… to say I don’t think I need life insurance?

[PARunnerGirl]

I am 42, no children (or other financial dependents) and am not married. My job is 100% WFH, desk based. I have a boyfriend and we have been together six years. Our finances are totally separate. We split our time between a city, where he has a property, and the country, where I have a property. Both properties have mortgages right now. Mine will be paid off by the time I am 58, if not before (at the moment I choose not to overpay the mortgage a lot but invest more into pensions etc, but this approach does fluctuate). We have good Bupa healthcare plans.

If you have no financial dependents, what is the benefit to having life insurance? If I die, the house will be sold to repay the bank. I know there is critical illness cover but if that is the only benefit, compared to the additional benefits to someone who has financial dependents, the loss- benefit analysis just doesn’t seem worth it to me.

I accept basic life insurance is not a huge monthly outgoing, but those basic policies seem even less worthwhile in my situation. Adding it up over the years it is massive and I’d much rather invest it in a private pension that will grow and can be accessed ten years before pensionable age.

Thoughts? Am I missing something obvious?!

DH and I never had life insurance other than that which came with our jobs and we did have DC and he died!

It was fine. We had some savings to use in the short term and knew we were both able to support ourselves/DC alone should the worst happen. We took a calculated risk and I would have been better off if we'd taken the insurance, but it was money we didn't need to spend.

But no, without dependents, you don't need life cover IMO.

@PricklyFoot I am so sorry to hear that! What a terrible thing to go through. Thank you for your thoughts 🙏

No you don't need it, insurance is to help with the financial consequences of a disaster.
We had it when DC were young but not now they are adults.

We don’t have kids and we have life insurance, just enough to cover the mortgage balance so if one of us died the other wouldn’t have to worry about that. But in your situation I don’t think I’d bother. Ours is only £6 a month

If you don't have dependents you don't need life insurance.
Some mortgages insist on life insurance but presumably you aren't in that position.

Thank you @PeonyFairy . That’s a good way to phrase it. I don’t think it would be a financial disaster to anyone if I passed away.

I think just critical illness cover is relevant. You can buy this separately I think ?

You can buy stand alone critical illness/accident cover. That's probably even more valuable to you than to someone with older kids/family who would step up.

You can also buy a funeral plan if you don't want to burden any family and friends you do have although the state will step in if you've no-one and you don't care what happens to your body.

I wouldn't bother with life insurance in your position.

Critical illness cover is definitely worth it, but I wouldn't worry about life insurance.
A lot of serious illnesses have a better long term outcome if you can be out of work for treatment and a period of time after. If you need your wages to pay the mortgage your more likely to work as much as possible during/after treatment.

I agree that you don't need life insurance. My children want me to have a funeral, so I've got insurance to cover that. I'm mortgage free etc. The insurance is easy to access, I've made one DD my executor, but I can see there being arguments. So insurance was the best course of action for my funeral costs.

When I referred to life insurance I was actually thinking about both life and critical illness, which are often sold together. I should have said that- sorry! Critical illness makes up the majority of the cost of policies like that.

This is the risk/ benefit part I think about. There is a risk I could get sick before the age of 58 (or whatever the age is then for accessing a private pension), but is it really worth it with the kind of job I have (family-owned, flexible, WFH), my current health/ family history, the private pension I can access in 15-20 years etc. Of course anyone can get ill at any time. But weighing all that up, it just seems such a waste. Even a £10pcm policy, paid from the age of 30 to 70, would likely be worth £10k in a mediocre performing pension over that time!

You need to think of them as separate things.

It doesn’t sound like it’s worth getting life insurance in your position.

Critical illness cover makes sense for anyone. Think about what money you would need if you got cancer or lost a limb etc before retirement. How would you pay your mortgage and what would you live on?

Ask yourself is there an insurable interest anywhere?

Will anyone suffer financially in the event of your death?

If not, you don't need life assurance.

I would also apply the same questions to yourself in respect of income protection and critical illness.

