Life Insurance?

Author
Discussion

Andehh

Original Poster:

7,107 posts

205 months

Thursday 26th January 2017
quotequote all
Aside from using one of the big comparison sites & signing up to pay £6/month for the next 10-15 years, is there any pitfalls of taking out a policy to watch out for?

Young, non smoker, etc

Thanks

Sarnie

8,025 posts

208 months

Thursday 26th January 2017
quotequote all
If you're young and healthy, take as much index linked Level Term cover your budget allows for..........life premiums go up every year you get older unlike car insurance that gets cheaper...........

Andehh

Original Poster:

7,107 posts

205 months

Thursday 26th January 2017
quotequote all
Sarnie said:
index linked Level Term cover your budget allows for..........
Can you explain what that is please?

I am only taking it out as part of writing a will and how family & daughter would be funded if i was to drop off the radar. Only looking to have it run for 15 years as a result.

Sarnie

8,025 posts

208 months

Thursday 26th January 2017
quotequote all
Andehh said:
Can you explain what that is please?

I am only taking it out as part of writing a will and how family & daughter would be funded if i was to drop off the radar. Only looking to have it run for 15 years as a result.
Having it on a Level Term basis means that the sum assured does not decrease across the 15 years.

Having it index linked means that the sum assured will increase annually in line with RPI/inflation or similar, to ensure that what the sum assured could buy today, can buy the same in 15 years time.....

C0ffin D0dger

3,440 posts

144 months

Thursday 26th January 2017
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It's assurance by the way as dying is one of the few certainties in life smile

Cheib

23,110 posts

174 months

Thursday 26th January 2017
quotequote all
Take out multiple policies rather than just one....i.e. if you want £100k of cover take out two for £50k. As the poster above said Life Insurance is cheap when you are young but you may find you don't need as much when you're older...if you take out multiple policies you can just let one lapse and then (in the above example) have one still going for £50k. To let £100k policy lapse and then take out a new £50k policy would be very expensive...it....or if circumstances change and you just can't afford the cover etc you can change

I took out three policies rather than one....the price difference was tiny. I think 1 or 2% vs having one single policy.

walm

10,609 posts

201 months

Thursday 26th January 2017
quotequote all
C0ffin D0dger said:
It's assurance by the way as dying is one of the few certainties in life smile
Not sure if username or advice is serious... wink

Sarnie

8,025 posts

208 months

Thursday 26th January 2017
quotequote all
Cheib said:
Take out multiple policies rather than just one....i.e. if you want £100k of cover take out two for £50k. As the poster above said Life Insurance is cheap when you are young but you may find you don't need as much when you're older...if you take out multiple policies you can just let one lapse and then (in the above example) have one still going for £50k. To let £100k policy lapse and then take out a new £50k policy would be very expensive...it....or if circumstances change and you just can't afford the cover etc you can change

I took out three policies rather than one....the price difference was tiny. I think 1 or 2% vs having one single policy.
You can simply reduce the sum assured of a policy rather than taking 3 policies.

Life providers would be more than happy to reduce their risk at any point.

It's increasing the sum assured thats usually not possible as you are asking for increased risk based on the initial underwriting that took place when you applied. Most provider will allow a small increase of up to 25% but anymore would require a new policy and application......

trickywoo

11,700 posts

229 months

Thursday 26th January 2017
quotequote all
C0ffin D0dger said:
It's assurance by the way as dying is one of the few certainties in life smile
You can have life insurance and life assurance, they are different things.

Essentially insurance will pay out if you die within the policy term, if you live longer there will be no payment.

Assurance is a combination of insurance and investment and will payout regardless of how long you live, the FSA views life assurance as an investment product.

Which you need will depend on your own personal circumstances.

C0ffin D0dger

3,440 posts

144 months

Thursday 26th January 2017
quotequote all
trickywoo said:
C0ffin D0dger said:
It's assurance by the way as dying is one of the few certainties in life smile
You can have life insurance and life assurance, they are different things.

Essentially insurance will pay out if you die within the policy term, if you live longer there will be no payment.

Assurance is a combination of insurance and investment and will payout regardless of how long you live, the FSA views life assurance as an investment product.

Which you need will depend on your own personal circumstances.
"You insure something that MAY happen, while you assure something that WILL happen. Death is of course assured, but as the question is "will you die within a set time?" many call it insurance."

Therefore nothing to do with investments. wink

walm

10,609 posts

201 months

Thursday 26th January 2017
quotequote all
C0ffin D0dger said:
"You insure something that MAY happen, while you assure something that WILL happen. Death is of course assured, but as the question is "will you die within a set time?" many call it insurance."

