Do you have life insurance / assurance? I don't have any- do I need it?

[ilikeyoursleeves]

I don't have any life insurance and neither does DH. We have 2 young kids and a mortgage of £120k. Whenever the subject of taking out life insurance arises DH says he doesn't believe in buying it and I can sell shares he has had for years for his pension (worth about £50k) should I need to if something happens, God forbid. He thinks there are so many exclusions on the policies that they are pointless.

I personally don't have many savings at all though so if I were to go and leave the family behind they won't get much from me. DH isn't worried though because of his shares and says he'd sell the house and downsize in the worse case scenario.

I'm worried about the economy too though, my job is pretty safe (although I am public sector so you never know) but what if I get some illness and can't pay our mortgage? I have looked at mortgage protection but I think they only cover a years payments?

I'm not sure what to do! Do you think we need some sort of cover? If so, what type? Thanks.

In a nut shell you should have the mortgage covered, then some more to protect the family in the event of either persons death. If you dh died, yes you'd have £50k (assuming the share values were okay) but you would have to faff about getting ownership transferred etc then what would you do once the money runs out. Do you really want the upheaval of moving and downsizing. You can get life assurance called Family Income Benefit that will pay a regular income upon a person's death, say £30k a year which you can have until the kids are 18.
Look online or speak to an IFA on the phone and get some quotes it really would not be expensive and although I am an IFA I think your dh is sticking his head in the sand somewhat.
Lastly life cover is life cover, you die it pays out. As long as you are honest on the application form and do not try to hide any existing medical conditions. You do not have to worry about exclusions etc.

Sorry I meant exclusions for critical illness etc, ie not paying out because you have the wrong type of cancer etc. Is that different to the life insurance policies then? I thought they were all in the same package so to speak? I will look into that FIB thanks. Oh and when you say 'have the mortgage covered' what do you mean? Like X months of payments?

We have cover for the full amount of the mortgage so if either DH or I died the mortgage would be paid off. We also have critical illness cover but can't remember exactly what we get for that.

Sorry I mean have the total amount of the mortgage covered for the term of the mortgage. So you can have £120,000 cover for how ever many years you have the mortgage left.
You can have the life assurance in joint name. You can have just life assurance or you can have critical illness cover added too.
If you wish you can just insure your dh for the mortgage and say another £200k for arguments sake, so if anything happens to him you will be provided for. You can argue this is for your peace of mind. What he does is up to him, Like I say it won't be that expensive.

My life is insured because we reckoned that dh would either have to only work part-time or he would have to employ nanny if I died.

His life is only insured through his employment benefits, nothing else.

Its not expensive because I took the policy out when I was about 10 years younger.

I would say, do it.

Don't most mortgage lenders make taking out life insurance to cover the loan a condition of granting the loan? You don't usually have to take their insurance but you do have to take out adequate cover elsewhere.

The only insurance mortgage lenders make you take out is Buildings Insurance for obvious reasons really. If the house got burnt down they would need to know the cost of the rebuild would be covered and so the value of the property would stay the same.

You need about a million quid life assurance (500k each) which will cost around £100 a month if you are around 40 years old. Much less if you are younger. Not dual life first death rubbish, 500k on each life.

That is very basic. I could easily say £1m each.

Think about it. £250k buys a house, leaving £750k. Invest that and take only 3% per annum to make sure the fund accumulates and you get only 22.5k per year. You can draw more and deplete the fund when the kids are grown up but your time taking car of them would not have allowed you to build up any wealth or income of your own. That is on £1m and 222.5 a year before tax is not a lot is it ?

sorry, 22.5k, not 222.5k !!!!!

Oh yes, BGD, was getting confused.

Do it - at the minimum, get a term life policy to cover at least the amount of the mortgage if one of you should die before it is paid off, and if you can afford it, a higher sum assured to provide some income so that the surviving partner would be able to pay for childcare/work less. Critical illness policies are good in theory, but they do have lots of exclusions and can be expensive.

