how much provision ?

oh_know

I am not sure how much I should set up for life assurance !?

Company scheme will pay out 220k if the worst happens
Mortgage is 190k (house worth 320k)
Savings etc. about 60k

So based on the above if the worst happened my wife could pay off the mortgage and have about 90k left plus a house worth 320k.

(I am 30 pension is included in above savings figure)

So bearing in mind we are starting a family I am thinking about adding extra cover - what do people think would be sensible ? - would say 200k on top of all the above be adequate - I think it would be more than adequate but want to check peoples thoughts

???

kingstreet

Try to keep each need separate in your head.

You have a mortgage repayment need on death. If it's a joint mortgage, you'll need cover for both of you - joint, or two single covers.

Have you made a will? Consider it as an urgent requirement.

Take any new life cover in trust to ensure the benefit reaches your intended recipient quickly, avoids your estate and any Inheritance Tax liability and avoids the probate issue.

Starting a family, you'll also have a need for family protection on death. Consider what happens if you die. What happens if your partner dies? What happens if you both die together? Take your DIS into account in working out your need for cover. Don't forget you won't be working if your partner dies and you're bringing up your child(ren).

What if either of you get an illness which prevents you working or makes you unable to look after the child(ren)? You should consider income protection cover like permanent health insurance, sometimes known as disability income benefit.

In the above scenario, how would you pay your mortgage? Should you consider critical illness insurance to repay your mortgage with PHI/DIB to maintain your standard of living?

Basically, you need to sit down and look at your overall situation with an IFA, who can make plans for you now, and once you start a family. They can help you with getting a will properly drawn and set up trusts for any protection deemed necessary.

oh_know

Great thanks I am looking at legal and general through cavendish
I am a bit concerned as to how i can get them to make it "in trust" so as to keep off the tax man should the worst happen - does anyone know owt about this ? or have anywhere to point me

Kind regards

kingstreet

Trust forms and specific wordings, where required, are provided by most insurers, L&G included.

You'll need to consider who will be your beneficiaries and you'll also need a couple of people to agree to be Trustees in the event of your death. They will be responsible for ensuring the funds reach your beneficiaries.

lisyloo

I have heard 10 time income as a rule of thumb.
Remember your wife won't be able to engage in both full time care and earn a full time income at the same time so potentially the family needs income for a few years.

I note you say "starting" a family.

If you don't have any on the way, I wouldn't personally put arrangements in place yet.
You never know it might take many years to get your family started.

kingstreet

To work out family protection cover, it's probably easier to calculate how much you or your partner would need to live on if either of you die.

Use the figure you come up with and turn it into an annual income.

Look for family income benefit which runs until your youngest child's 18th or 21st birthday.

For example, you work out you need £2,500 per month. That's £30,000 a year. Get quotes for family income benefit for that figure. If your youngest child is 6, select a term of 12 years to 15 years to match your preferred expiry age.

FIB is cheaper than lump sum cover because as each year passes, the total amount of benefit to be paid reduces (eg by £30,000.) For a joint £30k pa 15 year FIB (M31NB NS & F31NB NS) the monthly premium would be around £17.

The potential benefit is £450,000, £30k x 15 years. A level term assurance paying £450,000 with a 15 year term would cost £27 per month.

It's a simple question of how much you wish to pay. The level term would be better as you still get the full sum assured even if you die in the last year of the life of the policy, whereas the family income benefit would only pay out the last £30,000.

I still feel you would be better off getting advice about all your needs instead of simply concentrating on this. You may not want to address all the issues now, but a plan of what you intend to look at in the coming years would be of help, I'm sure.