Life Insurance how much cover needed?

FANTANA

Registered User
Messages
17
Trying to figure out how much Life Insurance to take out.

Age: 28

Spouse Ages: 28

Children: 1 Age 3 planning to have another soon.

Income 72K per annum spouse not working

Have mortgage protection and have checked my work they don't have any death in service benefit other than giving me access to my Pension.

How much of a lumpsum should I take out?

Is a 20 year term enough or should I plan until the youngest is out of College say 25?

Thank you in advance.
 

odyssey06

Frequent Poster
Messages
1,622
Mortgage protection is just life cover with a fixed term and reducing cover amount.
If you are taking out life cover you should cancel your mortgage protection and notify mortgage company of different policy.
So your life cover amount should cover your mortgage amount, and if you think you will be trading up in 10 years, sufficient to cover that - so you dont have to go through underwriting again. I would aim for cover until 60.
 

Sarenco

Frequent Poster
Messages
5,651
In my opinion (which definitely won't be shared by everybody on here), you don't actually need life assurance over and above your mortgage protection policy.

But you definitely need critical illness cover.

If you died in the morning, your spouse would have a mortgage-free house plus a (State) widow's pension. Not too bad.

But what happens if you get sick and can't work? How does the mortgage get paid?
 

odyssey06

Frequent Poster
Messages
1,622
But you definitely need critical illness cover.
If there's a sole earner and a lot of outgoings (mortgage, dependents) there's a lot to be said for protection against being unable to work.

Just curious, as to why you would suggest Critical illness (once off lump sum for specified illness only) versus income protection (regular monthly payments eg at 66% of salary if unable to work) ?
 

Sarenco

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5,651
Just curious, as to why you would suggest Critical illness (once off lump sum for specified illness only) versus income protection (regular monthly payments eg at 66% of salary if unable to work) ?
Cost, basically.
 

FANTANA

Registered User
Messages
17
In my opinion (which definitely won't be shared by everybody on here), you don't actually need life assurance over and above your mortgage protection policy.

But you definitely need critical illness cover.

If you died in the morning, your spouse would have a mortgage-free house plus a (State) widow's pension. Not too bad.

But what happens if you get sick and can't work? How does the mortgage get paid?
Thanks Sarenco. How much illness cover would you suggest?
 

Sarenco

Frequent Poster
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5,651
@FANTANA

I think it's worth having a session with an independent broker to discuss the various options. It's a fairly complex area and not all products are created equally.

FWIW, I personally don't hold critical illness cover - I have an income protection policy (aka permanent health insurance or PHI) that should pay me 75% of my income if unable to work due to illness. But it's expensive cover (although the premiums are tax deductible) and my family situation is quite different to yours.
 

amascid

New Member
Messages
8
If you died in the morning, your spouse would have a mortgage-free house plus a (State) widow's pension. Not too bad.
I just want to clarify something - the widows pension you mention is the non-contributory widows pension? If so, then I think this would be means tested? Therefore if your partner works then she may not get the full amount? Just trying to understand it.
 

Sarenco

Frequent Poster
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5,651
I just want to clarify something - the widows pension you mention is the non-contributory widows pension? If so, then I think this would be means tested? Therefore if your partner works then she may not get the full amount? Just trying to understand it.
I was actually thinking of the contributory widow's/widower's pension, which is not means-tested.

Here's a link the Department's FAQ on this pension -
 

Laughahalla

Frequent Poster
Messages
127
I would say at least five times income up until the children are young adults i.e 20.
That with the mortgage covered would ensure your family was sheltered from the financial burden of the income loss.
 
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