My DH died when I was in my 30s with two young children. Being widowed is crap enough without having to worry about having somewhere to live and paying the bills. Luckily we did have quite a lot of life insurance - doesn't make up for losing him, but makes life a little less crap otherwise. Oh, and make sure you have a will too. Legal problems are also the last thing you want to have to deal with if your world has fallen apart.

Life assurance to cover the mortgage is a minimum in my opinion. Yes, it doesn't cover some cancers, but it does cover any that are terminal and that's really when you need the cover. Or a sudden death. I dread to think how I'd pay the mortgage on my own for more than a few months without it. Re your husbands shares, if it took more than say one month to sort it all out (and the legal side can take a long time when someone has died, even if you are married) then you could risk losing your house if the bank was unsympathetic?

We both have "death benefit" with our employers, but I think employment insurance is a good idea these days too.

Why would you need to take out life asurance for £750k when you can buy Family Income Benefit that will pay say an income at £30k a year tax free (unlike the income earned from the interest from £750k) It will be alot cheaper too.

I second what exexpat says. I too am widowed and it was a huge relief not having to worry about money. For me, it meant that I could remain a SAHM. It would have made an awful time even worse for my DSs if Mummy had suddenly had to start going out to work. As exexpat says, money doesn't make up for the loss of your husband but it makes day-to-day living a lot less stressful.

Agree with exepat. BuyIng Term Life policy that only pays out on death with no other benefits is very cheap if you take it out under the age of 40 and especially if you are a woman in good health.

I have a Term Life policy to pay the inheritance tax and ensure our children would have enough to live on if me and DW died simultaneously in an accident. DW cannot get insurance at a sensible price as she has had a critical illness.

You and your spouse should both have life cover if you have a mortgage and have children. The policy should also be put in Trust so that if it pays out it does not attract inheritance tax on death.

Thanks everyone, but I'm still a bit confused what I should take out. I am 34, good health, no previous illnesses, non smoker, non drinker, non drug taker (hmmm I sound quite dull LOL). I have 2 young DS's and DH. Can I take something out that would cover me / the mortgage / the kids in the event of my / DH's death even if he doesn't believe in these policies so probably wouldn't want to get one?

You should buy a joint life insurance policy that simply pays out if either of you die. Do not bother with joint life policy that also promises some kind of future investment value if you keep payments. Salesmen love those. They pay nice commission.

A simple joint life policy insurance that pays out on death with no other benefits is cheapest. I have one with Legal & General.

From your first post, it sounds like your DH is getting mixed up between life insurance and the various other things like critical illness and permanent health. Those ones are complicated, do have lots of exclusions and can be very expensive.

Term life insurance is pretty simple - if you die, it pays out. Only exceptions are suicide (in some circumstances) or if you have failed to give them some relevant information about your medical history or smoking habits. It is also pretty cheap, specially a joint life policy at your age if you are both healthy non-smokers.

If your DH refuses to get basic life insurance, then in my opinion he is being irresponsible. He may have £50k worth of shares - but that doesn't even cover half your mortgage. Also, shares can fall in value and they could become worthless overnight. If they are in his name, you would have to get probate in order to sell them, and that takes months at least, sometimes longer. Would your mortgage lender be happy to wait that long? Or would you want to be straight back at work the week after he died to carry on paying the bills?

None of this is fun to think about, but believe me, if the worst ever happened to you, you would seriously regret not having paid £10 or £20 a month to get some financial security. Term life (a policy that lasts for 20 or 25 years - until the children are grown up and the mortgage paid off) on a joint-life, first-death basis is the basic thing to go for. And no, I am not an insurance sales person. By the way, I also agree with BeenBeta - avoid any life policy with an investment element - nice commissions for the sales person, much more expensive for you.

You can have any term you want up to 40 years for life assurance. Ideally the term would be to the end of the mortgage or until your children are 18 or 21 if you want them to go to university.
In answer to the other question, yes you can have one policy to pay out one lump sum that will cover all the issues you have mentioned.

Have a look on money saving expert to get some good advice on buying cheap life assurance. As everyone says, it pays out if you die, so you want to go for the cheapest policy you can find. You should be able to get over £500k cover for around £20 per month I would think.