Life Standalone term life policy vs. pension term life cover

[Protocol]

This is a duplicate of a post that was lost as it was affected by technical problems on Fri 20-Jun

I have a life assurance policy, details as follows:

Started 2008
30y term
300k cover, joint life, pays once on first death
Premium = 523pa

I am a member of a public service DB occupational pension scheme, which pays a death-in-service benefit of min 1x and max 1.5x salary.

I also have a MPP to repay home mortgage on death.

I have now discovered that I can buy optional voluntary extra life cover, linked to the pension.

It's 3x salary for 0.683% of salary, with tax relief.

I am trying to see the pros and cons of the two types of life cover.

So, for example, a salary of 100k (not me!!), would mean 300k cover like I have for 683pa, which is more than I pay.

But taking off the 41% tax relief means a net premium of 403.

Pension term life cover summary:

more expensive gross cost, it seems
cheaper net cost, after 41% tax relief
premium rate not guaranteed for term
term cover finishes when I retire (fine by me)

The key issue seems to be that the pension term cover only covers my life, not my wife's.

I welcome any advice or guidance in choosing between the two options.

 

[LDFerguson]

I think, to compare like with like, you'd need to get a quote for 300,000 cover on your other half alone and then add this to the net cost of the occupational life cover scheme after tax relief. Or see if your existing joint policy can be chopped up so that you're taken off it and if so, how much that would cost.

The result would need to be cheaper to take account of the fact that the scheme is reviewable cost. I'd also check with the scheme promoters to see if they have any guidance as to what sort of premium reviews are likely in the future and in what circumstances.

 

[Protocol]

Thanks for your reply.

Cover for my death is more important, so having two separate policies might make sense.

Wife covered for 100k for 25 years = 100 premium pa

Me covered for 3x salary for 0.683% of salary gross premium.

Add that to DIS benefit of minimum 1x salary, means if I die she gets 4x salary, or 200k+, as well as MPP paying off mortgage.

That's plenty of cover, I think.

Premium would be 229 net + 100 for her = 329

versus

520 pa for joint life 300k cover at the moment

We would save 191, and also have a cashflow gain, as pension term insurance is paid through payroll, rather than a lump-sum.

I welcome any advice.