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What life insurance do you have and how much would I need?

(13 Posts)
ASecretLemonadeDrinker Tue 14-Jun-11 13:32:15

I have been thinking DH & I really need life insurance - I have no idea how I would cope if anything happened to him (3 DSs 5 and under) and also if anything happened to him he would not be able to fund childcare for his job hours and pay a mortage etc. etc. Our house is worth about 150, mortgage of around 98. I wouldn't want to just cover that though, I would want DH to have a good chunck to maybe buy a house mortgage free and have some over to ... I dunno, have a comfortable life for the boys I guess. Can you pick your own "payout"? What companies are good? Is critical illness etc. worth taking out? How do you work out how much you need? Thanks

SuburbanDream Tue 14-Jun-11 13:36:53

Presumably you have some kind of life insurance because of the mortgage? So you need something extra on top? I'm watching this thread as am interested in getting life insurance too. My worry is if anything happens to me, DH would be stuck with finding childcare etc so I would want some kind of cover at least till the DCs are 18.

ASecretLemonadeDrinker Tue 14-Jun-11 13:39:50

No life insurance because of mortgage - the advisor said we didn't really need it because he said if DH died I would get it paid (government), and the insurance he was offering was for that 8/9 month "gap", and it was going to be added to our mortgage so we were going to pay intrest on it confused I didn't really know what I was doing - bought house @ 18.

Lizcat Tue 14-Jun-11 13:43:42

Okay DH and I between us have several types of life insurance. We have a policy for the mortgage that decreases in payout over the years in line with the mortgage it pays out on death or on diagnosis of a condition that would be terminal within 12 months.
DH has a primary carer insurance (he is most of childcare as I work weekends and out of hours as well as days) it lasts until DD is 18 and will pay out £25,000 per year till if DH dies.
I have lump sum insurance to the value of £250,000 that is tied into my business allowing my business partner to either buy out DH or continue to pay DH my share of the profits whilst employing someone else to do my job.
We took advice from an IFA (choose one who charged a fee, but did not get commission) about all of these policies.

crazycarol Tue 14-Jun-11 22:54:33

ASecretLemonadeDrinker - I have never heard of the government paying out if dh died. No-one told me that! I would be a bit wary of that advice to be honest. We have our mortgage covered if either of us died, we wouldn't need to worry about it. It is what is called a decreasing term policy ie as the amount of capital owed reduces each year so does the payout on the policy. We also have other life insurance through work that would bring in a small income to help plug the gap. We have 1 teenage dd so hope to have enough to fund her through uni if she chooses that.

RockChick1984 Wed 15-Jun-11 09:27:12

I'm a mortgage adviser and I've never heard of the government paying off your mortgage if dh died - there's a scheme for if you are made redundant but it only pays mortgage interest and only for a limited amount of time. Personally I've got decreasing cover for the amount and term of my mortgage, then a separate policy equivalent to around 5 years salary which would pay out on death or diagnosis of terminal illness. I figure that if anything happened to me or dh that gives us a buffer of 5 years to sort finances / childcare etc. Critical illness cover can be fantastic but always read the small print to see exactly what is covered, they all have restrictions so don't just take the cheapest as you may find there's very little it actually covers you for! It's a very expensive policy so you have got to weigh up if it's worth it for you and your family.

ASecretLemonadeDrinker Wed 15-Jun-11 14:59:19

I think the guy meant that thing where they pay your interest, like housing benefit? Not sure of the best company to go with - I don't mind paying abit more if it means they won't try and rip me off long term by not paying out for x,y,z etc.

siasl Wed 15-Jun-11 20:52:06

Check what your DH's company provides first then think about separate cover if required.

For example my DH's company provide life insurance of up to 4x salary (capped at the max pensionable salary of £129k), so anything up to £516k.

It also provides a pension for life of 7/16ths of the salary (again capped at max pensionable salary) or up to £57k/year. This is in addition to whatever company pension pot you may have accrued.

We don't have a mortgage but we've also got a separate life insurance policy to cover us if both of us die and our DCs find themselves with a large inheritance tax liability.

Blondeshavemorefun Wed 15-Jun-11 22:48:03

didnt think a bank would allow a mortgage without having life cover in place - as they need to protect their assets so to speak

you need ideally a term decreasing policy so will pay off mortgage and then maybe a lump sum of £100k+

obv more cover you have the more it costs

RockChick1984 Wed 15-Jun-11 23:26:06

No requirement to have life cover to have a mortgage, only thing you must have is buildings insurance. Sounds harsh to say, but bank can repossess if payments aren't made but if house burnt down (as an example) the buildings insurance would pay to rebuild or to repay mortgage.

Blondeshavemorefun Wed 15-Jun-11 23:50:02

didnt know that rockchick

Tigerbomb Thu 16-Jun-11 00:11:08

I have a mortgage but no life insurance, I can't get it as I am uninsurable sad

They still gave me a mortgage last year

MovingAndScared Thu 16-Jun-11 09:44:11

Do get at least life insurance its really not expensive and great peace of mind. Personally I would get level term as its not that more expensive and although you might not need it for the mortgage it would still come in useful
Critical illeness and other times of insurance are alot more expensive - what sick pay policy do your DH have at work - that could make at difference

This an excellent guide

And we used Cavindish online to get extra when we increased our mortgage impressed

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