Do we need this much Life Cover and Critical Illness Cover?

jlg1

Hi,

I'm hoping for some advice as Ive had a call from a provider today and unsure where to go with hthis.

We currently have Life Cover of £96,000 and Critical Illness Cover of £96,000.

Im a self employted music teacher wife is retail assistant.

We're paying £102 per month but I am wondering do we really need that much cover?

So basically our mortgage is covered.

Does it sound like we are "over insured"...? 

I would like to reduce my monthly premiums was quoted £81,500 life cover and £16,500 critical illness cover for £72 per month.

Just wondering your thoughts on what might be appropriate?  Mortage right now is £88,000.

Thanks for any advice.

dunstonh

I'm hoping for some advice as Ive had a call from a provider today and unsure where to go with hthis.

The vast majority of providers do not call you to discuss your level of cover.   However, several scams and dodgy dealers pretend to be a provider or use false pretences about why you should change.  (the dodgy dealers will not do things like working out what you need but will just set up what you tell them)

We currently have Life Cover of £96,000 and Critical Illness Cover of £96,000.

<snip>

Does it sound like we are "over insured"...? 

The amount of life assurance is below the level you would expect for the average married couple.

I would like to reduce my monthly premiums was quoted £81,500 life cover and £16,500 critical illness cover for £72 per month.

That is very low but we don't know your circumstances.

Mortage right now is £88,000.

If its a repayment mortgage, you would expect a decreasing term assurance of £88k.  Then a level term assurance on top for family/income replacement. 

For example, if you are dependent on each other's income, then you would need to make up that income and loss of pension,  So, lets say you need their £20,000 a year and they are 35 years old, then you need around 50 years worth of £20,000.  So, that is £1 million needed.  However, because you can invest it to provide income, you would only need £400,000.

You can then fine tune it by factoring in state pension and pension accrued to date.  And costs going down once children are over 25 etc.

Your IFA or whole of market protection adviser should be calculating things like this for you.   Or you can do it yourself but it sounds like you are way off the ballpark.

Weighty1

Imagine you or your wife has a stroke and loses their ability to work and the other person has to reduce their hours to care for them or worst still, can't work at all.

You've repaid your mortgage so can keep you house and will have a little left over.

Imagine what would happen with the new arrangement at £72/month.  What would happen after a year or 2?

Personally, I don't think you are overinsured at all.  If anything you would probably be underinsured, although this depends on your circumstances and a whole variety of factors.  As an insurance specialist myself I'd never consider switching my own arrangements from what you have to what you've been quoted for the sake of £30, even in the current climate.

caprikid1

I think there is too little information to even hazzard a guess. Income outgoings , children.

As has already been stated you are not over insured, it sounds like you have a relatively humble household income that would be massively affected by one of you suffering any kind of issue.

I always like to look at the possible scenario's and how personally I would cope.

IE Savings etc

I work in the industry and in my personal life my partner is a widow so the effects of this are very very close to me.

frank901

jlg1 said:

Hi,

I'm hoping for some advice as Ive had a call from a provider today and unsure where to go with hthis.

We currently have Life Cover of £96,000 and Critical Illness Cover of £96,000.

Im a self employted music teacher wife is retail assistant.

We're paying £102 per month but I am wondering do we really need that much cover?

So basically our mortgage is covered.

Does it sound like we are "over insured"...? 

I would like to reduce my monthly premiums was quoted £81,500 life cover and £16,500 critical illness cover for £72 per month.

Just wondering your thoughts on what might be appropriate?  Mortage right now is £88,000.

Thanks for any advice.

You are not overinsured, as has already been said, and it sounds like your modest household income would be severely impacted if one of you suffered any sort of problem.

tacpot12

I would suggest you get other quotes for your life insurance. I was paying about £23/month for £300,000 of life cover not too many years ago. Life cover is cheap when you are young, and starts to get expensive as you go above 50.

kingstreet

Why critical illness cover and not income protection (permanent health insurance)?