At these prices, life is cheap
Death may be unpalatable, but for relatives, penury can make the loss much worse.
Life cover is a way to ensure that your family would be able to cope financially if - excuse me for mentioning it again - you were to die. Anyone with responsibilities knows the importance of life assurance, but around of third of British adults have no cover at all.
But, as our table shows, it costs from just a few pounds a month to set up a simple policy which will pay cash to your dependents if you die. Our figures are based on cover for pounds 50,000 but most people will want to get more cover than that.
Why? If you are the breadwinner, or one of them, you should see life assurance as a way of ensuring your loss doesn't hit your family's finances. The aim should be to replace your income, or to provide enough income to meet their future needs. The simplest and cheapest life policy is term assurance which you pay into for a certain period, and which pays out if you die within that period.
The policies pay out a lump sum on death so you need to ensure that the amount is enough to generate an adequate income for your family. For instance, if you earn pounds 30,000 a year, you should aim to have life cover of pounds 600,000. Why so high? To guarantee an annual income of around pounds 30,000 from your life assurance payout, based on the assumption that you should be able to get a 5 per cent return on your investment. If you think in the future your dependents may be able to get a 10 per cent return on an investment, then you would need to buy only pounds 300,000-worth of life cover to get a pounds 30,000 income.
Do the sums based on your own salary. Of course you may feel that your family may not need as much as you earn, particularly if some of their outgoings may be reduced on your death. You may have mortgage replacement insurance, for instance. If so you should work out their future outgoings and work out your life assurance needs accordingly.
Alternatively you could list your debts first, including the mortgage, and start by getting enough life assurance to cover them, leaving your family with a financial clean slate. Remember to include all loans or other credit debts you may have if you follow this approach. Then you should consider just how much your family would need to live on in a debtless environment and working out your life assurance needs accordingly. If both partners work then both should be covered to an appropriate level, as the loss of either income could lead to a financial strain.
The costs of assurance will depend on a number of issues. Your age, of course, will be a determining factor, as will your sex. Since females are statistically likely to live longer than men their life cover is cheaper.
You health will play a big part in determining the cost of cover but as long as you are reasonably healthy, you shouldn't need to undergo a medical to get life cover, unless the insurance company demands it because of your age.
However they will not take it on trust and you will need to supply a note from your doctor attesting to your general condition. As you can see from the table, costs vary considerably between insurers with, in some cases, cover costing as much as three times more. This means that it is sensible to shop around - but it is equally important to check the small print. Some polices may have exclusions or omissions which concern you. Exclusions could be anything which render the policy invalid and it is important to understand what they are. Omissions could be inadequate cover - for instance, some more expensive policies pay out immediately if you are diagnosed with a terminal illness and have less than 12 months to live.
Getting the right cover is important so you should make sure you understand what is being offered. You may want to take expert advice to ensure you do not make a mistaken
Life cover - what it costs
Lowest and highest monthly premiums for pounds 50,000 of level term assurance for a non-smoker. Lowest rates in all cases were from Equitable Life; Highest rates quoted came from various providers as shown
Male aged 30 pounds 3.75 (Equitable ) pounds 12.00 (Winterthur)
Female aged 30 pounds 2.67 (Equitable) pounds 11.00 (Ecclesiastical)
Male aged 40 pounds 6.65 (Equitable) pounds 20.00 (Ecclesiastical)
Female aged 40 pounds 5.33 (Equitable) pounds 16.00 (Ecclesiastical)
Male aged 50 pounds 16.75 (Equitable) pounds 39.50 (NM Life)
Female aged 50 pounds 12.03 (Equitable) pounds 37.50 (Scot.Friendly)
Male aged 30 pounds 4.16 (Equitable) pounds 12.50 (Winterthur)
Female aged 30 pounds 3.11 (Equitable) pounds 11.00 (Ecclesiastical)
Male aged 40 pounds 8.42 (Equitable) pounds 22.00 (Ecclesiastical)
Female aged 40 pounds 6.35 (Equitable) pounds 17.50 (Ecclesiastical)
Male aged 50 pounds 21.94 (Equitable) pounds 46.50 (Winterthur)
Female aged 50 pounds 14.80 (Equitable) pounds 40.00 (Utd. Friendly)
Male aged 30 pounds 4.91 (Equitable) pounds 13.50 (AXA E&L)
Female aged 30 pounds 3.62 (Equitable) pounds 13.50 (Utd. Friendly)
Male aged 40 pounds 10.56 (Equitable) pounds 26.00 (NM Life)
Female aged 40 pounds 7.64 (Equitable) pounds 24.00 (Utd. Friendly)
Male aged 50 pounds 27.94 (Equitable) pounds 60.00 (NM Life)
Female aged 50 pounds 18.36 (Equitable) pounds 56.50 (Scot. Friendly)
27 September 2014 11:27 AM
An action group of disaffected Macdonald owners are now readying for their own legal battle with the company
26 September 2014 06:00 PM
Money worries are keeping more than 7 million of us awake at night
26 September 2014 06:30 PM
To encourage investment in this higher-risk area, the Government offers generous tax relief to those who invest in new issues of VCT shares
26 September 2014 06:00 PM
StepChange, the debt charity, has revealed that students who called its helpline in 2013 had racked up average debts of £7,818
20 September 2014 12:00 AM
13 September 2014 12:00 AM
30 August 2014 12:00 AM
05 September 2014 11:30 PM
30 August 2014 12:00 AM
The UK has slipped to 11th in the latest European league table of savers. Rob Griffin checks out the best options
22 August 2014 10:30 PM
Caroline Flint, the shadow energy secretary, says a Labour government would create a new energy regulator
22 August 2014 10:30 PM
16 August 2014 12:00 AM
16 August 2014 12:00 AM
Five Questions: Changes to car tax discs
Ticking time bomb: Interest rate rises are coming, so start preparing now
More than 300,000 adults are too deeply in debt to apply for bankruptcy
What is pension death tax, what is going to change and how will it affect you?
Almost two million people are facing winter weather without heating
- 1 Snoop Dogg and Jared Leto buy a stake in Reddit as A-list invests $50m
- 2 Car tax disc changes: Two days to go - and they affect you much more than just not displaying a piece of paper
- 3 Ed Sheeran dedicates song to David Cameron
- 4 Now we know whose fault it is if you end up being murdered in Thailand
- 5 35,000 walrus gather ashore on north-west Alaska beach 'for a rest'
Isis, we are told, is a 'clear and dangerous threat to our way of life'. I’m sorry, but I just don’t buy it
Exclusive: 'Putin's Russia has been my biggest regret,' says Nato's outgoing Secretary General
The Osborne Ultimatum: Chancellor’s benefits freeze bombshell will affect ten million households
There’s no excuse for Dave Lee Travis’s behaviour, but we need to keep a sense of proportion
Should gay sex be illegal? 16% of Britons think so
Mark Reckless becomes second Tory MP to defect to Ukip in a month
- < Previous
- Next >
iJobs Money & Business
£18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...
NEGOTIABLE: Austen Lloyd: TRUST ACCOUNTANT - KENTIf you are a Chartered Accou...
£18000 - £20000 per annum + OTE £30000: SThree: SThree are a global FTSE 250 b...
Highly Competitive Salary: Austen Lloyd: CITY - Law Costs Draftsperson - NICHE...
Day In a Page
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors