Do we have enough insurance coverage?

Marine1

Registered User
Messages
6
Hi all,

Long time lurker, there are some excellent posts and contributions on here so hoping that i can get some advice on our situation. My wife has recently taken an opportunity to take redundancy and is taking some time out of the work place, this may be permanent depending on how things go so i am planning on that basis.

One thing i want to make sure of is that were something to happen to me that everyone is taken care of, she also raised the point that if something were to happen to here we should make some contingency plan for that aswell!

Age: 40
Spouse’s/Partner's age: 40

Annual gross income from employment or profession: 400k at the moment but this can fluctuate, basic pay 200k and rest is bonus / profit share
Annual gross income of spouse: 0

Monthly take-home pay - circa 9k (after bik for health insurance for all of the family)

Type of employment: e.g. Private sector

In general we are saving or at least we were, but we would be considered by many on there to be spenders!


Rough estimate of value of home: 1.15m
Amount outstanding on your mortgage: 360k
What interest rate are you paying? 2.5% fixed until March 23

Other borrowings – car loans/personal loans etc - Car loan 750 per month

Do you pay off your full credit card balance each month? Yes

Savings and investments:

We have been aggressively paying down our mortgage over the past few years and making AVCs so savings have been a little lower but the redundancy payment will address that. So after this years AVC and mortgage over payment i estimate we will have circa 125k - 150k in cash available at the end of the year.

Do you have a pension scheme? Yes, current value of mine circa €185k (and expect to have at least 30k going in per annum) and my wife's circa €240k (but assume it wont be getting any further investment)

Do you own any investment or other property? No

Ages of children: 2 and 7

Life insurance: Scheme with employer that will pay €800k if i die, €420k with ark life (150k whole of life policy and 270k life insurance) and a permanent health insurance policy that will pay out circa 100k a year if i am permanently incapacitated.

The things i am wondering about are as follows, should we do anything with the 125k or just continue to chip away at the mortgage (max i can over pay is 10% of the capital balance each year) and do we have enough insurance?

If i die the family will be left with a PPR worth 1.15m and 1.2m from the insurance policies and then access to both pensions. The monthly cost of our household excluding childcare (we dont have child care costs any more) and mortgage is circa 2,350 per month, plus 750 for the car thats 3,100.

Id expect then that my wife would have at least 1k a month, ideally 1.5k a month outside of that. that is circa 48k a year (the car cost would come down im sure but may as well look at the worst case scenario) we also calculate circa a min of 10k per year in more once off costs including insurances, upkeep of the house, birthdays, christmas, holidays and management fees on the property. That makes it 58k per year to live relatively comfortably.

What i havent factored in there is school or college fees but my spouse could also go back to work when the kids are older, she has a professional qualification and was earning circa 90k annually up to recently.

With those facts in mind should i be taking out another policy on myself? and then if the unimaginable happened and something happened to my wife i would need some sort of permanent child care so perhaps instead we should have a policy on her?

Interested to hear your thoughts, maybe i am over thinking this but moving to a one income household has a way of focusing the mind.
 

RedOnion

can edit posts
Messages
6,024
max i can over pay is 10% of the capital balance each year
You can overpay as much as you like. But over 10%, lender will calculate I'd a break fee applies. The interest you save by overpaying will ALWAYS be more than any break fee.

Re insurance, looks like things will be fine if you were to die. But what would happen if you were unable to work for an extended period? I'd look into income protection rather than more life cover. Check how long you employer will pay for.
 

Marine1

Registered User
Messages
6
hi thanks for your response. thats interesting re the over payment, when you say its always more is that because the break fee is capped at 6 months?

its probably lost in the post above, but i have permanent health insurance that would pay circa 100k p/a if i was unable to work, my employer is also good in that regard in that we have a history of supporting people with serious illness.
 

RedOnion

can edit posts
Messages
6,024
its probably lost in the post above, but i have permanent health insurance that would pay circa 100k p/a if i was unable to work
Ah, apologies I misread it as a single payment of 100k. You've got plenty of insurance in that case.

If something were to happen to your wife, it looks like you'd be comfortable taking a year or more away from work. So any additional insurance would be to cover how long you'd want to away from work to be with your children.

hi thanks for your response. thats interesting re the over payment, when you say its always more is that because the break fee is capped at 6 months?
It's to do with how it's calculated. Interbank rates would need to fall by more than the interest rate you're paying before the break fee would be higher. The 6 months cap is an added benefit.
 
Top