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How much life insurance do you have?

(34 Posts)
Tryintohelp Mon 28-Jul-14 20:37:52

Hi, obviously also getting qualified advice, but am interested to know how much life insurance you have. We're just remortgaging and so looking at the protection again; dh is optimistic, happy-go-lucky and not keen on insurance, I am risk averse and pessimistic. Not a huge surprise then that I think we're under-insured and he thinks it's just right... As he has much the highest salary and we have 2 children our situation would be worse if something happened to him than if something happened to me.

To see what comparable families have, our situation is that we have 2 pre-schoolers. House worth about 500k, £150k left to pay. DH basic income about £75k, my part-time income, about £35k. Children at private nursery, might be private secondary, almost certainly need uni fees.

So how much life insurance do you have? Sorry for the nosy question but please give an idea of your circumstances to show if comparable or not.

FuckyNell Mon 28-Jul-14 20:43:28

We have life insurance for mortgage purposes. Decreasing term. So if either or both if us cark it the mortgage is paid off.

PrincessOfChina Mon 28-Jul-14 20:43:44

Not sure it's comparable but we have:

Me - Earn early £30k's
I have £140k of private life insurance, £150k through work and my pension would also pay out a pension to DH and DD.

DH - Earn's late £30k's
Has £140k of private life insurance

I think I need to encourage him to take out more.

We have £80k ish on the mortgage, plus other debt.

reup Mon 28-Jul-14 20:44:15

None!

reup Mon 28-Jul-14 20:49:04

My dh only has work insurance/pension, we earn half of what you do but have lower mortgage and more expensive house and no private education for kids. He would be fine if I die, I would be in major trouble.

reup Mon 28-Jul-14 20:53:33

Just looked up and his death in service would pay off the mortgage so I would be OK.its not enough to bump him off though!

Heathcliff27 Mon 28-Jul-14 20:55:52

Me and DH £100k each, only £30k left on mortgage. Not sure what his death in service payout is.

girlynut Mon 28-Jul-14 20:57:55

We've got enough to cover the mortgage, currently £160k. We both earn £30k so could survive financially if one of us died as long as the mortgage was cleared. Two children - 9 and 5.

baggyb Mon 28-Jul-14 21:01:53

We have a decreasing policy for the mortgage (£90k) and both have death in service cover through work (around £130k). No private policies.

MoreBeta Mon 28-Jul-14 21:19:23

Your DH dies tomorrow. You have to stop work to look after DCs full time.

Now work out how much money you need to live on until they leave Higher Education without reducing your current lifestyle.

That is the cover you need.

By the way Life Assurance of so called 'Level Term' cover is much cheaper than other forms of Life Insurance. It only pays if you die. There is no investment income or lump sum at the end.

MoreBeta Mon 28-Jul-14 21:21:43

The other thing is that your 'advisor' will always try to sell you the most expensive option with biggest commission.

Critical illness cover is very expensive. and has so many reasons they can use to avoid paying.

Meglet Mon 28-Jul-14 21:29:47

Decreasing mortgage cover and a decent lump sum for the dc's if I die.

I've got salary protection insurance too so the basics are covered for 6 months if I'm too ill to work (although, yes, they could wriggle out of it). TBH as a LP I'm terrified of accident or illness so I'm hopefully fairly well insured, costs a lot though.

It really is how long is a piece of string. What will be enough for one family, will not be for another.

When I worked out how much to get for ours, I took into account mortgages, number of children (fund through Uni) and if I totally collapsed and couldn't work for a year or two as well as ongoing maintenance for NR child. We are underinsured now I think, especially as my visa to work where we are is conditional on my DH being alive/being together.

You could calculate it by, say 10yrs of DHs current salary, which would see you through the first hard year, paying off mortgage, seeing DC through child chare, setting some aside for DC future and perhaps investing some.

applecatchers36 Mon 28-Jul-14 21:41:27

Decreasing mortgage cover for term and 100k lump sum in event of death of DP or I. Took it out with legal & general on advice of unite union.

