Life Insurance, any recommendations and who to avoid?

[Gibbo]

Hi there


Don't think its a topic that has been really discussed, but I've had to deal with life insurance company in the past when my father passed away, was Legal & General and I found them not too helpful, did not make it easy, failed to return calls, reply to emails etc. and always had to be chased, in the end they did pay up however.

My friend who also happens to be a financial advisor has suggested I get Life Insurance cover simply should the worse happen my next of kin won't have to write an inheritance tax cheque or have to deal with selling property or selling cars to cover it and as such he suggested get a life insurance policy to make life easy for them should worse happen to cover the 40% inheritance tax over 325k that family members would have to stump up.

As such I am not to keen to go ahead with Legal & General and was wondering and I know its a sensitive question as its one of the worse things to deal with but is also why I am asking if people who have being unfortunate enough to have to deal with it can advise if who their family members cover was with if they were good or should be avoided please.

Also if I get cover for say 200-250k is there any requirement to have medical check up or regular medicals to make sure the policy is not voided etc.

Again apologies as I know this is a sensitive question having gone through it and though Legal & General did pay up, took around three months it was pretty stressful to chase them and as such I cannot recommend them or really shame them, just average, I just found it annoying but am glad I did it for my Mum as it would have driven her insane. I just want to try and pick the right company for that when the time comes whoever is claiming for when I pass get an easy stress free time.

 

[Gibbo]

I've no specific policy advice but remember IHT will be payable on the insurance payout as well.

Simple scenario, you have £500k of assets and a £200k policy. IHT will be at payable at 40% on £700k-£325k; i.e. £150k tax to pay.

Yep aware of that, if I ever get married then it increases to 650k and I believe it can go as high as near million tax free according to financial advisor but how no idea but that is his profession but I’m not married so have upto 325k tax free.

I guess it will be something not many people have dealt with as it’s not a nice task having done it before but in case any had experience with any recommends or absolute avoids.

 

[Gibbo]

Worst "I'm worth more than £325k post" ever

It's something I've started to think about more too - time of life thing I guess.

Sorry, I can't really help other than to suggest speaking to a broker & ensuring it actually covers you for what you want - lump sum, paying off mortgage, illness/ loss of earnings cover etc. Don't just get the cheapest from a comparison site or similar.

Nope why I’m asking and the financial advisor is gonna sort me some recommendations too but at same time he can’t give me real life experience. He did suggest critical illness cover.

Mortgage is paid off etc and I have no debt I’d just not want the executor of my will having to worry about writing a cheque for inheritance tax out of my estate, I’ve got a private pension that would cover it but I’d rather they got all my pension and not have to use some of it to pay inheritance tax and for a life insurance policy to help with covering it.

 

[Gibbo]

With all due respect - You should take some proper financial advice - whether that is your friend or someone neutral to the situation. (that's coming from someone who is an IFA)

As @Maccy has said - it's not just as simple as picking a number and going with that. There are many moving parts to your situation and that will change over time (marriage, kids, new mortgage, moving house etc)

Lots of different policies and options out there and finding the right one that suits your current situation and is flexible to adapt to your future needs is important.

Sit down with a professional and take some proper advice on the situation.

Real world experience for me with L&G - Paid out on 250k Critical illness policy within 48 hours of receiving all the required information. (clients of mine). zero issues or delay.

I will sit with him as he did offer and he was great at sorting my pensions and combining them all into one with Embark, so now I just have that plus my Nest, then state pension when I reach 67. Just at same time it is good to hear feedback from others and ideas, not that I distrust my friend but I’d rather have a better understanding myself by posting here rather than just asking him with not much of a clue.

Lots of good advice so far and ideas which I can speak to him about.

 

[Gibbo]

They are all similar in my opinion. By nature they don't want to pay out and are slow.

Do you have any kids Gibbo?

Of course not if I had kids I doubt I'd own a Ferrari or have the other nice motors either, me and the Mrs are not interested in kids, of course nothing to say she won't change her mind but she is really against the idea which gets no complaints from me.

