Life Insurance?
Discussion
Ginge R said:
Chatted with a new client the other month. Having been divorced in middle age, and having once bought a cheap joint life policy and already surrendered it in favour of her partner, she found herself having to look around for fresh cover in her late forties.
Indeed..........individual policies all the way............although it's always tricky to suggest to clients that one benefit of individual policies is that if they split up from the person they are buying this house with then in the future they won't need to source fresh cover! 
p1doc said:
pmsl but thinking of people I know scaringly true
Yep........"I'm so in love my Mrs and the house you've just sorted the mortgage for.........."...................fast forward 3 years...."Liam, whats the Early Repayment Charge on our 5 year fixed rate, we're getting divorced"...........I thought I'd resurrect this thread as I'm starting to think about buying some life insurance (or do I want assurance...? I'm still not clear even after the debate above
).
Life situation as follows:
Married, 37 (wife is 33), no kids yet (but looking to start trying next year), own our main residence, BTL mortgage on second property. Where does one go for advice on life insurance products? Are there brokers selling these products like there are for mortgages? Or best to do my own research and go direct?
Any advice would be most appreciated.
). Life situation as follows:
Married, 37 (wife is 33), no kids yet (but looking to start trying next year), own our main residence, BTL mortgage on second property. Where does one go for advice on life insurance products? Are there brokers selling these products like there are for mortgages? Or best to do my own research and go direct?
Any advice would be most appreciated.
I haven't read the whole thread only the first couple of posts.
However, if you need life cover because of the financial implications of leaving a child behind, then consider a Family Income Benefit Plan for that part of your insurance planning.
Instead of paying out a big lump sum which someone needs to do something with, the policy pays out a regular monthly or annual income until a specified date, i.e when child reaches 18 etc
The benefit of this is two fold. First it is less expensive than Level Term Assurance and secondly it avoids the need to work out what to do with a big lump sum (a child under 18 cannot receive the lump sum so a trustee/surviving parent would be looking after it). A regular income is easier to deal with.
Anyway, not advice, just a suggestion to consider as I am not aware of enough of the circumstances.
However, if you need life cover because of the financial implications of leaving a child behind, then consider a Family Income Benefit Plan for that part of your insurance planning.
Instead of paying out a big lump sum which someone needs to do something with, the policy pays out a regular monthly or annual income until a specified date, i.e when child reaches 18 etc
The benefit of this is two fold. First it is less expensive than Level Term Assurance and secondly it avoids the need to work out what to do with a big lump sum (a child under 18 cannot receive the lump sum so a trustee/surviving parent would be looking after it). A regular income is easier to deal with.
Anyway, not advice, just a suggestion to consider as I am not aware of enough of the circumstances.
ukshooter said:
I haven't read the whole thread only the first couple of posts.
However, if you need life cover because of the financial implications of leaving a child behind, then consider a Family Income Benefit Plan for that part of your insurance planning.
Instead of paying out a big lump sum which someone needs to do something with, the policy pays out a regular monthly or annual income until a specified date, i.e when child reaches 18 etc
The benefit of this is two fold. First it is less expensive than Level Term Assurance and secondly it avoids the need to work out what to do with a big lump sum (a child under 18 cannot receive the lump sum so a trustee/surviving parent would be looking after it). A regular income is easier to deal with.
Anyway, not advice, just a suggestion to consider as I am not aware of enough of the circumstances.
Much overlooked, is Family Income Benefit (FIB). However, if you need life cover because of the financial implications of leaving a child behind, then consider a Family Income Benefit Plan for that part of your insurance planning.
Instead of paying out a big lump sum which someone needs to do something with, the policy pays out a regular monthly or annual income until a specified date, i.e when child reaches 18 etc
The benefit of this is two fold. First it is less expensive than Level Term Assurance and secondly it avoids the need to work out what to do with a big lump sum (a child under 18 cannot receive the lump sum so a trustee/surviving parent would be looking after it). A regular income is easier to deal with.
Anyway, not advice, just a suggestion to consider as I am not aware of enough of the circumstances.
For live or critical illness cover, FIB is cheaper, but mainly because the total amount you get paid diminishes as you approach the policy cut off date. For instance, £100,000 over 20 years would pay out £100,000 on the final day of month eleven, year nineteen, yet if you claimed on the final day of month eleven, year nineteen with FIB, you'd pick up a few quid because the payout is monthly and based on your income needs over the period that you declared at outset. So, in that respect, it's similar to decreasing term life insurance - your cover remains the same, but the amount that your estate stands to 'win' decreases over time - if you die in the early years of a policy, the total amount paid out will be more by the end of it, than if you die nearer the end of the term.
I agree completely that it has many benefits; the cover is cheaper and many beneficiaries would prefer the simplicity of a steady income stream - it's easier to budget. It's also potentially much more suitable for a young parent survivor with children as it can be affordable and may offer the right level of essential cover. But, one downside is that people's circumstances can change over time. A divorce later in life and a subsequent child with a new partner can cause protection issues if the cover is wrong (or if the term is too, for that matter).
Another is that it's difficult to predict what income needs are going to be in fifteen years. We could see inflation nudging 4% (even higher?) by the end of this year, who'd have thought that eighteen months ago? We've become so used to low mortgage rates, it's now almost in our psyche. But if you don't leave yourself much fat on the budgeting bone, what happens to the viability of covering mortgage repayments when rates may have raised to 'xyz%' in ten years? If you predict an income stream with very little margin for error, you might find yourself caught short down the line, whereas a slug of cash invested *can* be easier to manage. So, in that respect, FIB shouldn't be used to cover items like the mortgage.
For many people, a blend of the two works. The survivor gets a lump sum to pay off the family home, to subsidise the particularly difficult early months or year or so of a family death, but also the income which can allow a parent to work fewer hours to maybe spend more times with the kids. I have a client who is paying Life and FIB/CIC/IP premiums for his young adult sons on a forty year policy. They're young, fit and healthy, and the cover is, relatively speaking, cheap as chips. But they can't afford it themselves. However, he can, and they'll take over paying the premiums in a few years.
That's the idea anyway..
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