Help with level of life insurance

[Kiwi231]

Hi All,

I’m really unsure about this and so hoping someone can offer some advice (apologies if not the right chat group).

I’m trying to arrange my life insurance and have recieved quotes totalling £130/month. I feel uncomfortable paying this much for various reasons and so wanted to run the numbers past MNers to see if you agree we need this level of cover.

After taxes and pension payment I take home £4525/month.

The mortgage (split with partner) is around £250k and I pay £1030 towards this and bills per month. We have 2 children (11 and 8).

The payouts I’ve been quoted are:

Death or terminal illness: £250k (decreasing) from life insurance plus £4.5k/month for 20 years.

If I died there would also be a 3x salary payout from my company (£252k)

Critical illness: £250k (decreasing).

I’m wondering if I really need a death/terminal illness lump sum of £250k. That’s the whole mortgage plus my family would get the £4.5k/month.

I’m wondering if some income protection instead would be better and maybe half the lump sum from the life insurance?

i know it’s subjective but if anyone has any advice I’d really appreciate it.

You might want to re-post in the Money Matters section, or report your post and ask MN to move.

(FWIW, I only had LI sufficient to top up my works death in service benefit to cover the mortgage. But I also felt fairly confident that DH would cope with working and paying the bills and handling DC if I died, and vice versa).

@Chewbecca thanks! I’ve moved it. The broker is putting pressure on me to sign up (you might die tomorrow and your children will be left living in poverty etc etc) but I’ve asked them to half the critical illness lump sum and look in to income protection. I’m the main bread winner and we aren’t married so he wouldn’t cope without me providing some sort of cover, unfortunately.

Personally I would avoid any broker putting pressure on! Have you got quotes from other brokers too?

@Chewbecca I had a broker set up insurance for me in the summer but it transpired they’d told the insurance company I had no medical issues (despite the long questionnaires and discussions I’d had with them) so when the insurance company checked with me after a couple of months it was cancelled. That company put another broker on it but she wouldn’t reduce the amount of cover (she was quoting for huge payouts!).
I’m going to have a look myself this weekend and see what kind of quotes I can get online.

Not an expert by any means but I work in life and critical illness underwriting, many factors can affect the price such as health, lifestyle etc are any of these pushing the price up? I suspect the biggest part of the premium is coming from the amount of Critical illness as you’re more likely to claim. Generally people take out enough to cover mortgage payments for a year or two plus any additional costs depending of the ages of your children etc but I would say is there leeway to reduce the cover amount as some cover would be better than nothing. Again it’s personal preference. If you’re well covered for life I would focus on critical illness as most critical illness policies include life as well so in effect whichever happens first. Hope I haven’t rambled and the above makes sense. The prices also greatly vary across insurers so I would suggest making sure your using a broker who has a large panel.

@Daisysandviolets thank you! Do many people in your experience take out family income and income protection?

I have a neck issue which may push up the premium (although wouldn’t be covered anyway) but it’s possibly my salary pushing it up, I’m not sure. All of the quotes come with very restrictive conditions so I’m questioning whether any are worth it. The critical illness only pays out 25% for type 2 ovarian cancer and then says I’d have to have a combination of critical illnesses for full pay out.

The broker went very silly with the pushing so I’ve ignored him for the last week.

I would definitely look at income protection instead. A lot of people don’t take extra life insurance over and above the work one. Just remember if you stop work you may want another policy for that.

I recently got ill and nearly couldn’t work and I was amazed how little help I could get from anywhere (considering I’ve worked my entire life). My new job offers income protection (mine is limited due to a condition but it would still pay enough to cover bills). Have a good look at the policies and see what it covers and how much it is.

its the 2p years of monthly payments that’s adding to it. Look online for a quote for simple £250k cover with basic critical illness, not decreasing just a one off payment. Mines is £29 a month