How much life insurance?
Discussion
I'm not sure how much life insurance I should be taking out. Some online calculators tell me astronomical numbers, and I think they're way over the top.
What's a reasonable amount?
We have a one year old baby and will potentially have a second at some point. Is it enough to cover half the mortgage and around 4 years of salary?
Obviously if I were to actually die, I'd want them to have way more than that... But I have to balance it against paying a huge premium while I'm alive.
If I do what some of the calculators suggest (full mortage, several years of salary, full university costs for both children, other bills and expenses and critical illness cover) then it's not far off £1m of cover and £100pm, which seems ridiculous when I'm only in my early 30s.
What's a reasonable amount?
We have a one year old baby and will potentially have a second at some point. Is it enough to cover half the mortgage and around 4 years of salary?
Obviously if I were to actually die, I'd want them to have way more than that... But I have to balance it against paying a huge premium while I'm alive.
If I do what some of the calculators suggest (full mortage, several years of salary, full university costs for both children, other bills and expenses and critical illness cover) then it's not far off £1m of cover and £100pm, which seems ridiculous when I'm only in my early 30s.
AAz01 said:
I'm not sure how much life insurance I should be taking out. Some online calculators tell me astronomical numbers, and I think they're way over the top.
What's a reasonable amount?
We have a one year old baby and will potentially have a second at some point. Is it enough to cover half the mortgage and around 4 years of salary?
Obviously if I were to actually die, I'd want them to have way more than that... But I have to balance it against paying a huge premium while I'm alive.
If I do what some of the calculators suggest (full mortage, several years of salary, full university costs for both children, other bills and expenses and critical illness cover) then it's not far off £1m of cover and £100pm, which seems ridiculous when I'm only in my early 30s.
Why would you only cover half the mortgage?What's a reasonable amount?
We have a one year old baby and will potentially have a second at some point. Is it enough to cover half the mortgage and around 4 years of salary?
Obviously if I were to actually die, I'd want them to have way more than that... But I have to balance it against paying a huge premium while I'm alive.
If I do what some of the calculators suggest (full mortage, several years of salary, full university costs for both children, other bills and expenses and critical illness cover) then it's not far off £1m of cover and £100pm, which seems ridiculous when I'm only in my early 30s.
There are no right or wrong answers, so any responses will be specific to them, their circumstances and their appetite for risk.
Thats the key. Risk.
What does the picture look like for your family if you aren't here? Conversely, a blind spot for most breadwinners, is what happens if your partner wasn't here? Could you work and look after your family?
Your attitude to risk will dictate what you require, along with budget.
I have risk averse clients paying hundreds a month to protect themselves. I have other clients who don't feel the need for it......no situation or clients are the same.
Have you looked at Family Income Benefit? It pays out a monthly amount when you die, rather than a lump sum.........so you could have a policy that paid out a lump sum to clear anything big like a mortgage and then have FIB to pay a monthly amount to replace your income and keep the bills paid etc.....cheaper than taking out £1m+ lump sum cover.......
HTH!
PS: Ignore the calculators............rather than searching based on the amount of cover.............set a budget that you are happy to pay and then you can carry out a premium based search, which will show you how much cover that gets you, rather than spending an age plugging in sums assured to see what that comes out as etc etc...
As others have said, it really does depend on circumstances, but here's some thoughts I had;
Do you need it for you and your partner, how would you manage without him/her?
What is your partners earning potential? If they earn, or could earn a good salary (enough to afford childcare etc), then perhaps you can get away with less.
What other sources of income would your partner have - if the family will have other income, say from trusts/property then you may not need so much life cover.
Personally, the minimum cover I would consider would be enough to pay off any mortgage/debts and leave them with a good chunk of ready cash (say £50,000 minimum), as at least that way, even if they have to cut their cloth, they'll always have the home and your partner will have some time to plan/adapt etc.
If you are relatively young and healthy, then life insurance is a relatively cheap way to get peace of mind, or so my IFA says.
Do you need it for you and your partner, how would you manage without him/her?
What is your partners earning potential? If they earn, or could earn a good salary (enough to afford childcare etc), then perhaps you can get away with less.
What other sources of income would your partner have - if the family will have other income, say from trusts/property then you may not need so much life cover.
Personally, the minimum cover I would consider would be enough to pay off any mortgage/debts and leave them with a good chunk of ready cash (say £50,000 minimum), as at least that way, even if they have to cut their cloth, they'll always have the home and your partner will have some time to plan/adapt etc.
