Income protection vs Dual Life Insurance

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masterboy123

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Hi,

We are a married couple, both in our 30s with a 3-year-old child. I am the sole earner, and my partner is a homemaker.

I am looking at options to get income protection versus dual life insurance coverage (where the policy continues following the death of the first person).

1. Which cover should be given priority? Each cover is costing about €75 per month. I don't want to spend €150 per month and get both policies.

2. Does life insurance cover ANY type of death?

3. Does the monthly premium increase with our age?

Many thanks
 
Life insurance pays out only on death.

Whereas income protection pays a replacement income if you can't work.

Life insurance is cheap.



(1) if you have a mortgage, you should already have MPP life cover to cover the mortgage balance

(2) I think you are a doctor. If you are employed by the HSE, there is a Death Benefit as part of your PS pension scheme. It pays out 1x to 1.5x your salary. You might feel this is enough life cover. If not, see below.

(3) check are there any work-based optional life cover or IP schemes. Typically, these might be arranged by the unions, although not in some PS employer.

My PS employer offers optional extra life cover of 2.5x.

(3) as you are married with a child, most people agree that life cover (on top of any MPP) is very important. If you don't have Death Benefit as part of your pension, then I think you should buy term life cover, eith Joint or Dual.

Try here for a quote:


I had a look: 200k dual-life cover for 20 years is 230 per year - where are you getting 900 per year from!!! You must have asked for huge cover?


(4) Income protection is more of a personal decision.
 
The life cover premium is fixed for the life of the policy.

Example: 200k dual life cover for 20 years, both born in 1990.

230 pa fixed premium with AVIVA.
 
masterboy123 said:
Hi,

We are a married couple, both in our 30s with a 3-year-old child. I am the sole earner, and my partner is a homemaker.

I am looking at options to get income protection versus dual life insurance coverage (where the policy continues following the death of the first person).

1. Which cover should be given priority? Each cover is costing about €75 per month. I don't want to spend €150 per month and get both policies.

2. Does life insurance cover ANY type of death?

3. Does the monthly premium increase with our age?

Many thanks
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When taking out life insurance while you are young it is good to avail of a ‘conversion option’. It means if you wish to continue with your life insurance after your mortgage is paid. There will be no loading on your new policy because of age or illness. No medical would be required.
 
Protocol said:
Life insurance pays out only on death.

Whereas income protection pays a replacement income if you can't work.

Life insurance is cheap.



(1) if you have a mortgage, you should already have MPP life cover to cover the mortgage balance

(2) I think you are a doctor. If you are employed by the HSE, there is a Death Benefit as part of your PS pension scheme. It pays out 1x to 1.5x your salary. You might feel this is enough life cover. If not, see below.

(3) check are there any work-based optional life cover or IP schemes. Typically, these might be arranged by the unions, although not in some PS employer.

My PS employer offers optional extra life cover of 2.5x.

(3) as you are married with a child, most people agree that life cover (on top of any MPP) is very important. If you don't have Death Benefit as part of your pension, then I think you should buy term life cover, eith Joint or Dual.

Try here for a quote:


I had a look: 200k dual-life cover for 20 years is 230 per year - where are you getting 900 per year from!!! You must have asked for huge cover?


(4) Income protection is more of a personal decision.
Click to expand...
Thanks for the response.

Yes, I have mortgage protection plan in place, but our mortgage isn't much left. So advisor suggested an additional life cover.

Yes, I am a doctor with HSE. I didn't know there is a Death Benefit with pension scheme. I don't have a permanent contract with HSE, would that be an issue in this regard?

The life cover suggested by the financial advisor was €850,000.
 
masterboy123 said:
Hi,

We are a married couple, both in our 30s with a 3-year-old child. I am the sole earner, and my partner is a homemaker.

I am looking at options to get income protection versus dual life insurance coverage (where the policy continues following the death of the first person).

1. Which cover should be given priority? Each cover is costing about €75 per month. I don't want to spend €150 per month and get both policies.

2. Does life insurance cover ANY type of death?

3. Does the monthly premium increase with our age?

Many thanks
Click to expand...
Just remember your income protection policy yearly perium gets a tax credit at your income tax rate . So either 20% relief or 40% relief if higher tax rate payer. So if higher rate worker have you accounted for this credit on income protection side total cost.

For life assurance. I personal went for duel life policy as was only euro or two more then joint. With a conversion option. I declined the indexing option at the time as the total fund increased at lower rate to the perium every year and over time became very expensive. So I took out slightly larger sum then needed to cover the indexing myself over the first 20 years . ( kids be finished school /college) perium was cheaper after 5 to 6 years as well.

