Do I need Life Assurance?

Life assurance or life insurance as it is also known is an important consideration for anyone who has dependants or outstanding financial commitments. For many people the need for life assurance is not obvious; below we have outlined some common reasons you might want to consider or even need to take out life assurance.

I’m getting a mortgage

A mortgage is likely to be the biggest financial commitment you will ever have and therefore making sure the mortgage is repaid should the unforeseen occur is vitally important.

You should consider protecting your mortgage in the event of your death (Life Assurance) but also in the event of illness (Critical Illness Insurance).
If you are remortgaging or purchasing then it is very likely that you will be changing the amount you owe and the term in which you have the debt over - it is therefore a very good time to review your protection needs and top up your cover to reflect these changes.

I’m having a baby or adopting

Having a baby costs money, lots of it! You will be financially responsible for your child until they reach 16 and in most cases considerably longer if, for example, they take up further education.

You need to ensure a life assurance policy not only covers the burden of outstanding debts but also provides your child with a good standard of living.

Starting a New Job, Becoming Self Employed or a change in Employment Circumstances

When starting new employment it is extremely important to review your life assurance cover. It may now be the case that benefits you have been used to receiving whilst with your old employer are no longer applicable; equally you may well have received new benefits.

If you have or are planning on becoming self employed you will no longer receive any employee benefits so it’s imperative you review your life assurance cover as you are now as exposed as a builders bum.

It’s important for you to consider how you would cope if you were unable to work due to an accident or sickness; Income Protection (or Income Replacement) policies are worth considering.

Review what you will receive in the event of death & illness and plug any gaps in cover that have arisen due to your change in employment.

I’m getting married

Rather similar to having a child or adopting, by getting married you are effectively adding a dependant to your life. As such it is important to consider your life assurance cover in line with your new dependant.

Whilst your partner may not be dependant upon you it is conceivable that they may become dependant upon you and as such your life assurance should cover for this.

Furthermore if you have children with your partner the life assurance requirements are compounded beyond the considerations for a marriage and children sperately; caring for the child may make your partner unable to remain in employment and increase the deficit between income and outgoings.

I’m getting divorced

Unfortunately divorce doesn’t sever dependency on your former wife / husband. If you and your ex partner had children together then School and further education fees or Maintenance payments may still need to be covered.

 

News

Nationwide Offers First Time Buyers a Discount

Friday 16th October
The nationwide today has stepped forward with 2 new offers to help open up the market for first time buyers.

The offers are as follows; a £500 discount off any reservation fee’s or a £250 discount off reservation fee’s and no legal’s to pay.

The offers are available on The Nationwide’s 3, 4 and 5 year fixed rate deals and also on its 3 year tracker deal.

Mortgage director at Nationwide, Andy McQueen, said: "We are reducing the amount that [first time buyers] need to pay upfront and so hope we've removed a barrier which may have prevented people from buying a home ."

The move will be welcomed, however the true barrier to first time buyers at the moment is the excessive deposit amounts required by all major lending institutes, making a £500 discount as practically useful as a £5 reduction for most.

Coalition to Fight Stamp Duty Formed

Friday 16th October
The National Association of Estate Agents (NAEA) and the Association of Residential Letting Agents have formed a coalition named “1808 Coalition” after the date Stamp Duty was introduced.

The two groups and of course the coalition they form, believe the reinstallation of Stamp Duty at its normal levels will be detrimental to First Time Buyers and Buy to Let Investors.

Stamp duty, which is normally in place for transactions on residential property above £125,000 in value has for some time sat at £175,000 in a bid to re-light the fire under the housing market, however it is due to return to 125,000 on December 31st this year.

Stamp duty is applied to the total sum paid in consideration for a property where that sum exceeds the threshold. For example on a property transaction of £190,000, £1,900 is due in stamp duty (1%), not as many believe 1% of the sum exceeding the threshold i.e. £15,000 (£190,000 - £175,000) or £150 in stamp duty.

Chief executive of the NAEA, Peter Bolton-King, said: "Stamp duty is a barrier to entry for many first-time buyers and is also prohibitive for those looking for a step up the property ladder . The time has come to re-assess Britain's most unpopular tax."

Whilst we cannot agree that it its the most unpopular tax (recent surveys show 31% of respondents take the most displeasure in paying inheritance tax, compared to a mere 23% loathing Stamp Duty) however we support their call for an extension to the raised threshold as in the current market conditions, all stops should be pulled in efforts to draw in first time buyers, life blood, into the market.