@Heroicallyfound I definitely understand your point. But it’s not the same for everyone is it? It’s risk based. It makes most sense for someone with no/ limited savings to see them through a period of illness, a manual or non-WFH job, or only a workplace pension that can’t be accessed until state pension age (thereby increasing the time there is to get sick and not have money to live).

None of these things apply to me. My cash savings aren’t endless but I’d need to be so sick I couldn’t do a desk job and on zero income for probably a year before they’d run out.

My thinking has always been that the money is better saved or invested and that in turn reduces the risk even more of needing the insurance.

@jennytheonionslayer Thank you- it’s a good way to think about it. The other point I suppose is the amount that you choose to cover doesn’t necessarily need to be your full outstanding mortgage but perhaps a portion that you think covers the worst case scenario, taking any savings and time to retirement into consideration.

I would consider consider illness/income protection yes…..if you were diagnosed with eg. A survivable cancer, who would pay your mortgage/living expenses? Savings?are you assets easily accessible?would your boyfriend choose to help you out?You are only 42 and the whole point is you don’t know what will happen between now and retirement age so if you were unable to work for 6 mths/12mths/never again how would you finance this, that’s the question to ask. I’m very aware being in my 50s of a number of both friends and acquaintances who have died from cancer or had to have treatment for cancer in their30s/ 40s/50s .I have not been able to work since my early 40s due to illness and am unlikely to work ever again but luckily I have a spouse to support me (needless to say he has insurance!)

You need critical illness cover and/or income protection. Life insurance doesn't 'include' critical illness cover although you can buy them as one policy - you can also but them as separate independent policies. See a good broker/IFA for further advice.

When I was single, or had boyfriends that I didn't live with and no kids I didn't bother with life insurance. Why would I? I had no dependants, my house went to my parents, or what little equity there was would go to them anyway. All that was needed was my funeral coats which could be taken from the equity

@Aandornot It was actually my financial advisor that got me thinking about this a bit more. His advice isn’t to take it out, but to weigh up the factors I have explained in other posts above and make a decision (see reply to @Heroicallyfound). It’s not so easy though!

Many would say: just pay it, it’s not a big monthly cost. But critical illness cover is much more expensive than life insurance alone and when you add it up over the years and consider the cash lost from not investing, it’s huge.

It’s quite difficult to purchase critical illness alone, although not impossible from my research and discussions with brokers. Life insurance can and often is purchased alone and is inexpensive. Life insurance is usually included when you request critical illness because it’s such a small cost compared to that associated with a life insurance policy.

OP you have no need for life insurance, but I would recommend some critical illness cover. These policies pay out if you are diagnosed with something REALLY SERIOUS and take away the worry whilst you are going through treatment.

You could always consider income protection in the event of being unable to work through medium-term illness/accident/unemployment - again would pay the bills without eating through your savings.

@Zumzum A friend of mine in her late 40s had to stop work due to a serious cancer diagnosis last year and I have been living with her a few days a week to help her out. This has got me thinking about exactly this!

Of course I understand this could happen to me too. So that’s why I am considering all the factors and whether or not i should take out insurance. When I add critical illness, it’s a sizeable monthly bill and I can’t help but think it’s better invested elsewhere given my savings are good, the sort of job I have etc.

@Can2022getanyworse Thank you for your thoughts! 😊 🙏

I think you need mortgage protection insurance so that if you were ill or had an accident and couldn't work your mortgage would still be paid every month for a certain amount of time.

Also I think that all adults should make sure they have the funds to pay for their funeral. It is selfish to expect other family members to pay for it.

So your query is about whether to take out critical illness cover or not rather than life insurance?

Yes
Absolutely. Everyone that can have it should have it in my opinion.

@3dogsandarabbit I understand your point. I have savings that would last me about a year if I really couldn’t work at my desk job and had to leave my job. Critical illness/ income protection for my mortgage/ income would be a significant monthly bill and I often struggle to see the benefit given my circumstances. It’s more than very likely it’ll just be lost money. But I guess this is what insurance is at it’s very core. You are paying for peace of mind.

The savings I mention would cover a funeral.