Dumb question on decreasing life insurance

[walm]

I need some insurance to cover school fees. (I looked at the special school fee trust providers and it appears a total rip off compared to regular life insurance.)

Obviously over time the remaining fees to pay are reducing.
So decreasing cover seemed to make sense.

However, I was slightly confused.
I can cancel at any time, and obviously cover stops.
BUT (ignoring inflation, I know) I could just open up ANOTHER decreasing cover plan FOR THE SAME PRICE and restart the clock.

So say for £1m cover for 20 years... at 10 years down the line, I could just stop paying and then buy the same product again such that I was back on £1m cover...
Or - more sensibly swap to £500k cover (I know it's not linear but you know what I mean) for the remaining term and half the price!?

I must be missing something here - is it just the inflation part?

[Spitfire2]

You are missing that when you start the subsequent policies you would be older and therefore at higher risk of death. That would make the monthly premium higher for the same cover.

[walm]

Spitfire2 said:

You are missing that when you start the subsequent policies you would be older and therefore at higher risk of death. That would make the monthly premium higher for the same cover.

THAT IS IT!!
Of course.
Sorry.
I knew it was a dumb question!

[Simpo Two]

I'm more impressed with a school that charges fees of £1M!

[walm]

Simpo Two said:

I'm more impressed with a school that charges fees of £1M!

I was actually rounding down and ignoring inflation too!

6 years at £6k a term.
5 years at £15k a term.
3 years uni at £9k + £10k living.

= £390k

x3.

In fairness, I am desperately hoping it won't be £15k a term 13-18 and I can persuade the kids to remain at a day school, but need to plan for the worst.

[LeoSayer]

£15k per year surely, not per term?!?!

[Sarnie]

Premiums only ever get more expensive the older you get, put it off for a few months and it WILL be more expensive.......best thing to do is to take as much Level Term Cover as you can afford when you are young and premiums are low. Then as you go on through life, you can add small top ups to your Level cover as required.........

[walm]

LeoSayer said:

£15k per year surely, not per term?!?!

No.
Again as a WORST CASE example (financially speaking!!) Eton is currently £12k PER TERM.
12*1.05^5 is 15.3.

School fee inflation is notoriously ENORMOUS.
So at 5% annual inflation over the next 5 years - that £12k per term fee becomes £15.3k.
Kid #1 won't be going for 5 years (if ever).

Frankly, I have no idea whether I can afford this kind of madness in 5 years' time. Most likely NOT.
However, if I croak, I would at least like the little ones to have the option as a sort of silver lining to the "no Dad" scenario.

[Simpo Two]

Three through Eton, blimey.

So the prep school is £6K/term?



I suddenly feel like a peasant; my old school is only £5K/term!

[walm]

Simpo Two said:

Three through Eton, blimey.

So the prep school is £6K/term?



I suddenly feel like a peasant; my old school is only £5K/term!

I did say worst case!!
And yes, frankly the prep school is almost more of a rip-off.

[dalenorth]

It might be worth looking at family income benefit as you can set an annual amount (increasing if required) until the children finish university.

We have done this type of policy for a few pistonheaders so feel free to drop me a PM if you require quotes etc?

[walm]

dalenorth said:

It might be worth looking at family income benefit as you can set an annual amount (increasing if required) until the children finish university.

We have done this type of policy for a few pistonheaders so feel free to drop me a PM if you require quotes etc?

Huge thanks Dale. Let me look into it.

[Ozzie Osmond]

According to BBC all state sector teachers are heading for Dubai and an easier life so I'm sure yours will prove a sound investment!

BBC also reckons there are 8,000 schools outside UK which teach in English. Since there are more than 100,000 schools in the USA alone you have to wonder where they get their facts.

Correction: I just checked on Alice Cooper's website and apparently Schools Out, so they don't count.

[Ginge R]

Cost of raising a child is now over £230,000.

Having been asked to help out with a probate case today, remember to consider writing it in trust.

http://www.independent.co.uk/money/spend-save/rais...