MarmiteMania Mon 28-Jul-14 22:05:57

I have 500k and my dh 1m as his dad died young leaving his dm with nothing and he doesn't want that to happen to me. Don't think it costs that much as he puts it through his company

Pastperfect Mon 28-Jul-14 22:14:12

Enough to pay of the mortgage and continue with lifestyle we currently have, plus a but extra.

When we worked out what we needed to do that it was quite a lot ��

Rockchick1984 Tue 29-Jul-14 07:10:01

DH's death in service would pay off the mortgage, plus we each have level term policies equivalent to 4x DH's salary (£20k pa) as I'm a SAHM so would allow either of us to maintain current living standards until both children are well settled in school without working, or would cover childcare costs for a longer period. We also have critical illness which I don't think is particularly expensive - less than £5 a month despite DH having family history of heart attacks, stroke and cancer.

WeAllHaveWings Tue 29-Jul-14 07:43:18

If either of us die the mortgage will be paid off with a decreasing term policy we have.

We then have for dh (self employed):

- £10k from private pension
- £30k from an endowment policy
- £40k from a life insurance policy

For me (main earner):

- £130k death in service
- spousal pension for dh

foxdongle Tue 29-Jul-14 09:20:30

DH has excellent death in service 4x salary, plus I get half his pension, he gets half mine. It would pay off the mortgage and there would be a lot left over.

I work from home so I could carry on and our DC are 12 and 14.
I have no life insurance, but we have a big savings pot, another property owned outright and a small mortgage on this.

DH would be able to carry on at work too, with minimal help from family, because of his hours and DC ages.
I'm not worried about Uni fees- they might not go or can take out loans, but would get our support either way.

TalkinPeace Tue 29-Jul-14 14:50:55

we have £200k each, fixed, 20 year policies that run out when DC2
if we both die they have the money to make their lives
if either of us dies the other has time to think

watching a bereaved lady have to sell her home because her husband's insurance only paid the mortgage but not the bills and the lifestyle afterwards focussed my mind.

TalkinPeace Tue 29-Jul-14 14:51:28

typo : run out when youngest DC are 25

Sunseed Tue 29-Jul-14 16:21:00

Given that your pre-school children are, realistically, likely to be dependent on you for the next 20 years or so, then the rough rule of thumb is that you will need to have 10 x your gross salary as the level sum assured. This is in addition to a separate policy to cover the outstanding mortgage debt.

So, you are looking at £750k for DH, £350k for you and a further £150k for your mortgage. If it's a repayment mortgage then this should be on a decreasing term policy.

Yes, Critical Illness Cover is far more expensive (and Income Protection even more so) but even a step towards having adequate CI cover is valuable. You are 4 x more likely to claim on a CI policy than Life policy.

You would be well placed if you take out separate, single life policies rather than a joint policy. For only a couple of pounds more you get a whole lot more cover.

Your adviser should also recommend that you write the life policies into a Trust. The benefits of this are that claim proceeds fall outside of your estate so no IHT liability on them, no need to wait for probate, and ensures the right money gets into the right hands at the right time.

TalkinPeace Tue 29-Jul-14 16:48:19

and back in the real world

painting2014 Tue 29-Jul-14 17:03:12

As we don't have any employer cover my husband and I each have the following (index linked until our child would be early 20s, income protection policies until our retirement):

£225k life assurance policy
(lump sum on death, but terminal illness payment can be made too)

£25k critical illness combined with life assurance policy
(lump sum should particular horrible diseases happen)

£30k per year family income benefit policy
(pays money monthly so household has income for living costs if we die)

income protection policy
(pays a percentage of normal income monthly until retirement if we cannot do our usual job for ill health reasons)

Due to family history very aware of how health and early retirement and/or death can affect family finances.

Also planning to set up lasting power of attorney - already have wills, guardians and named person on pension policy.

titchypumpkin Wed 30-Jul-14 09:53:31

DH £500k and whatever I'd get of his pension (not much probably). This would leave me mortgage free and comfortable for long enough for the DCs to be at school etc

Me £200k. I'm a SAHM at the moment so if I died that would pay off the mortgage and DH could use the mortgage payment for childcare whilst he keeps working.

Don't have any CI cover though, I admit to being confused/scared by all the loopholes. We should look into it for DH though

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