Undecided whether to cancel our life insurance

[ItsStillWork]

We have a joint life insurance policy which pays out once. It pays 425k upon death of me or dh. It also has 75k of critical illness cover included in the policy.

i took it out 9 years ago when we didn’t have much savings and had a mortgage. We’re now mortgage free.

the children are 13 and 9 years old. House is worth around 650k.

im a SAHM and dh was very recently a high earner but has recently had a big decline in work.

the policy is £106 a month. Im late 30s, dh late 40s.

i dont know whether to cancel it. Dh has always resented it and the policy was taken out for my own piece of mind. We have a lot more savings now than we did 9 years ago.

What most other posters have said!

With young children and not working, I would find other non essential expenses to cut to save £106 per month before touching life insurance.

Your DH might resent paying for it but to be blunt if he dies before 70 he won’t be the one left to manage a dwindling savings pot 😐

My Parents both died when I was 23/24. That was a fun 18mths as you can imagine! They did have generous life insurance which made everything so much easier, and set me up for life really. I’ll be forever grateful that they were so sensible.

I think life insurance/critical illness cover should be mandatory for anyone with dependants, I’d keep it up until your kids are established adults at the very least.

Another way of looking at it is if you have 10 years salary in savings you can easily afford to pay for the insurance until your husband is 70. If he died prior to 70 - would receiving 425k have a greater positive impact on your life (and the life of your children) than the negative impact of paying £106 today?

That's a huge risk to take at your ages with a house worth only 650k and no private pensions. It's really not worth it.

No pensions? No way should you cancel it.
What happens if one of you dies in your 50’s or 60’s? The survivor might well be able to downsize to a much cheaper house but that £300k won’t go far in a 30 year retirement.
We renewed our life cover at 50 to cover us to age 75, just in case one of us dies, mainly to cover me as I would lose half of DH’s military pension and obviously all of his State pension. Downsizing might get me £150k but that wouldn’t last 10 years. We both have private pensions too.
Life cover is one of thise things you think you don’t need,
until you do.

I don’t pay for my life cover for myself - it’s really one of my final gestures to my children. I too don’t need it to pay my mortgage but hope it would pay for things my salary can no longer provide. I see it as a final goodbye.

Personally I would also explore why he resents paying it. It’s not for him. Why did he choose not to pay into a pension? Especially ans an higher rate tax payer (presumably). Are the savings in shares or cash? I only ask this as it will give an indication of his attitude to risk.

My dad died just before his life insurance was ending. My mum didn’t have a pension because of staying at home. Around my dads death there were a lot of unexpected costs and I had to take out a loan.

The relief that the life insurance caused my Mum was huge. She has stability and money to fund her later years and the impact of that has given me a huge sense of relief.

the impact of your spouse dying is huge and ultimately the life insurance/critical illness cover would only come to fruition should the absolute worst happen but the relief it brings as you don’t need to worry about money is vast.

It seems quite good value, certainly cheaper that what we were looking at for a smilar level of cover as a new client.

That said you could look at reviewing the critical illness portion if you want to lower costs. In my experience this is the bulk of the premium and often has quite a few restrictions in relation to what it can cover. If you have savings and could survive off one wage for a while this may not be essential. You could still keep the life insurance element to cover your mortgage. I would expect this to at least halve the premium.

Another vote for talking to a broker about other policies. Don’t cancel what you have now but maybe there is something else cheaper that would suit you just as well.

Dh died at 52 and was uninsurable. It’s not an easy situation to be in.

I would keep it while my children were dependants.

Is the cover whole of life/super insurance or is it term life insurance.

Is it a product that pays out a sum at 70, at the end of the policy?
Or is it a product that only pays while you pay a premium up to the age of 70, then you get niothing and also no option to be insured..

I might keep it as a forced investment if it was while of life cover.

I work in financial planning (not an adviser). I'm currently assisting in claiming two insurance claims for families where one partner has died.

The difference to their lives is huge. There is a huge hole created by the loss of one income, or a non income earning SAHP - replacing the work they do is expensive!!

I'd suggest a broker as they know the insurers available to you, and can help decide the amount you need right now. I would never be without life, tpd, or IP (illness). We help clients claim regularly.

I did go to a financial advisor to get a better deal on it but he tried to convince me to go slightly higher on the premiums for double the insurance payout.

as the life insurance is in a trust (so it bypasses inheritance tax) and a solicitor did it all, the financial advisor said we would need a solicitor to change the plan over.

so we didn’t change it.

ds had mild SEN, I could work perfectly fine if I needed to but I’m only trained in a minimum wage job. I wouldn’t be able to do unsociable hours if dh died.

I think I’ll keep it as it is.

We last renewed our life insurance in 2002 when we were in our mid 30s, two small children, mortgage etc. the policy is for £150k and we pay £30 a month. We felt that DH would need to take at least a year out of work before a sensible plan was in place, and we felt that I would need to get rid of the mortgage and top up income for a period. Now, of course things are totally different but I am going to let the policy run until 2027 when the term expires, then will look at policies to cover our funeral expenses and a holiday each.
Probably go back to work the morning after his funeral, he’d go in for a couple of hours in the afternoon of mine 😀

I wouldn't cancel it. I think life assurance is essential when you have children.

Also, that premium was based on your health when you took it out. If you cancel this policy and decide to take another one at some point, it will be way more expensive.

Do not cancel unless you have substantial savings. The only thing that saved me from being penniless and sleeping in a car (not relevant for you) was (deceased) DH life insurance which thankfully paid out last minute.
you have no idea what the future will bring and just how much of a breather that money will allow for either of should the worst happen (or for children left should you both die.).

My friend cancelled a policy on her husband and he died literally a week later when a truck hit him.

There Is no value to the trust unless the insurance pays out. You would take out a new cover and then cancel or just not pay the premiums on the old cover.

Not sure what the adviser is talking about needing solicitors. Life insurance trusts come off the shelf from the provider, you usually tick a box and fill
in beneficiaries details. No solicitors involved.

Do you have any life cover with your jobs?

DH and I didn't have additional life insurance on the basis that we were both quite capable of supporting ourselves and that there were savings to help until DC were adults, if necessary.

DH did die, when DC were in their late teens and I received surprising generous lump sums both from his final employer and the previous one, through their pension schemes.

I'd have been OK without, but it did make things more comfortable, and give DC something to start adulthood with.

If your earning abilities are less equal I'd be reluctant to cancel.

The life insurance paying out was such a good thing when we had a parent pass away. It allowed the other to remain in the home, pay off the remaining small amount of the mortgage and make a number of investments to top up the otherwise small private pension. Sounds to me like you should keep it and grit your teeth.

She doesn’t work and it sounds like he is self-employed. No pensions and a decline in work are clues.

Absolutely would not cancel it. Maybe speak to a protection specialist to see if the policy is still right for you, would recommend reviewing it periodically anyway.

The idea of downsizing is a common one people have, but if your husband were to become severely ill, or pass away, do you really want to be in the situation where you are having to uproot your children and move house while dealing with stress and/or grief? Especially one with SEN.

Then definitely keep the insurance. If one of you was to die and you needed to downsize to release equity from house the you would essentially leave yourself short for retirement

Don’t cancel it because older policies have better terms and cover more illnesses.

You can however reduce the monthly payments and subsequent payout.

We reduced DH from £300k to £100k for greatly reduced premiums and then a few years later claimed on the critical illness part.

The money has made a really big difference.

I've kept mine going as it pays out immediately and will give my kids some funds for the inevitable costs of death before probate gets granted. Will probably put something else in place once I turn 65 just so they get some cash to be going on with.

dh is self employed