Life insurance

Yemeles

Hi all, I've been a frequent visitor of mse but have never had a need to register.

I'm hoping somebody could give me some advice with life insurance.

I currently have life insurance to cover the value of the mortgage for both me and my partner (£218000) with joint critical illness to the same value on one policy.

I then have an additional £50000 of critical illness for myself only.

This was all as per mortgage brokers advice but seems overkill. I am paying £80 a month for this cover.

I have 4x salary death in service from work which is £140000. So would it best getting the below:

1. Life insurance for myself for £80000 (mortgage balance minus death in service)
2. Life insurance for £218000 for wife.
3. Critical illness for £50000 for both me and wife.

Thanks for reading this far, any help much appreciated

dunstonh

I'm hoping somebody could give me some advice with life insurance.

The board is not authorised to give advice and even those of us that can in real life cannot do so on the board. It is just discussion and comment only here.

This was all as per mortgage brokers advice but seems overkill. I am paying £80 a month for this cover.

It doesnt seem to be overkill. Indeed, it may not be enough.

1. Life insurance for myself for £80000 (mortgage balance minus death in service)

Death in service is discretionary. Plus, its main purpose is to go against short term lost income and/or loss of pension. So, if you earmark DIS against debts, then you will need to compensate for cover in those other areas.

2. Life insurance for £218000 for wife.

As you are using DIS for debt provision, I assume this segment is for replacing lost pension entitlement and income? If so, using the 5% rule, you are looking for an income of around £10,000 a year for your wife to replace your lost income.

Do you earn around £10k a year or more than that? If more, are you happy for your wife to have a lower standard of living in the event of your death?

We can't be very specific as we dont have enough info on you. However, to get you thinking of the ballpark figure you are looking at typically around 15x income plus total debts. You can deduct savings and money purchase pension value (if you have one).

Your selection also seems to indicate you have no children at the moment. Is that correct?

Yemeles

Hi thanks for the reply, sorry maybe advice was the wrong word, more personal opinions.

We have no children. I earn £35000 a year. (Although with overtime my gross pay has been at least £65000 a year over the last four years) The only debt we have is the mortgage with an outstanding balance of £218000 due to run 22 years

The mortgage is in my name only but wife also works.

My understanding of life insurance was that in the event of either of our deaths it would enable the surviving partner to pay the mortgage off outright leaving only bills to be paid. Which wouldn't be an issue.

Thanks again

dunstonh

My understanding of life insurance was that in the event of either of our deaths it would enable the surviving partner to pay the mortgage off outright leaving only bills to be paid. Which wouldn't be an issue.

if that is all you want, then that is fine. However, you and your wife have a lifestyle funded on her joint incomes. Even with you gone and your reduced expenditure, £65k a year is a lot of lost income and that has to impact on lifestyle.

ThePants999

Right, but taking a £218k mortgage out of the equation is a lot of reduced expenditure, too. I'm sure the wife would be able to maintain a reasonable lifestyle on her salary with no mortgage to pay...