Why Do Parents Need Life Insurance

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[00:01:28] Hello and welcome to My Bump 2 Baby Expert podcast, where we bring experts from all over the UK to answer your questions on everything, pregnancy to preschool.

[00:01:49] Today we have special guest David Gallagher from Apple Tree finance in Blackpool. David will be talking about everything we need to know, all your questions answered on life insurance. I hope you enjoy this episode.

[00:02:09] Hello everybody and welcome to My Bump 2 Babies Expert podcast. Today I am joined by David Gallagher. David is a protection specialist, and today we are talking all about life insurance. Hi David, how are you? 

[00:02:25] David: Hi, very well. Thank you. Hope you’re good?

[00:02:27] Carla: Yes, very well thank you. So today we’re going to be talking about life insurance and how important it is for parents to actually have life insurance.

[00:02:35] So, David, could I start by asking you about what life insurance actually is for parents that don’t know? 

[00:02:42] David: Of course, life insurance is a very simple, uh, policy. It pays out on the event of one thing only and that is unfortunately death. So you have to die to, uh, actually claim and receive the benefit, which is a capital lump sum.

[00:03:01] Carla: Right okay. Yeah. I think a lot of people think when they, when they’ve got life insurance they’re covered for everything, but that’s not always the case. So why should parents consider life insurance in your opinion then David?

[00:03:13] David: Probably two, uh, main, main points. Uh, I would say Carla. The first one is. Uh, we all unfortunately have at some stage in our life, a mortgage, um, or some form of debt, which are mortgages. We should always protect that debt in the event of death, because we don’t wish to leave the debt to either our partner or, or spouse or family members be that to elderly or dependent children. Um, so that’s the first one is to protect debt. The second one is to protect your family. And that is what we would call family protection and where okay, if you have your mortgage covered and that would be repaid on death, we would also be losing a partner because of that death, um, with that goes their income. Um, and it’s not just the partner you’ve  lost. You’ve lost the financial security. So we like to have  family protection in place where there’s usually young dependent children.

[00:04:12] To pay out a lump sum, that obviously it doesn’t replace the partner, but does, uh, remove the financial headaches that I quite often see in my business where there’s been death. And there’s been no life insurance in place for the family. 

[00:04:29] Carla: It’s scary. Yeah, because no one knows what’s around the corner. Um, so, so yeah, it’s very important.

[00:04:36] Um, a common statement that we get from parents is that they have death in service. Can you just tell us a bit more about the cons of relying on death in service when someone works at a company. 

[00:04:50] David: Yeah, of course, death in service is a good benefit because it is available um, for free. Most companies, um, historically did include that as part of a package for their employees, usually attached to a company pension. However, over the last 10 years or more, a lot of companies have removed, uh, company pension schemes, and death in service. So there are a lot less companies now offering a death in service package. Um, those that do are the likes of the civil service, the, uh, the emergency services fire police, um, NHS is a big one. But the, the rest of the population, uh, of employees don’t tend to have death in service. If they do it’s good but um, it tends to be no more than one or two times your annual salary. So it’s not a huge amount. It’s a nice amount. I’m sure, but it’s not a huge amount. Probably doesn’t cover a mortgage or provide a lump sum for your family.

[00:05:59] The, the negative or second negative I would say is that it’s only, um, uh, applicable while you work for that company. So if you move companies, which people often do. Then the death in service actually ends when you move. So people move companies, not realising all the time that the death in service is actually gone and they no longer have the cover. So wherever we see death in service, while we say it’s a good thing to have, we try to leave that outside of our guidance, when we’re talking about life cover, because it can be removed. Uh,  be it by the employer or when you change jobs.

[00:06:40]Carla:  Yeah. Another thing, um, that I I’ve experienced with, um, death in services, um, a friend of mine, um, actually got quite sick and because they took time off and they were sick before they passed away. Um, they, they, didn’t no longer worked for the company. Um, and then they didn’t qualify for the death in service. So I don’t know whether that’s something that some companies, you know, if you’re, if you’re not, like you said, if you’re not there anymore.

[00:07:05] David: Yeah. It’s it is. And again, historically, I’ve come across this more than once where people have left died, not too long after leaving the company and the spouses expected them to pay out. Unfortunately they don’t. Um, so the, the, the actual, while the protection is good as, um, an employee. Uh, it isn’t obviously there, if you move and that really, I do see it, unfortunately, a lot people move and forget about it. Um, and end up with potentially no coverage at all. 

[00:07:39] Carla: No and that’s scary because as a family, your costs, you know, it’s expensive to keep a house going. Isn’t it? I mean, there’s everything, everything to think about. So, so I know, um, when we’ve spoke to parents, they have this, um, vision that life insurance is going to be really expensive, but it doesn’t have to be does it? So, so can you explain a bit about how, um, is life insurance expensive or can you get different cover for different, different kinds of needs?

