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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

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Original poster

Do you have it?

89 replies

knittedbreast · 10/08/2011 19:33

Life insurance or assurance or what ever its called?

was just reading another thread and one lady said that when you cut back you dont cut that out.

I dont know anyone who does have life insurance, do you have it?

Is it the norm?

isnt it filled with lots of holes that get the company out of paying up?

Thanks

OP posts:

DogsBestFriend · 10/08/2011 21:03

No. I've never been comfortable with the idea of being worth more dead than alive.

The money's no use to me then.

Malificence · 10/08/2011 21:09

The money's not for the deceased

If one partner is a stay at home parent with no career, how exactly are people with no insurance going to pay the mortgage?

You would have the added distress of having to move your children from the family home and all the stress that entails.

Malificence · 10/08/2011 21:09

Rank stupidity is no reason not to have life cover.

TheBride · 10/08/2011 21:10

It's not about you DBF. It's about your dependents not being impoverished by your death.

So, if DH dies,his life insurance pays off the mortgage so DS and I aren't homeless. Similarly, if we both died, both our LI would pay out to DS so he would have somewhere to live and also be financed to go to Uni etc that we would have paid for if we hadnt been hit by a bus. Critically it would also mean that his guardian would have money to bring him up with.

ivykaty44 · 10/08/2011 21:11

you can take life insurance out for any length of time you want to - I took out a policy when my dd1 was 3 year old and it finished when she was 18, I took out another policy when dd2 was 4 and that will finish when dd2 is 21. the first policy was an endowment but the second is just purely life cover and only pays out if I die

You can aks for the amount you think is what your dependants would need and you can ask for as many years as you want - the price of the cover will vary

DogsBestFriend · 10/08/2011 21:13

I was pulling legs, to an extent, and yes, I DO know that the money's not for the deceased, Malifience.

But, no, I don't have insurance. For one thing my children need what little I have NOW and not a large sum on the basis of what MIGHT happen. For another, they would be provided for anyway, by people who are more affluent than I anyway.

And, thinking of it now, for a third thing it would be an incentive for my ex husband to take them on and that is something which definitely wouldn't benefit them. No money = no incentive.

Woodlands · 10/08/2011 21:14

I've been meaning and meaning to do it - I have 4x salary death in service benefit, but having just gone back part time after mat leave that is now worth less than it was. DH quit smoking the day DS was born so have waited a year so as to get cheaper premiums, but haven't quite got round to it. I got some quotes the other day but got bogged down as to whether I wanted critical illness cover as well - that seems to really add to the price, I suppose because it's more likely than death. Also I can't decide whether to get separate or joint policies - joint is cheaper but will only pay out on the first death and will then cease, whereas separate policies would pay out on each of our deaths. Oh I don't know!

bellaisgoingtoHawaii · 10/08/2011 21:17

Yes we do have have life insurance. If DH dies whilst in his current employment they will also pay out. We also have endowments, which are not worth much now, but we will not be using these to pay off the mortgage.

Malificence · 10/08/2011 21:18

Why does nobody ever get my bloody name right? grrrr..

TheBride · 10/08/2011 21:21

DBF- you can tie the money up so it only vests to your son when he's 21 (i.e. to take the incentive away from your ex) if that helps.

The main thing is the mortgage, as it's silly to lose a house you might have 75% paid off IYSWIM, but as you dont have LI, I assume you dont have a mortgage, so yes, maybe less critical for you, so long as you think your Ds's elected guardians would be happy to foot the bill.

4madboys · 10/08/2011 21:21

yes we have life insurance and cover that will pay for bills, mortgage etc if dp is every out of work, we also have a will, you have to get the insurance when you get a mortgage? tho we had life insurance anyway once we had ds1.

ShellingPeas · 10/08/2011 21:22

To answer a poster way up thread a "death in service" benefit is essentially a life insurance policy taken out by your company which will pay out, typically, 3 or 4 times your salary on your death. You don't need to die at work, just be employed at the time of your death.

Prior to children I had one of x4 my salary plus life insurance to cover the mortgage on my house - I was worth a lot dead then, in excess of £400,000!

DogsBestFriend · 10/08/2011 21:24

Sorry Malificence, it was a genuine mistake, nothing personal. I broke me specs this evening and am struggling with cheapy reading ones. :)

Tigresswoods · 10/08/2011 21:27

Oh the ignorance

holds head in hands and begins to weep

Malificence · 10/08/2011 21:29

DBF, I do understand your reasoning , if you know your kids will be taken care of and you know what your ex's motives would be for trying to take the kids, I don't blame you tbh.

pingu2209 · 10/08/2011 21:31

My husband and I had 4 times our salary in death in service payments. When I became a SAHM I took out £300k in life assurance, but my husband only has his death in service payments. Although I was only 36 when I took it out, because my BMI was over 30, my payments on £300k are £48/month.

