Life Am I overinsured as a single person?

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ronaldo

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Salary: €32,500
Life & Critical Illness: €93,000 decreasing term policy (30 years)
Life Insurance: €100,000 level term policy (25 years remaining)
Mortgage A: €93,000 (30 years)
Mortgage B: €88,000 (rental property - 25 years)
Pension Value: €55,000
Death in Service: 2 * Salary
Group Income Protection: 70% of salary if I can't do 'my own' job
Dependants: None

Given the above profile, what do you feel that I am overinsured?

The level term life insurance was taken out 5 years ago to cover the rental property (which was originally my PPR). I took out level term rather than reducing because it wasn't much more expensive. I can't remember the exact figure but I think it's a €100 - €105 a year so doesn't break the bank.

The Life & Critical Illness costs a little under €14 per month. It's a new policy which I'm now second doubting.

The rest of the protection (and health insurance) is provided by work.

In theory, I could get rid of the L&CI policy and add an additional €14 a month net to my pension. However, my thoughts behind getting it were that, should I get critically ill, the 70% income protection wouldn't go very far with a mortgage to pay and possible home care. Add to this the possibility of void periods in the rental property and things could get really tough.

Obviously, there's the chance of getting an illness that isn't on "the list" but there's not much you can do about that.

The Life and Critical Illness policy has a guaranteed option that allows me to add 50% to the sum insured if I increase my mortgage, get married or have a child. This is done with no further medical questions. The premiums are also guaranteed and will not rise over the 30 years. Tempted and all as I am to cancel it, I think it's a good policy and probably worth keeping considering I have no problems with affordability.
 
Insurance in general is a scam. If you have no dependents to worry about, reduce your cover to the minimum required by your mortgage lenders. Cancel everything else.
 
Wow, you are being very generous to your parents/siblings!

I'd be with dub_nerd and cull other than the essential, diverting the cash into pension or savings.
Reevaluate of course when life changes and your passing will have economic repercussions for others.
 
Hi,

The €100,000 level term policy is assigned to my tracker mortgage.

The Life & Critical Illness policy I got as I wanted to take out critical illness insurance and adding the life portion didn't cost much extra (a few euro a year).

Perhaps you're right though - with the Income Protection policy provide by work, maybe I don't need the critical illness policy. It'd just come in handy because a 70% salary wouldn't go far if you needed home care or had an empty rental property for a while.

Decisions, decicions....

The total cost of all the above to me works out at about €22 per month. The rest is provided by work.

In deciding whether to maintain the policies I do have one other fear that I need to consider: I've no family medical issues and no personal medical issues. I do intend on marriage/children some day but, if the medical history changes in the meantime, the premiums would probably triple.
 
Hi,
The cost €22 seems good value for that level of cover, if it was a €100 it might be worth it to cancel some of the cover,but on the face of it it seems good value.

Pat
 
I would normal agreed with been single have a min in life cover to cover loans. But if you are getting all that life cover for €22. I think you getting a brilliant price on it.

Remember as you get old it harder to get life insurance without a medical or medical background check. Also the preium goes up as you get older

I would get new quotes from a broker or chill.ie site as they give online quotes to see how much it would cost to take the same cover just before you cancel.

just to look at both sides of the equation.
 
just to add something to think about, why not get the people who benefit from your life policies etc to pay the €14!
as long as you know that they wont fiddle with the brakes in your car it might be a good plan..
 
ronaldo said:
The level term life insurance was taken out 5 years ago to cover the rental property (which was originally my PPR).
Click to expand...

It is not a necessary requirement to have life assurance on a residential investment property. This is only required on a PPR. Speak to your lender and explain the situation.
 
At present you're spending 70 cents a day. No big deal but i suppose everything helps.

If hopefully you meet someone and have kids you will want this (and more) insurance.
If you cancel some of the policies today -and then reinstate them in a few years will they cost much ,thus negating the supposed cost-saving of cancelling them? That's the key question.
 
mercman said:
It is not a necessary requirement to have life assurance on a residential investment property. This is only required on a PPR. Speak to your lender and explain the situation.
Click to expand...

Sorry, the rental property was originally my PPR which is why I needed the cover. I just didn't cancel it when I rented out the property as the cost isn't excessive and the premiums are guaranteed.
 
oldnick said:
If you cancel some of the policies today -and then reinstate them in a few years will they cost much ,thus negating the supposed cost-saving of cancelling them? That's the key question.
Click to expand...

That's my biggest fear - having children and needing cover but it becoming more expensive due to my age (which is extremely likely to happen) or it becoming impossible to get insurance due to an unforeseen medical condition.
 
If this is the case you'd be best changing your term assurance to full life assurance.
 
mercman said:
If this is the case you'd be best changing your term assurance to full life assurance.
Click to expand...

Well, it's all to do with the budget you have for protection. I haven't set a budget as such but common sense tells me that €22 is a drop in the ocean.

The way I see it is that, if I protect myself through insurance until 55 and concentrate everything else on the pension, I can reassess my needs if my requirements are different when the term insurance ends using my pension itself as a form of insurance.
 
Looking at your figures I'd say you are not over insured. Currently if you suffer a serious illness such as cancer, stroke, heart attack your main mortgage is cleared but you will receive only 70% income (taxable)for the time you are out of work. The 2nd mortgage will still need to be paid.

If you are out of work for somthing not covered such as stress related condition then the 70% income protection will kick in but you'll have to pay both mortgages.

If you loose or change jobs then you will loose the 2x salary life cover and the income protection. Not as many companies are paying for death in service and Income protection now.

For €14 a month its well worth it to have the serious illness lump sum bearing in mind that if a close relative suffers a serious illness you may not get cover for that illness on a policy in the future. i.e. some cancers

In the event of your death your parents will most likely inherit your estate but they also inherit your debt.
 
Yeah, I think I'm going to keep the policy.

Out of curiosity, I done a quote for level-term critical illness with premiums and cover increasing with inflation.

I went through the quote twice - once for a 30 year old and a 30 year term and once as a 35 year old and a 25 year term (to see what it would be if I waited 5 years).

The total premiums paid seem to be slightly lower for the person starting the policy younger even though the policies will end at the same age.

When I look at my circumstances, my requirement for insurance is only going to increase from here, never decrease. Therefore, I think keeping the policy makes sense.
 
I was just thinking too - if I decide that it's not worth the hassle of being a landlord after becoming critically ill, my 70% Income Protection policy would need to cover both mortgage whilst I'm selling.

If I were to get critically ill, this is a more likely scenario that the property being unrented for an extended period of time.

I think I've got all bases covered with the addition of the Life & Critical Illness policy.
 
Ronaldo, looking after No.1 doesn't mean spending money on unnecessary insurance.
 
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