Life Confused about life Insurance

[Mr T]

Hi All,
I have had a life insurance policy as a single man (no dependants)for the past 13 yrs. ita a whole of life, SIC €61,000, hospital cash €96 per day and PAB €381 costing me €90 pm.
Over the past few years my situation has changed and now I have a beautiful wife and son to consider also. I would like to take out a new policy or replace my existing one with something that will look after my family were something to happen to one of us.
We are both 40yrs old, working with about 40k take home per year, a 140k mortgage (tracker-yippee!!!). The mortgage is covered by a seperate policy. We have approx €80k in savings and I have a company pension. We have no other loans.
I got a quote for dual life cover of €100k each, accidental death of €100k each, critical illness of €60k each, hospital cash €100 and Personal accident of €381 all for a premium of €120 pm.
My first question is if the figures in this quote are suitable to my situation, I have seen other posters getting life cover of €300-€400k is this where I should be aiming at??
I read a post reciently where a person was getting dual life of €300k, SIC of €75k over 30 years costing €103 pm.
Also looking at what I have been paying for my past cover I am wondering if I was being shafted by my provider and also my broker (who tells me each year its good value!!)

 

[mercman]

Without going through the complexities, surely you might ber better off taking out a new Policy for a higher amount (to include the cover required for your mortgage). Many companies will do a Policy to tailor your requirements where you could have say €450 k of cover, where the first €150 k would be for cover applicable to the first death and the balance applicable to Joint Life second death -- or whatever permutations you might require.

If you are not happy with the Broker, find another one. These are people that earn on commission, the more YOU pay the more THEY earn.

 

[NorfBank]

Hi Mr T (it's like Jim has finally fixed it for me!)

It's not clear from your post if you had a mortgage when you were single. If you did not have a mortgage nor had any dependents then I would question the need for the whole of life policy at all. You could have been saving/investing €90 per month for 13 years and have at least €14,000 now. What is the curent surrender value of your policy?

It is difficult to assess whether the €100k life cover each is suitable for you. Life insurance is there to provide a lump sum to give a replacement income to your dependents on death. You would have to factor in what age you intend to work until and also until what age your son will be dependent on you.

I would question the need for hospital cash cover and personal accident cover. These are just expensive add-ons in my opinion. Get a new quote without these two extras.

 

[mercman]

It's not clear from your post if you had a mortgage when you were single. If you did not have a mortgage nor had any dependents then I would question the need for the whole of life policy at all.

It is a requirement for a mortgage for a PPR, that there is Life Cover in place.

The additional add on are extras simply to justify higher premiums. There are enough reputable brokers on AAM who might want to quote you for the business.

 

[StevieC]

First of all I would question the need for a whole of life policy, particularily if the premium on it is reviewable. Its a lot cheaper to take out a policy for a specific term if you know how long you require cover for.

Also bear in mind that the requirement for life assurance cover decreases as you get older, for example your mortgage could be paid off and your children grown up.

You dont mention whether or not you wife works or plans to return to work once your child is older, this is also a consideration to take into account.

Generally a figure of €50,000 should be enough cover per child to cover preschool childcare for a couple of years and college fees. These are the main things that people want to cover for their children in my experience.

You could in my opinion make an immediate saving on the hospital cash part of the plan. Not many things will require you to stay in hospital for more than 3 that are trivial in nature. Anything serious that requires a stay longer than 3 days will most likely be covered under the specified illness part of the policy.

There is no magic number for the amount of times salary you should have cover of. Everyone has different circumstances and mainly it comes down to budget, ie how much you want to spend.

If your wife was prepared to go back to work in the unfortunate event of you death and you didnt have more than 2 children then I would say that €100,000 life cover is enough as the mortgage would be paid off and you have sufficient savings and benefit for your childrens upbringing and education.

Hope this gives you some food for thought.



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