Life Assurance - Am I on the right option?

E

eddiem74

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Myself, and my wife are in our early thirties, we have 2 kids, 1 a teenager, and one younger. We currently have life assurance via a "Total Care" policy with New Ireland Assurance.

We are covered for Life Cover (mortgage amount), critical illness (20k), and also children are covered.

To be honest I don't even fully understand all the in's and out's of it, but we have had this policy for 2 years, and at the time obtained it via a broker who said this was like the "Rolls Royce" of policies.

It's only costing at the moment just over 70euro a month, however I was just wondering what folks thought, in terms of the policy or if I should be looking at something else?

Advice welcome.
 
Total Care is a reviewable whole-life policy. That is, the premium will be reviewed after 10 years and then every 5 years and when the older person reaches 70, annually. Personally I don't like this type of cover as it will probably get dearer as you get older.

I also would be of the opinion that cover for your mortgage should be kept separate from cover for your family. I'd expect that you can get a Mortgage Protection life assurance policy at a fixed cost for less than €70 per month. See www.labrokers.ie or www.123.ie for quotes. Then work out what personal cover you actually need, taking into account any other policies, death-in-service benefits at work, retirement age etc.
 
Ok, thanks.

So I should look for:
  1. A policy for mortgage protection life. (this would cover paying off the mortgage in case someone died early)
  2. A policy for personal cover. Would this just be for critical illness, or another form of death benefit type payment?
I would be entitled to death-in-service payments, and my wife would also get some benefits from that, however my wife currently does not work. So what should I be looking at outside the mortgage protection cover, for my wife, and kids?

Also, what is the deal with the online quotes, which give your a cheap first year deal - do you get hammered after that or you just switch again?

Thanks.
 
1. Yes
2. Yes

With regards to #2, I am a believer in substantial policies for families with growing children, and ESPECIALLY so for stay at home mothers, who are almost always vastly under insured. The chances of one of you kicking the bucket is low, so it is usually cost effective to put good coverage in place.

You need to figure out to the actual cost of your wife's work in your home and what you would do should she suddenly not be there - ie, if you had to pay her, how much would you need to pay her per year? You might be surprised to find out that a recent study valued stay at home mothers at €70K per year - your family essentially has a full-time nanny, a full-time housekeeper and a full-time cook on staff, plus a laundress and a taxi service! So you need to look into how much would child minding cost you, or if you work long hours or travel, a full-time nanny? Who will clean your house, do your shopping and look after the laundry, and how much will that cost you?

Likewise, were you to die, would your wife go back to work? If so, can she do that at a reasonable level with her current qualifications, or will she need education to be funded? How will she fund the child care that she now takes care of? These are all questions that vary from family to family, but are worth thinking about.

Obviously, as the children get older and are substantially more self-sufficient, your cover requirement for your wife will drop, whilst yours will not.
 
eddiem74 said:
Also, what is the deal with the online quotes, which give your a cheap first year deal - do you get hammered after that or you just switch again?
Click to expand...

There's no catch - you pay the normal premium from the second year onwards. They just offer you a discount for the first year as a sweetener.

If you go directly to the insurance company, you pay the same premium but you don't get the discount in the first year.
 
LDFerguson said:
There's no catch - you pay the normal premium from the second year onwards. They just offer you a discount for the first year as a sweetener.

If you go directly to the insurance company, you pay the same premium but you don't get the discount in the first year.
Click to expand...

Ok, thanks again. :)

Hells_Belle said:
1. Yes
2. Yes

With regards to #2, I am a believer in substantial policies for families with growing children, and ESPECIALLY so for stay at home mothers, who are almost always vastly under insured. The chances of one of you kicking the bucket is low, so it is usually cost effective to put good coverage in place.

You need to figure out to the actual cost of your wife's work in your home and what you would do should she suddenly not be there - ie, if you had to pay her, how much would you need to pay her per year? You might be surprised to find out that a recent study valued stay at home mothers at €70K per year - your family essentially has a full-time nanny, a full-time housekeeper and a full-time cook on staff, plus a laundress and a taxi service! So you need to look into how much would child minding cost you, or if you work long hours or travel, a full-time nanny? Who will clean your house, do your shopping and look after the laundry, and how much will that cost you?

Likewise, were you to die, would your wife go back to work? If so, can she do that at a reasonable level with her current qualifications, or will she need education to be funded? How will she fund the child care that she now takes care of? These are all questions that vary from family to family, but are worth thinking about.

Obviously, as the children get older and are substantially more self-sufficient, your cover requirement for your wife will drop, whilst yours will not.
Click to expand...

So what types of things should I be considering in a personal life policy?
  • critical illness - how much ?
  • how much for kids or they get some generic cover? (also should I assume I drop kids from the policy once they start working in later years? or they get removed at a certain age automatically ?)
  • death benefit for wife, so I should assume €70K times ??years?
I guess what should I be expecting to pay monthly/annually for this kind of stuff. Having mortgage protection life, and personal life, is looking like its going to add up.
 
A decent broker/financial adviser will be able to work out what cover you need, taking SW benefit, kids ages etc. into the equation. IMO you should be looking at a cheap mortgage protection policy to cover the house, an income protection policy to cover you/your family against the loss of your income and a guaranteed whole of life policy for the additional life cover you require - eagle star do a decent stripped down version of this.
 
As Jimbop says, a good broker should be able to help you figure this out based on your own circumstances as long as you lay out your criteria - that you want to cover your income in the case of your death, add a sufficient payout to cover significant expenses in the event your wife should die, and pay for any educational needs for your children in their event that either parent dies.

As for insuring the life of children, I've never understood that. They don't earn money (unless you're renting them out as chimney sweeps!) and the only expense if one of them should - God forbid - die, is funeral expenses. Someone may have a good reasoning for life insurance for children, but I've not heard one.
 
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