Do you have life insurance? Talk to me about cost/policies

[NutellaLawson]

DO you have life insurance? How much do you pay and what are the terms. Do you think it's a good deal?

DP and I have two DC (both under 2) and want to take out life insurance because we would be very seriously screwed if anything happened to one or other of us. We're not married yet but that's a subject for a whole other thread.

I'm the sole earner of the family on quite a lowish income (22k in one of the most expensive places in the southeast, outside of London) but we're frugal as hell and own our home outright, so we're managing ok on that. We wouldn't need a huge payout as we can live on very little (case in point: we're managing on just statutory maternity pay and tax credits at the moment. I'm not sure how we're doing it, but we are).

DP is the SAHP and this means I don't need to pay for childcare. I would not be able to afford nursery fees for two out of my salary (just one child costs two thirds of my weekly net salary).

Basically we are both huge contributors to our family's financial setup and need to make sure the other will not be thrown into financial hell during a time of grieving, should one of us die.

So have you taken out life insurance? What sort of cover do you think is the minimum - 2 years' salary? 5 years' salary? It worries me to think of how hard DP would find it if anything were to happen to me. He'd struggle to find work that fit around the children, I think. I'd want to be sure he'd not have money to worry about but not take out a huge policy with a large premium that then leaves us short of money today.

DP is 28 & his is £10pm, I'm a bit more expensive at £17pm as I'm 34 & my medical history is more "interesting". £200k payout if either of is die before 65 (or £400k if we both die - broker advised it's better not to have a joint policy for this reason) Did it through a broker & it's with L&G. It's enough to pay off mortgage & provide a bit of a lump sum so adequate for now.

The most cost effective option is usually family income benefit. It pays a monthly income rather than a lump sum (then there's no investment issue)

there really is no 'norm' but look at what you'd need coming in to survive and make that the basis of your calculation.

DH and I have just set the ball rolling ourselves. It was suggested to us to not just look at the minimum in order to survive, but maintain our current standard of living and so we were encouraged to include all hobbies, treats of lunch out, shopping (essential and non-essential), gifts to friends and family throughout the year and so on. It was staggering what we totted up to cover the 'nice to have' as well as the 'need to have' (and I don't think we live extravagantly, we do consider every purchase)

Life insurance, we're 35 and it's about £18 per month both of us for a 22 yr term (covering kids to at least 21) for a £200k payout - aviva and l and g both similar, shopped around this year. Critical illness cover is much more, about £40 per month for both of us for 22 year term, it's £180k of cover declining in value each year in line with our mortgage. We thought critical illness worth having for us as we don't have much in savings and would need to be able to pay mortgage. As our kids get older we plan to reduce our policies as our own savings and equity increase.