If you are relatively young and healthy, then life insurance is a relatively cheap way to get peace of mind, or so my IFA says.
Two additional things to consider:
You may already have a death in service benefit with your employer, think mine pays out ~4 x salary.
Whatever personal pension you've got saved up goes to your spouse (unless you say otherwise) in the event of you death (free of tax I believe).
Look at Cavendish Online for the best quotes.
You may already have a death in service benefit with your employer, think mine pays out ~4 x salary.
Whatever personal pension you've got saved up goes to your spouse (unless you say otherwise) in the event of you death (free of tax I believe).
Look at Cavendish Online for the best quotes.
Sarnie sorted mine out for me. We agreed a level of cover that I was comfortable would provide for my family and that would mean my wife wouldn't need to go back to work to provide for either herself or my son.
It is a very personal thing to have to sort out, but I recommend a conversation with Sarnie, he made it much easier. He found a policy that covered my motorsport activities and cigar habit easily enough.
It is a very personal thing to have to sort out, but I recommend a conversation with Sarnie, he made it much easier. He found a policy that covered my motorsport activities and cigar habit easily enough.
AAz01 said:
If I do what some of the calculators suggest (full mortage, several years of salary, full university costs for both children, other bills and expenses and critical illness cover) then it's not far off £1m of cover and £100pm, which seems ridiculous when I'm only in my early 30s.
That's pretty much what i did but I'm an extremely risk averse and pessimistic person 
You are basically ensuring that your other half and kids have one important thing less to worry about if you shuffle off this mortal coil.
rather than subscribe to life insurance I just whacked more into my pension fund , got lucky so far , so consider it a result in my favour , I've always been of the opinion if it all came to a sticky end for me at least the wife would get the house and so what if she had to go back to work ? it isn't the end of the world , plus she'd more than likely land another 'chump' to keep her in the way she'd become accustomed to.
but I also do have some assurances with my employer 50K tax free for heart attack or cancer plus CIC and just over a years salary for family to smooth things over if I snuff it.
but I also do have some assurances with my employer 50K tax free for heart attack or cancer plus CIC and just over a years salary for family to smooth things over if I snuff it.
Edited by dingg on Saturday 16th September 08:33
We - partner and I - pay c£38 p/m decreasing life insurance over the mortgage term (both monthlies and cover) that will cover the mortgage if either or both of us die. We also both agreed to releasing our medical records as part of this cover. I am mid-40s and she will be 40 in a few weeks. Neither of us smoke (she gave up a couple of years ago - disclosed).
Our Mortgage Broker ran through a number of options and made his recommendation based upon our risk profiles and personal circumstances. The gold-plated cover everything insurance was cripplingly expensive (as you would imagine) and didn't fit our risk profile.
Since I have death in service benefits w/ my company pensions, my partner would be the beneficiary of a cash lump sum plus my various pensions to help raise our Little Man.
Whatever you do decide based upon your risk profile, it is critical that both of you make 100% disclosure, and understand what is included, what is excluded, and any obligations. For example, during the 1st year there were a number of 'dangerous' sports that we could not do e.g. sky-diving, etc.
Our Mortgage Broker ran through a number of options and made his recommendation based upon our risk profiles and personal circumstances. The gold-plated cover everything insurance was cripplingly expensive (as you would imagine) and didn't fit our risk profile.
Since I have death in service benefits w/ my company pensions, my partner would be the beneficiary of a cash lump sum plus my various pensions to help raise our Little Man.
Whatever you do decide based upon your risk profile, it is critical that both of you make 100% disclosure, and understand what is included, what is excluded, and any obligations. For example, during the 1st year there were a number of 'dangerous' sports that we could not do e.g. sky-diving, etc.
dalenorth said:
It really does depend on personal circumstances but look to fully cover the mortgage and then at least provide an income for the children until they reach dependency.
We are experts in the protection field so feel free to drop me a pm if you'd like a chat?
I'd have a chat with dale, he's does mine and lot of my clients.We are experts in the protection field so feel free to drop me a pm if you'd like a chat?
Knows his onions that kid
C0ffin D0dger said:
Two additional things to consider:
You may already have a death in service benefit with your employer, think mine pays out ~4 x salary.
No,ignore any death in service cover. If you get cancer or some other terrible illness, you'll have lost your job and any DIS benefit long before you actually die. DIS should be looked upon as just a bonus for your family, if you die suddenly, but it shouldn't form part of your insurance portfolio. You may already have a death in service benefit with your employer, think mine pays out ~4 x salary.
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