Death in service benefit vs life insurance

Why not just set up stand along life cover? At age of 25(smoker) I took out

Death in Service benefit is tied to the company. Therefore should you leave the employment, you loose the cover. From your original post, you own the company, therefore leaving it is very unlikely.

The problem arises if the business folds(through managment or illness), the life cover ceases to exist. Come that time you may have had medical problems which will stop you attaining more cover, or it will be a hell of a lot more expensive).

I saw a case in the last year, whereby a man was relying on his DIS benefit to pay off his mortgage. Poor guy developed a cancer, which is slowly killing him. He did his 6 months Full pay, 6 months half pay, now, he is no longer an employee of the company, so has no DIS, and he cannot get life insurance now as he is dieing. So his wife is left with the house to pay.

While you business may keep running, in the event of your illness, I find it a better idea to have stand along cover which noone can touch, rather than save a few quid on the premium monthly.

Just my opinion though.

Phil,

I guess I just don't like the idea of a 'term' based life cover. If I pay for something, I'd like to know I WILL claim on it, rather than MIGHT claim on it. Death comes to us all, and being in control of the company allows you to remain an employee forever, therefore ensuring you do actually receive a DIS benefit. I'd hate to take a 25 year term life insurance, and die on year

12 per month = 144 pa = 6480 total payment over 45 years, assuming no increase in premium during the term. Pretty good really, but will you actually claim? The average age for men is 74 or 76, I can't quite remember, so the chances are, you might go at 71+. I'm also a little unsure that, as you move towards the end of the term, if the premiums become that much higher. Private health care schemes for example, often increase premiums to ridiculous levels once you start to make claims against the policy or get to an age where you are likely start claiming. I noticed some even stop altogether once you reach a certain age, even if you've been with the scheme for 30 years! I'm a bit concerned life policies might well do the same.

Which company, may I ask, offers the 12 per month scheme for 100K of cover. Is this a typical price, it sounds fairly good value for money to me.

Kind Regards, Shane Cook.

This is because you have yet to fully appreciate why you would need life insurance.

There is life insurance that will pay out when you die, i can't remember what it is called, but guess what, its more expensive and you have got to pay it until you die.

There are all types of life insurance, another type is where your monthly premiums and your cover increase by a set percentage each year.

If i can correctly remember back to a company i worked for who had a DIS benefit, the premiums were re-calculated yearly. We had to send the information of the ages of our employees, they were in age brackets up the age of 65 and over to the insurance company. You can guess that the cost of an employee over the age of 65 was considerably more than one aged 18.

They don't, term insurance 20 for 25 years means you pay the same amount on the last month as the first month. If you then need to extend the term, the older you are the greater the premiums.

I got 250k of cover for 27 years that took me up to the age of 55 for 15 a month. I played with the on-line calculator and the premiums shot up after the age of 60. They went up quite a bit between 55 and 60. Me and partner both have this amount of cover and it was quite gratuitous for us at the time, but we wanted to make sure that if s*it did happen the other did not have to hold down a full time job while at the same time looking after the children, this amount of money bought us choices.

The policy was actually taken out pre-children. I am a believer of taking out a policy as soon as possible in case you fall ill.

Another reason, it appears DIS benefit is not taxable for Inheritance Tax, where as life insurance is. That's one HUGE reason to pick one over and above the other. Anyone suggest any good DIS schemes for employers?

Kind Regards, Shane Cook.

No! Whatever the type of life cover, it can be paid out free of IHT. It needs to be in trust to your beneficiaries, not be paid into your estate. DIS is just automatically set up in trust, whereas life assurance won't be automatic. But it's no big deal to do it.

Rob Graham

Why aren't you discussing this with an IFA?

Rob Graham

Also, you may want to consider Convertible Term Assurance - which allows you to covert to an Endowment or Whole of Life policy at a later date without any medical requirements.

Because it often pays to know what you want to talk about the various options available BEFORE you start talking to anyone about what exactly you'd like to do. I'm a great believer in being able to ask the right questions.

Kind Regards, Shane Cook.

Without a hint of irony, "Shane Cook" astounded uk.finance on 04 Sep 2004 by announcing:

I believe that's only if there's no obligation on behalf of the company to actually pay it to your intended beneficiary.

Correct. Otherwise, it rather defeats the point of the discretionary trust, under which most (all?) such policies are written?

Without a hint of irony, "Doug Ramage" astounded uk.finance on 07 Sep 2004 by announcing:

I've no idea of the technicalities; I just know that the form I complete says something along the lines of "We can completely ignore you and pay the money to who we want." :-p

Employers with DIS schemes typically ask you to keep, in their files, a 'nomination form' which states what you would like them to do with the money. They don't have to follow it but normally do.

Robert

The cover is there "just in case". I did have the option of whole of life cover. but most whole of life covers in my experience only run till about

Mine is inflation linked, so the premiums do increase, but so does the cover. I have had the policy for about 3 years now, and the premium has gone up on average about 40p per year.

It is the risk you take. I have it as I have children. I want them to be looked after in the event of my death. I did not necessarily chose the term of 70, That was what the policy was, I thought it was a good idea, as I should (hope to God) be retired at that point, whereby my income earning days are over. So My wife would be in receipt of spouses pensions, and not miss any income from me.

It was a special promotion with royal and Sun alliance If I remember correctly. They don't offer it anymore I believe. It is very good value for money. But remember it is life only, And as you said I might not die before I am 70.:-)

In message , Shane Cook writes

But if the life insurance is written in trust (like DIS is) then it isnt included in IHT.

In message , Shane Cook writes

But DIS cover will only pay out if you die whilst you are in the employ of your company. So that has a term as well.

DIS is deemed to be a Pension benefit and has a maximum sum insured linked to your salary and it also has a maxmimum age.