Dear LPG, 

I want to talk about something I have learned which I think readers need to hear if they have or are thinking of taking out life insurance.  When you see the adverts on the telly it all looks like quite a good idea because those adverts often imply the promise that once you die, your family will be able to use that money when it comes to making the many arrangements that have to be made but having watched a friend’s journey after the death of his daughter, I have worked out that it is not that simple.  His daughter was ill for quite some years and unable to work which is why he took the policy out in the first place because he knew that there would not be much money around to do all those things that need to be done within weeks of such an event.

But he took it out in her name which was not the answer at all because, although the inevitable happened some four months ago, he and his family still had to find the money needed for a funeral themselves. When he told me this it occurred to me that, while it is a subject that we don’t really want to think about once we have set such a policy up, it is worth realising a few things about the time it takes to get that money.

The first thing that I learnt is that if a person dies without leaving direct instructions in a will as to what is to happen to such an insurance, the money just gets added to their estate which means that it only gets paid out when all their debts are sorted, which is usually at least a month or two later and well after any funeral arrangements need to be paid for, although it is not all bad news.  

There are a few lessons to be learned.  Insuring someone else’s life comes with a completely different set of rules and even if you are just trying to help, that payment will not necessarily be paid back to you if you are not the insureds next of kin or the fact that it needs to be is not mentioned in their will, and the most important lesson my friend’s story has taught me is that anyone, young or old, who is planning to take out a life insurance policy needs to realise that the money that most people assume will be available to make things financially easier is not always immediately available.

NC, Forest Hill.

NC found a little reading material on this subject…

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