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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

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Original poster

To be thinking of life insurance?

27 replies

Sinkingships · 31/08/2015 11:09

Inspired by the thread about wills, I've been wondering lately if it would be a good idea for me to take out life insurance.

I'd never really thought about it until recently but lately I've been thinking that I would really like to leave my DC's something when I die and at this rate I have virtually no way of being able to do that unless I win the lottery.

I have no assets of any value, no property, no savings and to be honest I don't anticipate that my financial situation will get a lot better in he future. I have virtually no chance of being able to buy my own home ever.

I feel like at least if I have life insurance I'll have something to leave the DC's, is this a stupid idea? Eldest dc could use the money to get himself on the propety ladder/put himself through uni etc etc. Youngest dc is quite badly disabled and the likelihood is he will never be able to live independantly so if I left him some money it might help pay towards his care. Or is that not how it works? I am woefully uninformed about this sort of stuff, if it a waste of time and money or Aibu to think this would be a good idea?

OP posts:

Kuriusoranj · 31/08/2015 12:05

No - you should definitely do it if there is anyway that you can afford to do so. My thinking would be pretty much the same as yours - you may be able to help your eldest get started and to help your youngest with care. YADNBU.

What is it that's making you unsure about it?

DoJo · 31/08/2015 12:05

I would go and speak to a financial adviser, tell them what you want and they will work out your options. We have life insurance, which will pay off the mortgage if we die, and a separate policy that makes provision for our son if anything happens to us, in the form of a monthly allowance to be paid to him/those caring for him until he is 21. There are plenty of different policies out there so you're sure to find one which suits you, but I would definitely want to leave something in place in your position.

Spartans · 31/08/2015 13:29

We have it. Not really to leave the kids something, but more if making sure they can stay in the house if something did.

Dh and I run a business together if something was to happen to either of us, the business (at this early stage) would probably have to close.

Neither of us wants the stress of worrying about money if soemtjkng happened to the other one.

If something happened to both us, mum and dad agreed to move in here and look after the kids. The house would be paid and then sold to when thy are both adults. Again if they were to lose their parents I wouldn't want them to have to leave their home too.

I honestly think life insurance is a must for us.

Gingermakesmesick · 31/08/2015 13:34

Yes, we both have it as well. We have no one to have the children if we both died so it's a way of protecting their inheritance.

lemoncordial · 31/08/2015 14:13

Definitely see a financial adviser who has knowledge of paying for care. It's a lovely idea to leave money for your children. However be aware that social care for people with disabilities is means tested. So if someone needs care and they don't have any assets or money, then the care is paid for. If you have assets or money then you'd be expected to use some or all of your money to pay towards it. An organisation such as this might be able to advise you www.carersuk.org/
If you have money you're not expected to have every penny spend on care. At the moment you are allowed to keep some savings but the rules are going to change soon so there will be a cap on how much you pay in your life time.

Original poster

Sinkingships · 31/08/2015 15:37

Kuri, it's mostly the fact that at the moment, I am a student with limited income. I've been told that with the whole life insurance that pays out when you die, no matter when that is (the kind I want), that if you miss even one payment you lose all the insurance and I want to make sure I can afford it.

For youngest dc I guess I just want to leave something to ensure that he can have a decent quality of life if I'm not around, so he can have the things he needs without having to live very basically and without eldest dc having to give up his life/income to help him out. Dc2 would not be able to manage his own finances so I'd have to make sure that someone else was in 'control' of the money anyway.

For eldest dc I want to make sure he has opportunities I didn't have and that he doesn't feel obligated to look after youngest dc. Obviously I hope that they will be close enough that he will want to help dc2 out when he is older but I want them both to have happy lives without having to stress over student debt, housing costs, etc.

OP posts:

LumpySpaceCow · 31/08/2015 15:51

Get it. My mum died earlier this year and whilst she was ill the life insurance paid off her mortgage so she didn't have to worry about work (her policies paid out on death and/or terminal illness).... she actually had several policies that she didn't even know she was paying and they all paid out.
I think if you have dc and a mortgage then you need life insurance. I only pay about 20 quid per month. I didn't see a financial advisor as I found it easy enough to navigate myself online.

BackforGood · 31/08/2015 15:52

I'm not sure that life insurance will provide the right access to money for the things you are talking about though - if you want to help your dc through university / onto the property ladder, then he'll be wanting the funds before you die, in all likelihood.

I think life insurance is a very good idea for the vast majority of people with dc., but it won't help your ds at those times. I too would advise having a chat with a financial advisor and talking through the different things you would like, compared with your current income, and see what they advise. There are plenty of ways to save, alongside, or instead of life assurance.