A close friend had duel policy taken out for mortgage and unfortunately a week after the policy was taken . They partner passed away all of sudden.. They were surprised that even they had not paided one month it was going to pay out on the first life. Just you never know what's around the corner.
 
For someone your age a disability leading to incapacity to work is easily 10x more likely than death over the next 20 years.

If you are incapacitated at 40 you still have a costly life ahead of you with no scope to earn your way out of it.

Whenever this comes up on AAM I find people tend to have too much life cover and too little income protection.

Personally I have income protection cover to 65% of wages. I have life cover to pay off mortgage and €350k on top.
 
irbx said:
Just remember your income protection policy yearly perium gets a tax credit at your income tax rate . So either 20% relief or 40% relief if higher tax rate payer. So if higher rate worker have you accounted for this credit on income protection side total cost.

For life assurance. I personal went for duel life policy as was only euro or two more then joint. With a conversion option. I declined the indexing option at the time as the total fund increased at lower rate to the perium every year and over time became very expensive. So I took out slightly larger sum then needed to cover the indexing myself over the first 20 years . ( kids be finished school /college) perium was cheaper after 5 to 6 years as well.

A close friend had duel policy taken out for mortgage and unfortunately a week after the policy was taken . They partner passed away all of sudden.. They were surprised that even they had not paided one month it was going to pay out on the first life. Just you never know what's around the corner.
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I believe most quotes are given to you now after the tax relief. So in my case it is about €75 per month for dual life insurance and about €70 per month for income protection of 75%..

I appreciate our lives are unpredictable and we all want our families to be financially stable, but I feel there is no end to it when it comes to such policies.

I am still contemplating whether to get income protection of 75% or Dual life Insurance or none at all!
 
Dr Strangelove said:
For someone your age a disability leading to incapacity to work is easily 10x more likely than death over the next 20 years.

If you are incapacitated at 40 you still have a costly life ahead of you with no scope to earn your way out of it.

Whenever this comes up on AAM I find people tend to have too much life cover and too little income protection.

Personally I have income protection cover to 65% of wages. I have life cover to pay off mortgage and €350k on top.
Click to expand...
So you suggest to focus more on the income protection, is that right?
 
masterboy123 said:
Thanks for the response.

Yes, I have mortgage protection plan in place, but our mortgage isn't much left. So advisor suggested an additional life cover.

Yes, I am a doctor with HSE. I didn't know there is a Death Benefit with pension scheme. I don't have a permanent contract with HSE, would that be an issue in this regard?

The life cover suggested by the financial advisor was €850,000.
Click to expand...


Fair play to you to be nearly finished repaying a mortgage in your 30s!!!

The first thing to check is whether you are a member of a PS pension scheme.

All PS pension schemes offer a Death-in-Service benefit.

This means that if a nurse or teacher dies, while in employment, a lump-sum is paid to the next of kin.

I am not surprised that you don't know about it. Nobody really explains these things to new staff.
 
850k dual life cover over 20 years.

Both born in 1990, non-smokers.

827 pa with AVIVA, or 69 per month.
 
Dr Strangelove said:
Yes!

Without knowing your full income and wealth it’s hard to be precise.

Personally I have dependents and I have both income protection and life insurance.
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Annual income = €105,000.
Savings = €100,000.
Mortgage left = €50,000.
Have 1 child and 1 partner to support.
What's your thought now?
 
@masterboy123

I would go for 70% income protection to age 65 (escalating and indexed) for you.

I would take out life insurance so that spouse is left mortgage-free with 5-7 years of living expenses. Factor in death-in-service benefit here.

Review life cover upwards of you have more kids. Reassess downwards if your spouse returns to work and as you age.
 
Dr Strangelove said:
@masterboy123

I would go for 70% income protection to age 65 (escalating and indexed) for you.

I would take out life insurance so that spouse is left mortgage-free with 5-7 years of living expenses. Factor in death-in-service benefit here.

Review life cover upwards of you have more kids. Reassess downwards if your spouse returns to work and as you age.
Click to expand...
That's most helpful.
Got a quote for €60,000 income protection from Royal London at Monthly Premium €108, net cost monthly following tax relief €65.
Upto age of 66 with 26 weeks deferral period.
 
masterboy123 said:
That's most helpful.
Got a quote for €60,000 income protection from Royal London at Monthly Premium €108, net cost monthly following tax relief €65.
Upto age of 66 with 26 weeks deferral period.
Click to expand...
As far as I know, Aviva an Zürich are also also in the market.

You can play a bit with the deferral period and age which will bring down the cost of a bit. Also ask about escalating cover which is where the premium and amount covered go up every year. Also ask about indexation which means that your payment will keep up with inflation if you are incapacitated and unable to work. Escalation and indexation push up the cost but are worth considering in my view.
 
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