[00:08:07] David: Yeah. Yeah. Great question. Um, life insurance is based on three things. It’s based on age, it’s based on, um, smoker status, be, uh, ideally a non-smoker or if not, obviously a smoker and also your current health. Those three things affect the cost of life insurance and what we, what we only know upfront when we see a client is usually the smoker status, um, and their age. Their health isn’t always known in detail until we may do an application, because if a client’s got some form of ill health, ordinarily the insurance company will have to write to the doctor for that client. And only then do we know, uh, one what the, the insurer will provide as cover and two the cost. So, um, to keep it simple, if a client is healthy, young, and non-smoker life insurance is very, very cheap.

[00:09:12] It’s only becomes expensive as we get older. Um, and unfortunately, as we get older, we also start to suffer, um, with some form of ill health at some stage in our life. And then it becomes either very expensive or in some cases we can’t get clients cover. And that’s when it’s a real sad, because quite often I have clients who come to me, um, for, uh, let’s say a mortgage deed, uh, and they’re in the forties or fifties, but they’ve got ill health. We can’t always get them cover. So they don’t. So they take a big mortgage on and it’s not protected. I personally have always stressed to young people um, to take out life insurance as early as possible for as long as possible because it’s cheap and it will last for hopefully for life or certainly into retirement to cover all those mortgages, uh, debts, uh, family protection needs, and it will never need to be reviewed again. So it’s a massive thing to do early, young and healthy because it’s cheap. 

[00:10:23] Carla: Yeah, no, that makes sense. I think, um, a lot of people kind of just put it off and they’re like, Oh, I’ll do it soon. I’ll do it soon. But all that time you’re waiting, you’re getting older and then it’s more, then it could work out more expensive. So all that time you’ve waited. You probably end up paying back in some way. Anyway so you may as well be covered. 

[00:10:43] David: Uh, I’ll be honest again, Carly historically, I’ve seen so many clients over the years who have said, I’ll do the bare minimum but I don’t want to do anymore. So they might cover the mortgage, but they wont cover the family, and then I’ve had quite a few clients who died, unfortunately, um, while the mortgage was paid off, they left a, a family with young dependents. Um, and the family then struggled, uh, because the, the partner quite often didn’t work full time. And it was usually because they didn’t take out because they couldn’t really see the benefit or, and didn’t want to pay the price. So, again, it, it, it’s not a great subject to talk about people dying, but I have to do it every day.

[00:11:28] Um, and for me, particularly with the last eight, nine months of COVID, uh, I have had to pay out on quite a few claims for people that have died very sadly due to COVID. Um, And the great benefit for me is being able to pay out successfully to clients who did take out life cover, and now their families are financially secure. So out of some sadness, there has been some, uh, some joy in a way, albeit financially. 

[00:11:59] Carla: Yeah, no, that, that makes sense. Exactly. Yeah, but I bet that’s a, not a nice feeling, but then at the feeling that you actually helping people, which is, um, is really important. So it’s not, I think for anyone listening to this as well, it’s not just you dying that you need to think about. If you and your partner both get it, you’ve got to think of your partner. How, how much you’d actually struggle if your partners wage. Obviously you’d be devastated if something happened to them, but if their wage was taken away, could you survive? Um, and you know, you know, all of these expenses, um, it is quite a lot, isn’t it? When you’re, when you’re running, when you’ve got a family and you’re running a household. So, um, when, at what point would you say that people, um, well, parents should start to consider life insurance? Would you do that when they’re pregnant or before hopefully? What point?

[00:12:51]David:  Um, well, again, just going back on my last point, the younger you take it out, so, okay. You might not have children at that point, but while you’re very young and sort of 20 plus let’s say when you start, you’ve got a job hopefully, or you’re in business at that point while you’re young and healthy life cover again is cheap. So I would never put it off. Um, but saying that, um, uh, lots of young people don’t always come asking for life cover because, I’ll be honest most people don’t ever ask for life cover. Very few people ever knock on the door or pick the phone and say, Oh, can I have life insurance? It’s a product or a policy that is advised. So it’s when, usually when we see people about other things, be it mortgages, be it pension planning, or savings for the family.  That the, the subject of life insurance comes up. And it’s, at that point, we would then start to talk about it. Now, if, if they have life cover then we will, we’d always review that life cover to make sure that it’s right, that they’ve got the right amounts. They’re not paying more than they should. Um, and, and if it’s, um, if it’s not being done, let’s say for the right amount of cover. And I’ve quite often seen that where somebody got a mortgage of say a hundred thousand pounds, but, they’ve only got 70,000 pounds of cover and they don’t know why. So if we haven’t reviewed it and there’d been a death that have had a shortfall, so reviewing existing cover we try to do every couple of years.