As I say if I pass, hopefully, it will be many years from now, good chance I might be married which lifts it the 650k and I own my home so would I still get the 175k nil rate balance on top of 650k also does anyone know?

It is simply a process that if I pass I want to avoid those carrying out my will can avoid IHT from the estate or a good bulk of it and hence be good to get a 200-250k life cover so then after IHT from the life insurance they will still have around 150k from the policy which should, in theory, cover the majority of IHT that might be owed to the tax man and my private pension would easily cover rest so need to worry about selling property or other assets to raise funds.

 

[Gibbo]

I'm not talking about their recommendations of specific products, I'm talking about their weight for the actual need for life insurance.

Well mine has proved invaluable because I was not fully aware of the fact of the amount of government contribution I can get when paying into a pension fund along with tax relief every year also when I do my self-assessment. In short his helped has resulted in me getting a nice cheque from tax man every year and a few grand out the government towards my private pension contributions every year, it all adds up and just means I am legally maximizing government contributions to my pension and getting as much tax relief as I can.
But that his expertise and the life cover side he knows about but its not his expertise he just agreed to assist and thinks because of IHT and my estate value it makes sense to have.

If you already know about all this fair enough, but myself and I am sure many more do not and this is where a financial advisor is great, as my pension fund grows considerably every year due to contributions and how it is invested, it is important to me because state pension is very little and comes when your 67 and as such I wanted something on top of my Nest pension so that around 50-55 I can retire and have a huge pension to draw from tax free or if I pass then it will pass to who I leave it too and make them financially very well off.

 

[Gibbo]

No worries - I had no idea about your circumstances - I was just going to talk about the option of gifting a chunk of the house to kids if you had them.

To answer your question: https://www.drewberryinsurance.co.u...inheritance-tax-threshold-for-married-couples

Good for you for carrying out financial planning while still young (not knowing your age that is).

Well I set myself up a private pension back in my early twenties which was with Brittania I think it was back then, they went pop or got consumed and become Pheonix Life and what I setup as a kid has pretty much tripled/quadrupled in value, then a few years ago with introduction of Nest and Bitcoin I transferred my Pheonix into one new pension with Embark which I now pay large amounts into monthly unless I do large lump sums so I got off to a good start, then forget about for a while and left it to work and then a few years ago put a lot more to maximise tax relief and government contributions, I am now 41 and plan is to retire 50-55 and ideally have more than enough in pension to give me a good older lifestyle and no worries and at 67 state pension kicks in but that is only like £175 a week at present forecast.

 

[Gibbo]

Oh crap mines with L&G

They did pay out but what annoyed me most is they would request forms filled in and I'd have it done within 24hrs but then they could take like two weeks or claim they never got the emailed forms back, then another service advisor would. Biggest problem for me was always speaking to a different person, they never seem to put a single individual in charge and so every time was nearly speaking to someone different, even trying to request to speak to same person would normally be met with they are on vacation now or not available so just seemed a very inefficient process that took far more time than I would like and some people I spoke to were helpful and other people there were just not interested in helping at all. I was dealing with it on behalf my mum so I could handle it and knew how to handle them but if it was my mother doing it would have driven her insane to point of giving up, maybe that is what they hope for to not have to pay out.

 

[Gibbo]

Personally I'd never charge an existing client for a protection policy, nor accept a commission from the provider. I'm sure that's not the norm, but I doubt I'm the only person to adopt that stance. It's like any professional service you require: find a good practitioner and don't deal with the bad ones.

This he is not charging for this just offering his help if I need it, there is no cost associated.

 

[Gibbo]

all I will add to this thread, is whatever you do, DONT GO WITH LEGAL & GENERAL

They have been ranked 1st on worst company in the UK list for years (even beating openreach, whom I admit have been improving in recent times)

Awful, awful, awful company

Not just me then who has had an unpleasant experience.

AVIVA I have had some dealings with and they always seem very prompt and professional so are one I shall consider.