Life Insurance... or just save up £6K

[MontyVeda]

I was looking at life insurance on MSE a couple of weeks ago... most policies seem to be around £30 a month and pay out around six grand, but you pay the monthly for the rest of your life (i think?).

At £30 a month, it'd take 17 years to save six grand. Any payments after that go in the insurer's pocket.

As things currently stand with my incomings and outgoings, I could potentially put £250 a month a aside and save £6K in two years, then put that somewhere safe as my 'life insurance'.

This would mean i wouldn't be forking out £30 each month when i'm relying on only my state pension (plus a potentially very small workplace pension), and whatever a state pension is in 17 years' time, I reckon I'd appreciate that £30 a month in my pocket.

Sound financial sense or another one of Monty's hairbrained ideas?

 

[DCLane]

That seems a lot to pay out for just £6k life insurance imo.

I'm not sure what others pay, but we've been paying just under £50 a month for £150k life insurance since we were in our early twenties as a dual whole-of-life cover. But it's also partly a savings account and there's £10k or so in there as well*

* Thinks "Hmm ... that'd buy a nice bike. I wonder if I can sneak it out of there .... ? "

 

[SpokeyDokey]

Mine has just finished after 25 years - £23 pm for £100k cover; started when I was 40.

 

[Sharky]

When I was working, I had the "discretional" life cover from the firm, of 3 or 4 times my annual salary. Fortunately was never called, although it was close on one particular morning commute.

All the time I had a mortgage, we had the "death on first" cover, but cancelled it when the o/s amount dropped to a few thousand and I felt that I could accept the risk myself.

I guess you just have to think of the risk and consequences should something happen. But £6k cover hardly seems worth it. Wouldn't be enough to keep your dependents in the manner to which they are accustomed for very long. Assuming you have dependents.

 

[cougie uk]

6 grand isn't much is it ? Are you sure of those figures ?

It's just a back up isn't it - if you pop your clogs is 6 grand gonna be enough for any dependents ?

A decent policy should pay off your mortgage and more.

Depends on what you need.

 

[ebikeerwidnes]

The thing with life insurance is that if you get run over by a bus tomorrow then it will pay out now

It is an insurance just in case that happens

If you are married (or similar) with kids or other dependants then this may be an important factor

I realised - when I was working - that my company pension scheme had a 'death in service' feature so my partner would get a big payout plus a life time pension if I got run over by a bus -- hence I decided that life insurance was not necessary.
When I split up with her ( best thing I have ever done!!!) then I had no dependants and had enough saving to pay for my funeral etc so there was still no point - in my opinion.

I do feel that there are other options available that are better - IF you can justify having no protection until your savings get big enough to protect those people you want to protect.
In my case I have enough savings and my will leaves everything to my wife (shhhhh - she has access to the kitchen which has sharp knives!!!)

If I needed to save up - I would look at one of those monthly saving accounts that pay much more interest - or maybe a few of them
Or a stocks and shares ISA - better still go through an IFA
After a few years you can have the full amount that a life insurance policy would pay out - and it is all yours!!


Just my opinion - everyone is different - you need to look into it in depth - as you seem to be doing

 

[midlife]

I took out level term life assurance for my mortgage, about £28 a month for £240000 rings a bell. Slightly different from life insurance but way more than six grand......

 

[Alex321]

What is the actual purpose of life insurance for you?

The best way t do it is very much going to depend on the answer to that question.

If you just want something to pay your funeral expenses, then just saving until you have enough and putting it away may well be the best thing.

If you want money to support your kids if you pop your clogs before they are adults, then life insurance is probably the better way to do it - but a term life insurance that ends when the youngest is 21 (to allow for university). You should get a lot more than 6K for 20 year term life insurance - but of course then you get nothing if you survive the term. But you would also want a lot more than 6K for that eventuality.

If you don't have any dependents, and your estate would cover funeral bills, then why have any life insurance?

 

[Profpointy]

As others have said it's a lot of money for £6k payout, assuming you're not a lion tamer or already in poor health. I think mine's £50k for the same premium including going diving, caving etc

 

[vickster]

I don’t have any as I have no dependents and no mortgage, don’t see the point (once upon a time I had an endowment, long since cashed in). I have death in service benefit currently through work.

I do have a will, there should be ample to pay my funeral costs

 

[bikingdad90]

I would consider critical illness cover which also includes payment on death. We have two single policies between me and our wife we pay about £50pcm on £220k.

 

[ebikeerwidnes]

As far as saving for a future funeral is concerned - I honestly believe that the best option is to go to a local funeral director and ask about a scheme where you pay and plan it all now - they normally have some scheme where you can pay by installments and then it is all paid for eveb if it doesn;t happen for a long time (hopefully!!!)

I have seen such things but never actually had to do it

If your thinking is about paying a mortgage then you normally have to have some sort of plan anyway - if not they are easy to organise

 

[midlife]

As mentioned above I have level term assurance for the mortgage which pays that on death (no value at the end of the term), a couple of life insurance policies so wife can give up work, death in service benefit and Pension income for the wife as well. All in all if I die then everything gets paid off and Laura can life a life of Riley. If the wife dies then there's enough for the mortgage but I still have to work lol.

 

[MontyVeda]

6 grand isn't much is it ? Are you sure of those figures ?

It's just a back up isn't it - if you pop your clogs is 6 grand gonna be enough for any dependents ?

A decent policy should pay off your mortgage and more.

Depends on what you need.

It's just to cover the cost of my funeral, which is currently in the region of six grand, i understand. I know my Dad's cost around that, and his LI policy was for £4K, so we had to put in the extra. I don't have any dependents and don't want my nephews or nieces having to foot the bill for disposing of me (presuming I outlive my mother, brother and sister).

The figures came from MSE's article on life insurance for over 50s, and this table in particular:

The thing with life insurance is that if you get run over by a bus tomorrow then it will pay out now
...

Depends when you take out the cover. If I take out a policy today and get killed by a bus tomorrow... it won't pay out.
My employer will pay out 5 months wages plus all earnings from the current month to my next of kin should i get run over by a bus tomorrow.... so plenty to cover my funeral costs there. Obviously that won't be there if I'm not in employment when i go.

I just want to be able to cover the costs of my funeral

 

[MontyVeda]

As far as saving for a future funeral is concerned - I honestly believe that the best option is to go to a local funeral director and ask about a scheme where you pay and plan it all now - they normally have some scheme where you can pay by installments and then it is all paid for eveb if it doesn;t happen for a long time (hopefully!!!)

I have seen such things but never actually had to do it

If your thinking is about paying a mortgage then you normally have to have some sort of plan anyway - if not they are easy to organise

According to R4s You and Yours consumer program, prepaid funeral plans are in many cases, a scam.