DogsBestFriend · 10/08/2011 21:33

Glad I haven;t offended Malificence, :)

For most insurance is the way to go of course, for me, my DCs further education is sorted anyway and as TheBride guessed I have no mortgage.

My DDs would (scarily!) be better off financially if I died as the people who would be caring for them are comfortably off, far more so than I am.

monkeycat · 10/08/2011 21:55

Critical illness cover may be expensive but it is also really important , if you can stretch to it .

Our financial advisor reckons it is more important than life cover because if you have a terrible accident or illness then, not only are you no longer able to contribute financially or practically to your family , you are also still a financial drain on them .

Sorry to be so depressingly practical. :(

DH and I have been insured/assured up to our eyeballs since having DD1.
We come into the category 'risk averse' .

attheendoftheday · 10/08/2011 22:56

We have life insurance to cover the cost of our mortgage and to cover childcare costs until dd (and an anticipated second child) are at school. Hopefully this shoud mean that the surviving parent would be able to stay on in our house and avoid further upheaval at what would be difficult time.

Original poster

knittedbreast · 12/08/2011 17:07

why are you weeping?

can i ask, what is this thing where you pay money into life assurance and get it back at the end of the period of time? i tired searching for life assurance but it didnt say the same thing.

death in service-taken out by your work, on your behalf? or do they get all the cash when you die? do they have to ask your premission to do so? can you refuse them? does that mean i can take it out on any person i like and benefit financially when they die?

im 25 and my son is 5. if i take out life insurance up to 100k for a 20 yr period at the end of that period and i am still alive, i just take out another policy and lose the money already paid? at this point my premiums will shoot up because im older right?

sorry if im asking silly questions, you cannot imagine how little i understand financial things

Thanks

OP posts:

neolara · 12/08/2011 17:11

Yes, we have it. I have a friend whose DH died unexpectedly. She did not have any and it made a completely horrendous situation even more awful. She had to go back to work two weeks after he died.

suzikettles · 12/08/2011 17:29

knitted - do you have (or have had) any type of insurance? Home? Car? Travel? Phone? Life insurance works in the same way.

You wouldn't expect to pay £500 car insurance and if you hadn't had an accident at the end of the year to get it back. Or £40 for travel insurance and if your flight wasn't cancelled or your bags weren't stolen to get your £40 back. Just the same.

The yearly amount you pay (or monthly) is to protect your dependents from financial loss following your death in that year. If you don't die, well no, you don't get the money back. The advantage of taking out cover for a much longer term is that a) you won't have to renew each year b) the risk is spread over a longer period resulting in reduced premiums.

There is a different kind of policy which is basically a savings scheme rather than life insurance (I get confused about which is assurance and which is insurance). It's often attached to a mortgage as a vehicle for paying it off - cf Endowment Mortgages.

The "death in service" isn't paid to your employer if you die, it's paid to your nominated dependents or whoever. It's just that your employer takes it out on your behalf.

Yes, you can take out life insurance on behalf of anyone. Sometimes people take it out on behalf of their children if they're worried about funeral expenses if anything happened (I don't know how much this happens any more but it was common a long time ago).

Original poster

knittedbreast · 12/08/2011 17:47

thank you,

i meant could i take out a death in service policy on another person, if a company could.
why do companies do this if they dont benefit?

does anyone else know about these assurance saving schemes?

OP posts:

Andrewofgg · 12/08/2011 17:54

No you can't take out life insurance on just anyone's life; you have to have an "insurable interest" - your own life, that of spouse or CP, that of your debtor (!), etc.

In Victorian times it was made illegal to insure your children for more than funeral expenses - for reasons too appalling to spell out on this forum. I don't know when that was repealed - does anybody else?

suzikettles · 12/08/2011 18:05

Companies do it as a perk of your job I suppose. Given the general age of the people they'll be insuring it will be v cheap, and I guess stop the widows and orphans gathering at the factory gate..

Andrewofgg, that's interesting. I still pay a few pounds a month (due to shocking inertia) into a joint life policy with an old flatmate of mine who I used to own a flat with (I still live in the flat but bought her out years ago). I wouldn't even know if she died tbh, but would that mean that the policy would be invalid if I did find out she'd died and tried to claim?

I'll be cancelling it in the next few days anyway as I've found a cheaper one and obv want dh on the insurance rather than some random woman whose address I haven't known for 15 years...

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