How much cover do i need?

Sean75

Good morning to everyone.I would just like to ask a few questions and hopefully some of the experts out there might be able to help me??

Obviously us moneysavers like to save money but even more so at this time of the year so i will let you know my situation.

OH and i have an outstanding mortgage of £48.5k on a 2 bed worth approx £130k.We have one dependent (7 year old son),all in good health and are non smokers.At the moment we have the following policies.

(1) Level Term Assurance.Critical Illness with Life Cover.OH & me £50k Son £12.5k.£23.85 per month.
(2) Level Term Assurance.Critical Illness with Life Cover.OH & me £78,236 Son £7.5k.£39.07 per month.
(3) Life Assurance.OH & me £60k.£8.44 per month.

I also have a company pension which i pay approx £17 a week into.

Now do you think i am over covered or dont have enough? I realise that these policies are very important to have but i dont want to be paying over the odds if i could get cover cheaper elsewhere.Looking forward to some expert replies.Many thanks.

lisyloo

It doesn't look like you have any long term sickness cover in place.
Critical illness pays out a lump sum but does not provide an income.

What happens if one of you is sick for a long time (possibly until retirement).
Most sick pay schemes at work last 6 months.

jasonking

As ever it depends as much more information is required before firm recommendations can be made. This is where I would point you in the direction of your IFA.

However if either of you died then the mortgage would be repaid and cash surplus of £140k, when invested £140k could provide an income of around £450pm gross at 4%pa...would this be enough to buy the help you would need to run the house, childcare etc and/or replace the lost income? You may have death benefits with your employers pensions as well you can fall back on.

You seem to have a good level of CI cover, you should look at Income Protection (PHI) as well, but dont confuse it with ASU/MPPI cover. IP will give a long term income in the event of any illness preventing you from working, whereas the CI you have will pay out the one off lump sum but only in the event of you suffering one of the defined (serious) conditions.

You dont mention the term of your existing policies. Make sure the mortgage one covers you until your mortgage will be repaid and your others last until your youngest child is non-dependant (so another 14yrs if you will be providing for him until 21yrs).

I would be very wary of switching your existing CI plans to a new insurer as the new cover will probably be less generous (and more expensive) than your existing plans...depending on when you took them out and who with etc.

good luck