Life insurance

[Sephy]

Hi there, grateful for any suggestions for someone pretty clueless...

My dad gas always said that it's good to get life insurance when you're young, as you're as healthy as you'll ever be so you should arrange it early before you get any serious illnesses etc which would put premiums up.

I don't yet have kids, and my dh and I don't own our house, so there's not a specific sum in mind that I can think we'd need. We do want to have kids fairly soon though, and I would like to get thus sorted while I'm still earning and can contribute to paying for it etc!

I really don't know where to start in arranging life insurance, or what cover we'd need etc. I guess if I died my dh would need money to help out with child care when the (future) kids are little but apart from that not sure what our needs would be.

Does anyone 1. have any advice, and/or 2.know where I could find a professional to advise me?

Thanks in advance

Your dad is right in one respect. Life insurance taken out now when you're young and healthy is very cheap.... but that's because the insurer knows you're very unlikely to claim. If you have no dependants and no mortgage, the only life insurance you really need is enough to cover a decent burial.... any more than that is 'nice to have' and how rich you want your widowed husband to be. As you get older & have more things to protect like a mortgage or a few dependants, that's the time to insure your life and the price goes up accordingly. I'm a little confused by the 'thus sorted while I'm still earning' comment. Like motor insurance, you have to keep paying life insurance premiums year in year out, or it lapses and you're no longer covered.

What's certainly worth investing in while you're young are savings and pensions. The earlier you start on that, the better. Put what you'd spend on life insurance in savings for now and when you're thinking about taking on a mortgage or you have a child, talk to an IFA (Independent Financial Adviser) about it and include appropriate life cover in the conversation.

If you have no mortgage and no children, what is the policy for ?

DH and I each have £200k cover - so that if anything happens to either of us the mortgage gets paid and the kids lifestyle is not affected

until recently we've only had mortgage cover but the case of an ebayer who nearly lost her house after her husband died shocked me into action.

I agree with Cogito
Pile the money into ISAs for now ...

That's interesting TalkinPeace2. If the e-bayer's mortgage was covered, how come she nearly lost the house?

Cogito
she had an interest only mortgage with no repayment product (very common for mortgages sold between 2003 and 2007) - when her husband died she had no way to make the interest payments.
Luckily the mortgage company realised what bad PR it would be and gave her a year to get a job - she has 3 kids.

So she wasn't covered for the balance of the mortgage?

Nope.
Scarily common it transpired among the posters when we were trying to help her through.
Mortgages used to have to be repayment with life insurance or interest only with repayment vehicle.
All checks on repayment vehicles went out around 2003 ....
tens of thousands of mortgages are still held where the ONLY way to settle them will be to sell the house.

Thanks very much. Yes, that earning comment didn't make much sense, sorry!

I guess I'm still not clear whether it's better to arrange some now, that would potentially pay out if I die in 20 years time at which point I probably will have kids, a mortgage etc, particularly because I've heard some EU judgement about discrimination means women's life insurance is likely to get more expensive in January.

Thanks for your perspectives. That is scary for that poor ebayer - hope she gets/got a job in time.

I still think you're not understanding how insurance works properly.

If you take life insurance out now and it gets more expensive for women in January all that will happen is that your premiums become more expensive next year. Taking it out now with a view to it paying out in 20 years time when you 'probably' have kids and a mortgage etc... is a little like taking out car insurance on the basis that 'probably' one day you'll buy a car.

Think about your life now,today and work out, if you died tomorrow, what the actual financial impact on the people you leave behind would be. Would your husband be able to afford your funeral? Would he be in big difficulties without your wages? Would he be homeless? Or would his finances really not change much at all? If the answer is 'not much at all' then decide if you actually need insurance or would saving a few thousand 'funeral fund' in a Cash ISA be more sensible.

Finally, far more important than life insurance at this stage is probably making wills. Very easy and cheap to do and, once done, makes things a little smoother for those left behind in the event of your death