The Fixer: Do I need life insurance?


The Fixer logoHave you been left out of pocket due to poor service or sharp practice? Do you have a money problem that won't go away?

It can seem impossible to get a fair result when you are battling a large, faceless organisation alone. But never fear! The AOL Money Fixer is here to help.

This week, she offers advice for a young mother contemplating taking out life insurance to protect her newborn son.

Dear Fixer,
I recently gave birth to my first child, a little boy. I want to do my best to protect him in the years to come and I have been advised by a friend that taking out life insurance would be one way to do this.

My partner and I contribute more or less equally to our household income at the moment, so it would clearly be a help to both of them if there was an insurance payout should something happen to me.

Is taking out life insurance a sensible move? And should my partner take out a policy too? Thanks in advance for your help.

M Nuttall, Bristol

Dear Ms Nuttall,

Life insurance will give you peace of mind when it comes to the wellbeing of your son. While the death of a parent is always terrible for the family members left behind, the financial devastation that can follow a bereavement should not be underestimated.

You do, however, have to decide what sort of policy to take out. A 'single' life insurance policy covers one person only, and pays out the sum assured if that person dies during the policy term.

A 'joint' life insurance policy, on the other hand, cover two lives, usually on a 'first death' basis. This means that the sum assured is paid out if and when the first person dies during the policy term, after which the cover comes to end.

Either way, it is a good idea to take out a policy before December this year. This is due to the EU Gender Directive, which will prevent insurers taking your gender into account when calculating their premiums and will therefore increase the cost of cover.

Taking out life cover is more complicated that buying car, home or travel cover, though. It also lasts for a fixed term of many years, rather than just 12 months.

So compare the whole market and, if possible, talk through the purchase with a financial adviser before committing.

The Fixer

Whatever your financial problem, write to and The AOL Money Fixer will get on the case.