… 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?!

@Zumzum My BF has always taken it out for this reason! He just believed the mortgage brokers over the years. I think they have to be a bit more transparent these days.

58 is what my plans are based around but I think this will likely be extended for the reasons you state. Your point about taking it out for a shorter term is well taken 🙏

@mast0650 thanks for your thoughts! Yes I think this is still my opinion but from what others have said I think I might also look at a shorter policy to take me through to private pensionable age, maybe less coverage too.

It’s not like I’m saying £40 a month would break the bank, it’s that I think it might be far better spent elsewhere.

I suppose it all comes down to how risk averse we are though and the answer will be different for all of us.

Guess depends how much mortgage is left op

But you seemed to have made up your mind

Get enough to cover the mortgage or perhaps look a combined plan which includes illness cover incase you can't work. I think some policies payout on cancer diagnosis etc which would be handy if worst happened to you and needed to stop working and pay for care

£25-£35 a month would allow you to include critical illness of something like ~£40k payout, or £2k a month for two years. Rough figures from a few of the big providers. It’s not like they pay you forever until you’re better. I’ve got that sort of cash in savings.

This is incorrect. Proper Income Protection would pay out for as long as you're unable to work, or the end of the policy (which is usually chosen to match your retirement age). There are budget versions which will only pay out for two years but the better policies aren't like that.

If I was in your position I'd seriously consider Income Protection.

Your pension would probably pay out a lump sum on your death (the fund value) and do you not have life assurance from work?
I know I do and it will pay out 4 x my annual salary.

We don't have children but do have a mortgage. We have life insurance and critical illness cover, never thought we claim on it but my husband has been diagnosed with an illness which is life long. So we're claiming the critical illness element and if successful, we will have no mortgage.

@Blondeshavemorefun Unless you are in negative equity for some reason, like the housing market takes a massive crash, or you didn’t keep up with your payments, there will always be money back to you (or in this case your estate) after the sale of a house, even if you sold it soon after buying it, because banks ask you to put down a mortgage deposit.

Example:
House bought in 2013: £200k
Deposit £20k
Mortgage/ amount owed to bank: £180k
Same house sold in 2023: £250k example
Mortgage/ amount owed to bank: £130k example
Cash back to you: £120k

Genuine question please from a non-UK person; do you not need to take out life assurance cover for death when you take out a mortgage?
From my experience here, banks won't lend you money for a mortgage unless you have a policy to cover loan in the event of your death. Of course you can add critical illness but death is a minimum requirement.
I was read threads/news articles of UK experience in bewilderment when there's a story that says something like ...... I lost my home when DH died because I couldn't keep up mortgage payments...
If my DH died the mortgage protection cover would kick in and pay off the balance.

@Whisper23 It’s correct for those types of policies. If you start looking to insure yourself for basically a full income in the event of illness until retirement age, it’s a monthly cost I just think isn’t worth it for my situation.

Hi @Marmight - I’m not worried about death for the reasons in my OP. As you say, it is covered in other ways and I have no financial dependents anyway. I’m more thinking about getting so ill you can’t work.

@PixiKitKat What a horrible thing to go through and at the same time having to sort all the financials. I hope the mortgage gets sorted and that will at least be one thing off your plate.

It's correct for the budget type policies, yes., but not all income protection. You get what you pay for.

You've already made your mind up anyway. I'm not sure why you posted.

@Whisper23 I had an opinion that was formed on some research I did and then some discussions with FA/ brokers. I then asked for advice here. I hadn’t made my mind up at all!

If you read the thread you’ll see I did actually take some advice about considering a shorter/ smaller policy through to private pensionable age. I thought that was a good point and aligned to the factors I have to consider. Sorry I didn’t agree with yours or think that it was beneficial for my situation 😕

Everyone should have income protection first and foremost. That ensures you have an ongoing income in the event of long term illness.

Critical illness can be advantageous if there's anything you'd need a capital sum for, for example adaptations to property to accommodate any life changing illnesses.

Critical illness isn't a catch all. You could be off work and unable to work long term with something that isn't a critical illness.

Many critical illness policies include 'free' life cover, since you're more likely to be critically ill than you are to die during the term of the policy.

From what you've said I don't see a burning need for pure life cover.

@DeeHellem Really great summary, especially about the lump sum. Thank you!

Don't forget there are multiple types of policy, a decreasing term could fit if you prefer, which would be cheaper than a level term should you decide you would like to leave an amount behind should that be the douse of action you decide.

Don't forget that pensions form one of the most tax efficient ways money is passed on, so you can consider nominating a beneficiary that way.

To me though, based on what you have said you should be ensuring you have critical illness in place, and income protection.

Just extra point, you are eight times more likely to suffer a critical illness and survive than to die.

Make sure you have your lasting power of attorneys covering health and wealth too.

You can actually do this yourself.

In many cases lenders do require life insurance. Usually not for a single person with no dependents, unless it was very high loan-to-value.

In the event of the borrower's death, the house will simply be sold and the lender gets their money.

In the news story you mentioned, @SmallAngryPenguinWoman , I'd guess their circumstances changed in some way after taking out the mortgage. Lenders don't tend to keep an eagle eye on borrowers' changing life situations after they agree to the loan.

For example, maybe the husband was a single person with no dependents when he took out the mortgage, so he didn't need insurance, and then he failed to take out life insurance when he married someone on a much lower income or they had children. Or maybe they'd had insurance and later cancelled it.

Which lenders still require life assurance? Can't recall the last mortgage I was involved in where that was a condition as opposed to a suggestion.

Who still requires it?

None in the UK, this is an old rule.

My question was to the poster who posed it.

If that's aimed at me (and as I said I'm not in the UK hence my question), it's a legal requirement in Ireland for a lender to ensure the borrower has life insurance before giving a mortgage. There are some exceptions, but it is the general rule.

No, OP, you don't. I'm 60 and have never had life insurance.

Until 45 I didn't have any dcs or dependents and then if I had died, ds would have inherited the value of my house.

I'm single now with a pension fund and ds will still inherit the house if I get run over by a bus.

I've made a will. My dsis is executor, and has lpa so if I was in a coma, she could manage my affairs.