simple level term life assurance for as long as they would let me take it out. I suspect that it's worked out on the basis I'm not going to die until my 70s or 80s, after the policy is over (it's unavailable for people over 65 & there's a minimum of 5 years cover you have to take). By taking it out now, I'm covered until 68 due to the maximum 40yr period.


    Wrong - If I got run over by a bus tomorrow, the flat I'm buying would have to be sold to pay off the mortgage without the life cover. This way, the mortgage can be paid off, any other outstanding bills etc. paid, my funeral arranged etc. & the flat can remain with my family.
    All insurance is taken out 'just in case'. I'm simply extrapolating the principles.

    It's called long term planning - it's cheaper to over-insure now than it would be to add extra insurance in my 30s\40s\50s for each step up the housing ladder & stage in life I go.
    If qualified expert advisers aren't allowed to help you with long term planning I won't bother with them & I'll do my own research instead as their advice would be pointless short-termism.
    Originally posted by VJ_
    YOu get confused between a NEED and a WISH. You WISH to leave the house to your family but you dont NEED to.

    On the other hand if you have a family you have a NEED to cover yourself for their benefit if you died.

    You seem pretty smug that you have things sorted so I'll refrain from commenting further - but the most important part of my job is the ADVICE I give. Whether that in turn leads to a recommendation of a product or not is secondary. I have opened my mouth on plenty of occasions to DIYers like yourself( in the real world not MSE) and in doing so have saved them from potential disaster. Not that I earned a penny from it mind... Remember anything you do by yourself has almost no protection should you select the wrong product.

    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 am a Financial Adviser specialising in Mortgages, Protection, Health and Medical Insurance. I also write wills. All information posted on this site is for discussion only, and should not be taken as advice.
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