[00:14:23] Um, but if we don’t see a client because they haven’t asked us, all I would try and stress is to your, your sort of clients and you and your family from parents is that. It’s not something I would ever put off considering it’s it’s again, the sooner, the better, the younger you are to consider your options because they are far cheaper and will last for hopefully into retirement.

[00:14:52] Carla: Yeah. Yeah. And something I find really difficult to kind of, when I think about it is how, how much we insure or the  things like we insure our home appliances, our phones, our cars and stuff. And the thing that our, you know, our children need us more than any of those things. Um, and I think it’s really, really important to insure ourselves so that our children are protected and God forbid, anything does happen to you. You can always, if there is an afterlife, you could always be rest assured that your child’s going to be absolutely, absolutely fine.

[00:15:26]David:  Exactly. Exactly. You’re spot on with that, with your comments there, because that is something that, uh, it’s again, it’s, it’s an unfortunate consequence of, um, we are all so busy running our lives that quite often we forget about the fact that, and it is a fact, that we do unfortunately suffer ill health. Um, people do die. People do suffer serious illnesses. Uh, people are off short-term on sick. Um, and it’s the financial consequences that people, unfortunately don’t always consider until after the event. And that’s why it’s so important to always review your insurances be that life insurance, particular illness sick pay cover as often when I say as often, every, probably every couple of years, or, or as your circumstances change, uh, be that have more family or have a family or, or consider buying houses, et cetera. Um, every two years without fail. And then you’ll always be confident that you’ve got sufficient protection for you and your family.

[00:16:36] Carla: Yeah, that’s very true. Yeah. That’s brilliant. So, David, can you just share a little bit about you and where people can find you, should they want to discuss this further?

[00:16:46]David:  Yeah, of course. And again, we’re in, well have been very unusual times, so, for the last, where are we now? Since March um, myself and my  business, I’ve got seven advisors that work with me. We have been working very much, uh, on a remote basis. So a lot of Zoom. A lot of Microsoft teams and a lot of phone calls to existing and new clients. So we’re happy to do online meetings. It’s very now, much the norm, uh, lots of people are doing it and lots of businesses are using the online option. Its become quite, I would say a nice way of dealing with clients as well. There’s no pressure of rushing to meetings. Uh, being late or, or stuck in traffic. So I think it’s something we’re going to take forward and probably do more of, so you can contact me by email, which is probably the first point of call for any, any sort of, uh, clients now or potential clients. My email address is [email protected].

[00:17:53] My, my websites, if you would like to go and have a look at us on there in respect of our range of services we have is www.appletreefinance.com. Um, and if you want to just give me a call by all means directly, I’m happy to give you my, uh, office number. 01253 886600. Or my mobile 07831568359.

[00:18:30] We do work long hours in this type of business because we appreciate clients that are working work quite often, nine to five hours. So we do work, um, evenings quite often, uh, and the odd weekend, which, um, sometimes it’s okay. Sometimes it’s nice to get a break, but we are pretty flexible, and again this online, uh, experience has become so normal now that it’s quite easy to do that. I did one in the car yesterday, uh, in between meetings, um, stopped on the road, uh, had a zoom call with a client, we talked about some protection and it was just great to be able to do that. So online meetings are probably now quite the norm Carla, so quite happy to do whichever you clients may wish to do.

[00:19:17] Carla: Yeah, that, that’s brilliant. I think, um, if you are listening to this and you’ve not, you know, reviewed your life insurance, or if you don’t have it, please, please get in touch with, um, with David or your nearest, uh, family protection specialist. I think it’s so, so important. And you just don’t want to be that person that you read about in the paper that has no blooming life insurance, and now you’ve got no home as well. I can’t stress it enough. I’m very passionate about this subject.  

[00:19:45] David: Carla, can I just add one important point, which is something that I think also puts off people occasionally, cause they don’t understand the process, we don’t charge people, um, for arranging life insurance or any protection policies. There is no cost to the clients. Right. So I’ve had quite often in the past, people say, well, what do you charge me for arranging a policy? There is no charge at all. Insurance companies pay us as the advisor for submitting your application to that insurance company. So we are paid by the insurance provided direct. So there is no cost at all for the client. 

[00:20:29] Carla: That’s good to know. That is, that is good to know. I think, um, people sometimes think back to years ago when things were slightly different, it’s very different now, and it is, it’s just all about protecting yourself as parents, not just for you, but for your children.

[00:20:43] So thank you. Thank you so much, David, for coming on and talking to us about that I really appreciate it.

[00:20:49] David: My pleasure Carla.

[00:20:54] Carla: Thank you for listening to My Bump 2 Babys Expert podcast. If you would like to find help and support from experts in your local area, head over to www.mybump2baby.com and you will also be able to find local pregnancy to preschool groups, classes, businesses, and services in your local area.