Do I have enough life insurance or am I underinsured?

[Familyman77]

I may have posted the below in the wrong section but I'm looking for advice on my level of insurance cover

I currently pay €80 per month PPI through AXA. It's a 100 % joint cover with my wife. Our circumstances changed so although my wife is on the policy it doesnt actually cover her now as shes not working. Therefore I'm going to cancel it.
I'm wondering whether I should look into income protection or a life insurance.
Currently we have a level term assurance ( joint life ) with a benefit of €267000 ( expires jan 2039 ) and I have a death in service benefit through the CWPS with a €100000 benefit payable to my next of kin.
Mortgage balance is €125000 and finishes October 2037
Any advice on what i should look at would be much appreciated

 

[jpd]

You should have enough life insurance to
1. repay your loans including your mortgage
2. provide an income to your dependents to replace the income which has been lost

You need to bear in mind any benefits eg widow's pension which may be payable on your death and any reduction in expenses eg smaller grocery bills when calculating the net loss of income

 

[Dave Vanian]

Have you kids? If so, how old?

What's your income? Level of life insurance cover is related to level of income. One man's fortune is another man's pittance.

Is the level term policy covering your mortgage or have you a separate Mortgage Protection policy covering that?

Finally, what's your occupation? Looks like you're in the construction industry. If you're doing a manual job, e.g. carpenter, bricklayer, Income Protection would be horribly expensive.

 

[Familyman77]

David,

2 kids aged 4 and 8.
Take home pay is €1100 a week and I am the sole earner .
The level term comes with the mortgage so the mortgage balance would need to be paid off. I checked with the provider last week and they confirmed even if the mortgage has been paid off in that time the full value is still paid out. That covers both myself and my wife
Occupation is Quantity surveyor

Thanks

 

[Dave Vanian]

Okay here's the quick version of the calculations. Feel free to adjust them if any of my assumptions are off.

If you died, your family would be down €1,100 per week. I'm estimating that your mortgage is €200 per week or less. That's cleared. Your wife would also have State Widows Pension, also roughly €200 per week. Let's say she cuts back a bit on household expenses - you're not around to consume or spend money - so a further saving of €200 per week. She's still down €500 per week. She has €242,000 in the bank from the life cover after clearing the mortgage. If she draws €500 per week from this, it would last between 9 and 10 years. Need for a bit more life cover on you.

If your wife died, you'd be better off by €400 per week (mortgage + State Widowers Pension) plus the amount not being spent by your wife. And you'd have €242,000 in the bank. That should be enough to cover childcare expenses. I wouldn't be rushing out to buy more cover on your wife. Just you.

If your username hints your age and you'e a non-smoker, you should be able to get more life cover on yourself and some Income Protection cover and still have change out of your €80 per month.