Continuing the discussion from Life Insurance: some helpful comments but nothing to explain what a first time life insurance buyer should be looking for.
My partner and I are both in our ahem mid(ish) 20s, still young (at least in the physical sense. Mentally I’m a grumpy old man already). We’re are expecting our first child in December. The 29th. So probably Christmas…
Life insurance is definitely something we should be thinking about. But what do we get?
What type of policy? Do we get critical illness cover? What should we set the payout as? How long should the term be? What is a sensible amount to expect to pay?
We don’t yet have a mortgage so I know we don’t have to worry about that being covered at the very least.
I have searched high and low but the only “guide” to buying life insurance don’t really explain a lot.
It’s all very dependent on your needs and circumstances but when we took our out I went for:
- level term
- for the length of our mortgage
- enough to cover the balance of mortgage and extra for the Mrs and kids to live off for a while without having to work in the event I’m not around
- yes for critical or terminal illness
I’m the only earner so covering them was the goal but obviously adjust for your own goals.
I went with level term for length of when our son hits 21. Basic 10x salary
Sainsbury’s bank (Legal & General) and got just over half million for £20 exactly a month. Better deal than L&G direct plus £70 points and double nectar for the lifetime of policy as in earn £10 a month they’ll give you another £10. We eat and use the fuel anyway so it’s nice cashback. Don’t buy insurance just for the cashback/gifts though.
You can then login to L&G and they will write it in trust for free so the gov don’t take a slice.
My life insurance is through Vitality, and I pay £24 a month.
I actually think, in terms of cost-benefits, this is one of the best. The perks I get back completely pay for the monthly fee:
- A Starbucks once a week
- A Cineworld/Vue ticket once a week
- 40% off Virgin Active membership
- 50% off running shoes once a year
- 40% off British Airways short-haul flight twice a year
- Amazon Prime membership
- Apple Watch
The entire premise of Vitality though is that you remain healthy, so a lot of the perks are contingent on you doing daily steps, seeing a doctor for checkups, going to the gym etc… but it’s insanely easy to do these things, and there are quite a number of perks I don’t even take advantage of.
I’m still waiting for a life insurance provider that doesn’t decline insurance or inflate costs five fold for what in this day and age is a minor underlining medical condition
As I am going through something similar myself I would be interested to know what you have decided in the end. What insurance provider did you choose in the end?
I have chosen this new life insurance services providers https://www.ensurancecompare.com/life-insurance/ and I am quite happy with their services.
Hello @marshallbrown I will look into it. Thank you for sharing this
Fortunately I don’t think Life Insurance quotes take that into account…
Money Saving Expert have a useful guide (perhaps…) on the topic - that at least explains how you might calculate the cover you need.
The short story, as I understand it from my own searching lately, is:
- If you look through an insurance broker rather than price comparison website you will likely find better costs.
- The younger you get insurance, the cheaper the premiums - but prevailing wisdom suggests not buying it until you need it.
- If you’re just covering a mortgage - policy’s who’s value decrease over the term are what you would likely want (as the amount outstanding on your mortgage would decrease with time) - I believe cover for this is overall cheaper.
- If you want a lump sum payout to support people - I think the “10x salary” is a rough rule of thumb - but also take into account how long you need people to be dependent on that. (may be partner, kids, etc).
- Certain policies allow you to set up a trust for the lump sum payout which I think protects the value against tax - but not 100% sure on that.
Note - the above is all stuff I read when searching for insurance myself. May not be 100% accurate so please do research further
Hey no problem, glad to help you