MyGastIsFlabbered · 31/08/2015 15:54

I've been thinking the same thing. I've recently split from husband and have 2 children (5 and nearly 3). Don't own our property so keep wondering if there's any need. But do wonder about funeral plans as I honestly don't know who would pay for mine if I died.

Gingermakesmesick · 31/08/2015 15:56

Funeral plans are very cheap if you're young and in good health; I pay £5 a year for mine!

Original poster

Sinkingships · 31/08/2015 16:09

I don't have a mortgage as I have virtually no chance of being able to afford a deposit etc and I think it extremely unlikely that I could get one with my earning potential and bad credit history anyway (assuming I don't win the lottery or marry someone rich).

I don't want to leave just enough to cover a funeral, I want to leave enough for them to be able to use it for something worthwhile I want as little spent on my funeral as possible but it's not necessarily my choice

I just want something that will pay DC's a chunk of money that they can use when I die, whether from an accident or age. I want to make sure they'll still get it if I become ill or disabled. Who do I talk to about this sort of stuff that doesn't cost £££?

OP posts:

HermioneWeasley · 31/08/2015 16:13

If you can afford it, in your position I would do it.

Gingermakesmesick · 31/08/2015 16:14

Try your bank - mine and Dhs is arranged through that. They often give current account holders a good deal. Alternatively you could try an independent advisor or one of those price comparison websites.

Tealtowel · 31/08/2015 16:19

Everyone should have it. Even if you get a Funeral plan at least your funeral will be covered, would anyone have £1000s to pay for this if you didnt have any type of insurance?
We have critical care and life insurance mine is £15 per month which pays out 150k

Pneumometer · 31/08/2015 16:21

I don't want to leave just enough to cover a funeral, I want to leave enough for them to be able to use it for something worthwhile

Unless you're planning to die young, I don't see why you think this will work. You would expect to lose money on a whole life policy if you died at or around your actuarial life expectancy, because insurance companies aren't charities with a plan to lose money. So if you paid in £10/mo from now until when you died you would expect to get back less than what you paid in plus a modest investment gain, because how else would insurance companies make money? You would be better off paying the same amount per month into some long-term savings vehicle or, if you're a tax-payer, into a pension.

Term insurance replaces your income and time if you die during your children's childhood is very valuable. But that's not, in any way, a savings vehicle.

Gingermakesmesick · 31/08/2015 16:25

I think I know what OP is saying.

Should she die, she wants to ensure her DC are not left penniless.

Now if she should not die, she will hopefully live to a ripe old age and have plenty of time to put something aside for the DC and in any case they will hopefully be adults. But if they are still young - in full time education - she wants them to have something.

Have I read that correctly?

Pneumometer · 31/08/2015 16:29

Should she die, she wants to ensure her DC are not left penniless.

Then she wants term insurance, not the whole life insurance she talks about.

Gingermakesmesick · 31/08/2015 16:29

That's helpful for her, I imagine :)

Original poster

Sinkingships · 31/08/2015 16:35

Yes, basically ginger. I ride a motorcycle and do several other potentially 'risky' hobbies and I want to make sure that if the worst should happen I will be able to leave them something.

Also, I know that I could not save enough per month over the next, say, 50 years, into a savings account for them to even come close to the 500,000 or whatever they could get with a life insurance policy!

OP posts:

Gingermakesmesick · 31/08/2015 16:36

Make sure you read the small print then chick, as some won't pay out if injured or killed doing dangerous hobbies. Good luck with it x

Original poster

Sinkingships · 31/08/2015 16:37

Pneumometer but surely if I get term insurance for, say, 20 years, if I don't die within that time then I don't get a pay out and I have paid in for nothing? Or does term insurance pay out at the end of the term even if you don't die? This is what I mean about being clueless :(

OP posts:

Gingermakesmesick · 31/08/2015 16:48

I think you have to die OP for any type of life insurance to pay out

You can save in other ways that will pay out to DC in event of your death but will also be money for you/DC if you stay alive and well. A few pensions will do this.

Pneumometer · 31/08/2015 16:50

Pneumometer but surely if I get term insurance for, say, 20 years, if I don't die within that time then I don't get a pay out

That's right. Just like car insurance or travel insurance.

Start from the premise that insurance companies are profitable businesses. Why do you think you will make more money out of life insurance than out of a savings vehicle?

Original poster

Sinkingships · 31/08/2015 17:03

If I saved £850 a month every month for 50 years then I'd have 500,000 to give DC's. I can't save that much so if life insurance is less than that then it's a better deal, surely?

OP posts:

Gingermakesmesick · 31/08/2015 17:03

Yes, but only if you die!

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