# Looking for greater efficiencies



## The Accumulator (14 Jan 2015)

*Age:* 32
*Spouse’s/Partner's age:* 32

*Annual gross income from employment or profession:* EUR 82,000
*Annual gross income of spouse:* EUR 31,500

*Monthly take-home pay:* EUR 9,450

*Type of employment:* Private sector in Gulf country

*In general, we are: *Saving

*Rough estimate of value of home: *Not applicable

*Other borrowings – car loans/personal loans etc: *None

*Do you pay off your full credit card balance each month?* Yes

*Savings and investments: *EUR 20,000 emergency fund in cash

*Do you have a pension scheme? *No

*Do you own any investment or other property?* EUR 104,000 investment portfolio; 75% stocks (indexes), 25% short-term government and corporate bonds, following Boglehead philosophy.

*Ages of children: *New born; only child, will not have any more children

*Life insurance: *

Two years into a 30-year term policy covering each spouse to EUR 200,000 for first death and full and partial disability. Monthly premium is 62 euros. Not inflation-linked.
Husband is insured by employer for annual salary*4 (EUR 328,000). Husband's employer also insures wife for EUR 40,000.
Wife's employer insures her for EUR 50,000
Obviously things are going well and we have budgeted to save EUR 70,000 this calendar year.
Our question related to the 30-year term policy...namely, do we really need this? We are already insured by our employers.


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## Brendan Burgess (14 Jan 2015)

If husband dies, wife is paid €328,000 which is plenty of insurance.

If wife dies, husband is paid €90,000.  Again, that seems enough as husband is a high earner. 

I don't think that I would pay €700 a year for an additional €200k in life cover.  But it's a personal choice.  

Is the full and partial disability worth it?  These can be difficult to claim on.  The premiums tend to be bad value.  

Brendan


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## odyssey06 (14 Jan 2015)

If I was in your position, the situation I would be worried about is if the primary earner suffers an illness or accident and is left unable to work for years\rest of life.
You should check the small print of your policy to see exactly what is meant by "full and partial disability." It sounds like critical\specified illness cover and these can be quite hard to claim against (at least that is the perception).

Also, if something serious, but non-fatal, happens to you at age 35 or 40, how far would €200,000 go?

I would prefer to have an Income Protection Policy, that would pay out e.g. 60%-75% of your income, if you suffer an accident or illness and are left unable to work in your *chosen occupation*.
That way, if something happens at 40, it will continue to pay out until you are 65.

If you take out an Income Protection Policy, look for one where the premiums are not reviewable e.g. the company cannot increase the premium.

You may have issues obtaining such a policy in Ireland that will cover you while in the Gulf however.


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## The Accumulator (14 Jan 2015)

Hi Brendan, 

The idea initially was three-fold:

We were advised that if we took the premium out at a young age (31), we would get a better premium than if we were to take it out at, say, 40. True, but I'm thinking the cheaper premium isn't worth it due to the fact that if you started at 40, you would have saved 700 euro per year for the preceding 9 years!
My wife's mother is a semi-dependent. She lives in SE Asia and her needs are very simple - 2500 euro per year is sufficient to cover them. In addition, she has stage 4 lung cancer. My thinking was that if my wife were to die suddenly, it would be nice to have a large sum with which to take care of her mother, but obviously EUR 200,000 is overkill if 2,500 is able to sustain her now.
Our employer insurance ceases when our employment ceases, meaning we would be without life insurance. (However, the same is true for Health Insurance, and I haven't felt the need to take out a separate health insurance policy...which leads me to wonder whether taking out the extra life insurance was a waste of money).
The policy is one of the Isle of Man ones...not very consumer friendly, but it was the best we could find given our location. Certainly if we were to leave the Gulf I would cancel the policy and take out a better one in Europe.


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## The Accumulator (14 Jan 2015)

odyssey06 said:


> If I was in your position, the situation I would be worried about is if the primary earner suffers an illness or accident and is left unable to work for years\rest of life.
> You should check the small print of your policy to see exactly what is meant by "full and partial disability." It sounds like critical\specified illness cover and these can be quite hard to claim against (at least that is the perception).
> 
> Also, if something serious, but non-fatal, happens to you at age 35 or 40, how far would €200,000 go?


Indeed, not very far at all! But EUR 200,000 plus the EUR 328,000 from my employer would provide better protection.



> I would prefer to have an Income Protection Policy, that would pay out e.g. 60%-75% of your income, if you suffer an accident or illness and are left unable to work in your *chosen occupation*.
> That way, if something happens at 40, it will continue to pay out until you are 65.
> 
> If you take out an Income Protection Policy, look for one where the premiums are not reviewable e.g. the company cannot increase the premium.
> ...


You're dead right. However, getting such a policy from the Middle East is a nightmare. If you know anyone still in Ireland planning to move out here, do them a favor and tell them to take out their policies before flying out.


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## Shakespeare (19 Jan 2015)

The Accumulator said:


> Indeed, not very far at all! But EUR 200,000 plus the EUR 328,000 from my employer would provide better protection.
> 
> Hi, just a point to note, the Eur328,000 is that not a life assurance that your employer has, or does it cover serious illness/disability? If it's life only then in the case of a serious but *non-fatal* incident, you would just have the Eur200k.


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