Life Insurance

[Eve4Walle]

DH and I have just started our own business and are now self-employed and neither of us are covered if we die anymore (we both had over with our previous jobs). Can anyone give a few pointers about what to look for in a life insurance policy please? I haven't a clue where to start.

It will depend if you just want say a mortgage covered or a set payout, and if you want critical illness as well, which is something else to consider. I expect you would get advice from a financial adviser, I'd go for an independent.

The first thing to note is that whatever anyone says, life assurance is still a massive profit for any adviser and thus they should be avoided at all costs.

I am presuming here that you can work out for yourself how much you want or how much you can pay and how long you want cover for. If not, then an adviser is not going to help you anyway.

For my needs, the cheapest and best is Legal and General. Now my cover on one policy is about £50 a month with L&G direct or the same via any of these comparison sites. The commission is about £2000 or more up front plus a residual commission every month for years.

If you go to www.cavendishonline.co.uk/life/ then you can pay £35 per policy and your premiums, which you pay direct to L&G, are about £35 per month for exactly the same cover. The fact is that Cavendish only get the £35 and perhaps some bonus from L&G and the commission is used to reduce your payments. You can telephone L&G to confirm this. I did.

Now in your circumstances L&G might not be the best company but do your homework and save yourself thousands and don't line the pockets of the advisers for things like this.

As an aside, you might want to review the L&G adviser centre here www.legalandgeneral.com/advisercentre/MedicalUnderwriting/Information/Underwritingconsiderati ons/Ageandsumassuredevidencelimits/page3927.html which shows at what limits and ages they start asking for all manner of extra medical evidence. All other companies have the same information on the web, though they do their best to hide it away as the advisers don't really want you and me, the stupid general public, knowing too much, such as how much commission they would like to screw out of you.

Be educated and save yourself a fortune.

I would speak to a an IFA or two to get some advice, that is what you really need here. Life assurance is as it says, you die it pays out. You need to look at your debts like the mortgage etc. Then you need to think about the costs of looking after the kids. Thene the potential loss of earnings for the business if either of you died. After all that you need to think about whether you should have the policy in trust for Inheritance Tax purposes and whether you need a will to specify how you would like the monies to be used in the event of bot your deaths.
A good IFA will at least help you decide how much cover you need. Whether you decide to take his advice is up to you.
If you can afford it you should consider critical illness as that would pay out a lump sum or an income if you wish in the event of long term ill health. But you have to decide how much you can afford in cover and take it from there.
I would point out not all IFA's are out to screw people, good ones have long term relationships with their clients which they need if they wish to stay in business.

Not all IFAs are robbers but most of the products they sell are high commission and you need to know how the product commissions work or you will never get the best deal.

IFAs have to eat remember so if you do your homework, then you can afford to pay them a professional fee, just as you would a lawyer and not have them sucking your policies dry year after year on commission.

A good IFA will show you a comparison table showing all the different life assurance rates that are available for life cover and the commission paid. You will be able to see that you are not being advised to purchase the policy with the highest commission.
It is always a good idea to pay by fee if you can, the IFA should tell you up front what their fees will be, but expect to pay somewhere in the region of over £100 an hour.