Is life insurance worth it?

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KirbiG

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My husband and I are expecting our first child, and are exploring moving over to life cover from mortgage protection insurance, but the more I learn about it the less sure I am that it's the right choice for us. We're still early enough in the process that we haven't received any quotes.

I'm 40 and my husband is in his late 30s, and we both have health issues - he has an autoimmune disease, and I have major depressive disorder and haemochromatosis. In our early explorations during this process, we learned that we would likely not get an option to convert the policies after the mortgage is paid off.

I'm the higher earner by a bit, and I work in the public service where I have decent packages for sick leave, death, and retirement - including survivor pensions. My husband has very a reasonable sick leave coverage at work as well, and his pension scheme is ok for the private sector.

I'm assuming that the quotes for life insurance will be higher than for mortgage protection, just based on how much more involved (and honestly, annoying) the process has been so far. Would we not be better off keeping the mortgage protection insurance packages and investing the excess money? Particularly assume changes are made to deemed disposal.

I was already planning to put the amount of children's allowance into investments or a savings account in any case.

I should mention though, that I have no actual experience with investments.
 
If you need general life insurance then why not take it separately from and in addition to your existing (presumably decreasing term?) mortgage protection life insurance?
 
KirbiG said:
That we might replace the mortgage protection insurance policies we have with life insurance policies.
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You will still need to cover the mortgage, so better to leave this on place. The life cover policies will be more expensive as the amount is covered doesn't reduce like the mortgage protection, and possibly if your health issues have come to light since the mortgage cover began.

You could take out additional life cover in addition to the mortgage protection, but it would be wise to assess what level of cover, if any, you need.
 
We've been advised to go for an amount that would cover the rest of the mortgage, so I guess it just doesn't make sense to me to keep both?

We only bought the house 3 years ago (with a 29 year term), and there hasn't been a big change health-wise, other than the pregnancy.
 
If you can afford it, it's no harm to have it.
In the event of a sudden death of one partner, yes the mortgage is paid off but it might help a lot to have another large lump sum if someone wants to stay off work for a longer spell to mind children for example.
 
I am the sole earner in my family and as a result have life insurance as well as income protection, although I have a permanent high salaried HSE job. If I were to die my family would be left with no real way of earning, even if my wife returned to work she'd need childcare etc.

I have arranged things so that she'd get the mortgage paid off, lump sum, €3500 per month - and then she would be able to return to some sort of paid employment. I have bare trusts for the kids (under 5) which if I died would at least mature into college fees and expenses paid at least.

I think you should consider the psychological damage of the death of a spouse where your own health might falter and your employment also. In that case a life insurance policy would be of use.
 
KirbiG said:
We've been advised to go for an amount that would cover the rest of the mortgage, so I guess it just doesn't make sense to me to keep both?
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I think theres confusion on all sides. The mortgage protection will clear your mortgage so the surviving spouse has a house debt free.

Your life insurance would provide a monthly income (or lump sum) to the surviving spouse in order to provide for the standard of living that a dual-income household would have expected - so rather than scraping by your family might have a better life. Mine is for 25 years so that would cover through college.
 
Check if he has cover via his pension. Mine pays out 4xsalary if i die in service.

Mortgage cover is useful and a requirement but if you took the mortgage out of the budget how much salary is left over… like our mortgage was 1k a month and my take home was 4… so we needed to cover the 3k to have the same standard of living.

If your earnings just about cover the mortgage then the sums would indicate that you don’t need the extra. But think about how you’d manage on your own, what services you might need to pay for to have a reasonable life. Or you might want to be able work part time for a few years while the child is small, be good to have a cushion for that,

My dad didn’t bother insurance on my mum on the basis that she wasn’t earning… then realised he’d need a childminder and a housekeeper, a gardener, a chauffeur for the kids… long list when you've 5 kids, then add it the need to maybe pay for help with elderly relatives in years to come. One of my brothers died, we are literally a man down in terms of minding the parents and have to pay for additional help as we can’t manage…

And see what the quotes are like. Might not be as bad as you think,

And don’t forget a will and guardian
 
Seaniemed said:
If I were to die my family would be left with no real way of earning, even if my wife returned to work she'd need childcare etc.
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I don’t know the number precisely, but I’ve read that a 40 year-old has something like a 10 times higher chance of being unable to work before 65 than dying.

I am personally quite heavy on income protection insurance and light on life insurance.
 
We were advised by an insurance broker.

I do have income protection insurance. My husband doesn't (and wouldn't realistically be able to get it).
 
They're independent. They're the ones we went through to get our Mortgage Protection insurance a few years ago, and we both wound up with different providers because they helped us pick the best one.

I'll have to think about this more. The provider we're exploring now might've frightened me off a little because the communication and administration side seems poor. (The only option they gave for returning forms was by post, and we had to get onto them because they'd made a bunch of mistakes of fact when transcribing both of our medical histories into their format.)
 
KirbiG said:
They're the ones we went through to get our Mortgage Protection insurance a few years ago, and we both wound up with different providers because they helped us pick the best one.
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Why didn't one joint policy with one underwriter work?
 
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