I have no idea whether my husband or I should take this out? We have one DS, I do a little bit of freelance/ self-employed work (not very much money), he is salaried at about £21,000 per annum. I own outright the house we live in, and we have no mortgage. Neither of us has any debts between us.
I have made a will.
We could do without the £25 per month life insurance charge, but what will it give us? Do we both need it? Or only one of us?
I'd really appreciate some independent advice, as professionals are always trying to sell it to you!
Hi happyhopefulmummy, I am a family protection specialist and advise people on what protection is suitable to them and help to arrange this cover if it is something that people need. Based on what you have said I would suggest that you are wise to have life insurance. The question is how much cover you need and for how long! The easy part to answer is how long? I would suggest that you should make sure you have a policy that will last until the point at which you would hope you're son is no longer financially reliant on you. This is a personal decision but probably up to the point that he is between the ages of 18 - 25. The amount of cover is more difficult. You could look at your partners net salary per month, annualise this figure (multiply by 12) then multiply by the number of years you need it for. However if this results in an amount which is too costly there are policies which will actually pay out a monthly figure in the event of the insured life passing away. This can be far cheaper as the total payout reduces over time, and in some ways is far more effective at providing the cover that you need than simply a lump sum, the money is also less likely to be wasted by anyone else, such as those that you nominate to be guardians of your children.
Another important fact to check, is whether the insurance policy is written in trust. As you have a family and this money is supposed to be used to protect them, you would want to make sure that your children get all of the money and quickly should anything happen to you. If the insurance policy is not written in trust and you have not allocated trustees then the money can get caught up in the probate process and in some cases can have IHT implications. It doesn't cost anything to put the policies in trust when they are taken out, but so many advisers fail to do it.