Therefore nothing to do with investments. wink
confused
So it's life INSURANCE the op and everyone else is talking about.
Not ASSURANCE as you suggested earlier?

trickywoo

11,700 posts

229 months

Thursday 26th January 2017
quotequote all
C0ffin D0dger said:
Therefore nothing to do with investments. wink
Sorry but you are plain wrong. Look it up.

Life insurance is relatively cheap for the young as they aren't likely to die within the term. If you take out insurance you are essentially aiming to provide for dependents if you die early.

Assurance is an entire plan for both possible early death and death beyond the term.

You are right in that insurance is for something which you hope doesn't happen and assurance is for something you know will happen but for life cover you essentially insure against premature death.

trickywoo

11,700 posts

229 months

Thursday 26th January 2017
quotequote all
walm said:
C0ffin D0dger said:
"You insure something that MAY happen, while you assure something that WILL happen. Death is of course assured, but as the question is "will you die within a set time?" many call it insurance."

Therefore nothing to do with investments. wink
confused
So it's life INSURANCE the op and everyone else is talking about.
Not ASSURANCE as you suggested earlier?
OP is looking at insurance. Assurance is a very different product.

walm

10,609 posts

201 months

Thursday 26th January 2017
quotequote all
trickywoo said:
walm said:
C0ffin D0dger said:
"You insure something that MAY happen, while you assure something that WILL happen. Death is of course assured, but as the question is "will you die within a set time?" many call it insurance."

Therefore nothing to do with investments. wink
confused
So it's life INSURANCE the op and everyone else is talking about.
Not ASSURANCE as you suggested earlier?
OP is looking at insurance. Assurance is a very different product.
I know!!!
Coffin Dodger told him it was assurance, which is wrong!
C0ffin D0dger said:
It's assurance by the way as dying is one of the few certainties in life smile

trickywoo

11,700 posts

229 months

Thursday 26th January 2017
quotequote all
walm said:
trickywoo said:
walm said:
C0ffin D0dger said:
"You insure something that MAY happen, while you assure something that WILL happen. Death is of course assured, but as the question is "will you die within a set time?" many call it insurance."

Therefore nothing to do with investments. wink
confused
So it's life INSURANCE the op and everyone else is talking about.
Not ASSURANCE as you suggested earlier?
OP is looking at insurance. Assurance is a very different product.
I know!!!
Coffin Dodger told him it was assurance, which is wrong!
C0ffin D0dger said:
It's assurance by the way as dying is one of the few certainties in life smile
Agree Coffin Dodger has muddied the waters. I thought I put up a very considered post on the differences in life insurance and assurance and the dodger said I was wrong.

The irony is strong here.

Sarnie

8,025 posts

208 months

Thursday 26th January 2017
quotequote all
trickywoo said:
OP is looking at insurance. Assurance is a very different product.
Well, lots of Life "insurance" providers call their "insurance" "assurance".......taken from their Key Features Documents;

AIG:

"Who can buy AIG Term Assurance?
AIG Term Assurance is available to British citizens or those
resident in the United Kingdom, Channel Islands, Isle of
Man and Gibraltar, aged 17 up to and including 86."

Aviva;

"What is Term Assurance?
It's an Insurance policy that can provide you with life cover and for an additional premium you can include critical illness cover"

Just a few examples............

trickywoo

11,700 posts

229 months

Thursday 26th January 2017
quotequote all
Sarnie said:
Well, lots of Life "insurance" providers call their "insurance" "assurance".......taken from their Key Features Documents;
'Term assurance' - which is essentially insurance. The 'term' element changes the meaning.

The legal defination of life insurance and life assurance is as I've described it.

Sarnie

8,025 posts

208 months

Thursday 26th January 2017
quotequote all
trickywoo said:
'Term assurance' - which is essentially insurance. The 'term' element changes the meaning.

The legal defination of life insurance and life assurance is as I've described it.
Not really, they could just call it "Term Insurance"...........

sidicks

25,218 posts

220 months

Thursday 26th January 2017
quotequote all
Sarnie said:
Not really, they could just call it "Term Insurance"...........
"Assurance" is simply referring to the underlying risk being mortality risk I.e. assurance is a subset of insurance.

trickywoo

11,700 posts

229 months

Thursday 26th January 2017
quotequote all
sidicks said:
"Assurance" is simply referring to the underlying risk being mortality risk I.e. assurance is a subset of insurance.
Isn't insurance a subset of assurance given assurance is in many ways (like for like) the superior product, at least for the person being covered?

By that I mean insurance will leave the policy holder with nothing if they live beyond the term while an assurance policy will still have a value if they live a (very) long life.