Is it worth keeping my life insurance?

[Tashtegotoo]

I currently have life insurance that will pay out about twice what I have left on my mortgage. I can get some of the money early if I am diagnosed with a terminal illness. I am a single mother, 2 of my 3 children are now at uni. My youngest, aged 13 lives with me full time. If I died he would go and live with his Dad. The 3 children are my beneficiaries.

As soon as I stop paying I come out of the scheme and get nothing. It costs about 25 pounds a month.

Given that my youngest would be looked after by his Dad should I continue with the insurance or would I be better off putting it towards my mortgage?

1. if you have a mortgage you'll need insurance to pay it off in death
2. does the dad pay you maintenance? It's not very fair to just expect someone to care for your child without thinking through the financial implications (I would want peace of mind everything is covered for child).
3. if you die now your 3 children no matter their age will be disadvantaged in some way, inheritance can be a small alleviation to that.

I will have life insurance for as long as I have a mortgage, and my second life policy up until my youngest is 21.

Although that policy is quite expensive, you could shop around for something better if your age and health don't affect quotes too much.

if you have a mortgage you'll need insurance to pay it off in death

Well as the only dependent DC will go to live with his dad, the house can just be sold to pay off the mortgage.

How much equity do you have OP? If the worst happened and your house was sold, would there be money to provide an inheritence for your DC?

Seeing as the OP has sole/primary care of the DC currently, I don't think it's a terrible imposition on their other parent to expect him to care for his DC if their mother is not around. Unless he would be on the breadline looking after the 13 YO, I really wouldn't concern myself with it. It's not like childcare is an issue at that age, although if the 13 YOs dad did find himself as a single parent in the short term and he travels away for work, this might be an issue.

OP, do you have a workplace pension? That also often pays out on terminal illness or death, so you could be doubling up anyway. You also might want to consider what would happen if you had a long term illness that meant that you had to give up work either permanently or after any sick pay ran out. That might be harder to deal with financially than actually dying.

On balance, I would probably cancel the life insurance. I think it's oversold and a lot of people have it because they think they need it as a condition of their mortgage (not true) or they haven't considered what other provisions they have in place.

@BarbaraofSevillle well yes obviously, but if she wants her children to inherit the house at it's full value like most people who buy houses want and giving them the option to not sell their possibly childhood home immediately if that's not what they want to do, the insurance will be needed to pay it off. It would be potential further money for them if they wanted to rent it out also.

@BarbaraofSevillle I'm thinking from the point of the child, not the dad, as a mother I would want to know I'd left plenty so he could have a comfortable rest of his childhood, university paid for if that's what he chooses, and basically have some benefits after the trauma of losing his mum young.

I would keep some life insurance but that seems quite expensive, mine is only £10 a month with Legal & General.

Yes, keep paying. Does it payout for definitely terminal, or just potentially terminal illnesses? Dh was diagnosed with cancer that was advanced enough to trigger a pay out. He didn't die, but having the money to live on when he couldn't work /lost his job /we had small children took a huge amount of stress away. You will never get a policy for such a low price again, the premium will only get higher if you decide to take out another.

Thanks for all the replies and the advice.

I need to double check the exact conditions of the pay out on a terminal illness diagnosis.

I'm in NZ and GBP25 a month for life insurance was competitive at the time. I'm 50 next year. I'm overweight and very unfit but not otherwise unhealthy
EH and I are both teachers, he has a permanent job, I don't.

He has GDP 100K from me recently for his share of our house and my pension so I have met my financial obligations to him. As part of our financial settlement he got away (from my pov) with not paying money he owed for child maintenance and I know he loves our children so would do his best as far as he was able. He is not good with money though. My will leaves my money to my three children but I don't know if XH can spend it on behalf of DS3

My house is worth about NZD350-400K and I have a mortgage of NZD140K 13 years left on the mortgage.
If I stop Life insurance then the money will be used as extra to pay off my mortgage.
I will get some money if I die from my pensions, well my children will. I'm vague on what exactly.

I did nearly die a couple of years ago so I'm very conscious that it is always a real possibility.

I think I have found my financial project for the next school holidays, working it all out!