Life Insurance help

whatawaster

Hi all,

I am 30 years old, my wife is also 30 and we are expecting our first child. Naturally, this has got us thinking about the future and "what would happen if . . . "

I want to ensure that, should something befall one or both of us, the remaining family members are secure, at least financially.

Background info:
Myself - age 30, salary €50k. In work they have a death in service policy in place which will pay out 4 times my salary in the event that I die = €200,000. They also pay for an income protection plan which will pay half my salary in the event I am unable to work.

Wife - shortly going on maternity leave and unlikely that she will return to work, certainly not in the short term.

Home - Mortgage = €100,000K, value = €200,000K approx. Life insurance policy attached to mortgage will pay €100,000 on each of our deaths.

Expenses - excluding our mortgage, I'd estimate our net monthly expenses to be €2,500.

With this information in mind, how much additional life insurance should we look to purchase?

Looking at the various scenarios:

If I died:
- mortgage would be paid off
- wife would receive widows pension of €223.30 (approx €1k per month)
- wife would receive lump sum of €200,000 (tax free I believe?)

If my wife died
- mortgage would be paid off
- I would receive widows pension of €1k per month.
- I would likely continue working, and the pension should cover child care.

If both of us died
- Mortgage would be paid off and €100K would go to our estate (rising as our mortgage balance decreases)
- €200k paid to our estate from my work policy.
- So €300K plus our paid off house would go to our estate. I don't feel like this is enough for whoever is good enough to take in our children.

If I became ill/unable to work
- Income protection would kick in (I calculate approx €2K per month)
- Illness benefit (approx €1K per month)
- These two should cover our expenses.


Questions
- I reckon I need extra life insurance certainly in the case that I died, but how much? I would like the surviving spouse to have monthly income of €3K at least to be secure.
- Should we take out cover on my wife's life also? In case I didn't want to work/wanted to take time off work?
- Obviously if I leave my current job, these existing policies would be null and void. Should I purchase additional cover now while I am younger and it is less expensive (essentially plan as if they are not there, as my job is not guaranteed for life)?

Not nice things to be thinking about, but that's life I guess.

Thanks for your help.

PaulM1977

A couple of things for you Whatawaster,

The widows pension is Eur193.50 until you reach age 66 and then it goes to Eur233.50 per week.
You would need to work off your net income for the year to give you an idea of how much of an income would need to be replaced.
On top of that, your mortgage repayments would no longer need to be paid as it would be cleared in full should one of you die, so this would have to be factored in to how much cover you require.
With regards to the Income Protection, would 50% of your income be sufficient for your family to live off should you be unable to work long term due to illness/disability? You can get cover of up to 75% of your income so you may need to bridge that gap with a separate policy for yourself if your employer can't/won't increase the level of cover. Are you also factoring in the state disability benefit that you would be entitled to for your PHI cover?

whatawaster

PaulM1977 wrote: »

A couple of things for you Whatawaster,

The widows pension is Eur193.50 until you reach age 66 and then it goes to Eur233.50 per week.
You would need to work off your net income for the year to give you an idea of how much of an income would need to be replaced.
On top of that, your mortgage repayments would no longer need to be paid as it would be cleared in full should one of you die, so this would have to be factored in to how much cover you require.
With regards to the Income Protection, would 50% of your income be sufficient for your family to live off should you be unable to work long term due to illness/disability? You can get cover of up to 75% of your income so you may need to bridge that gap with a separate policy for yourself if your employer can't/won't increase the level of cover. Are you also factoring in the state disability benefit that you would be entitled to for your PHI cover?

Hi, thanks for your response.

I have double-checked on the income protection and it seems to be 2/3 of salary less any state benefits. So I have put this through a net pay calculator and I should come out with just over €2,500 net per month. This might just about cover net expenses including the mortgage, but things would be tight so some level of additional cover may be needed.

coylemj

whatawaster wrote: »

I have double-checked on the income protection and it seems to be 2/3 of salary less any state benefits. So I have put this through a net pay calculator and I should come out with just over €2,500 net per month. This might just about cover net expenses including the mortgage, but things would be tight so some level of additional cover may be needed.

Your employer may deduct the state benefits from your gross pay so you may end up paying less tax than you have calculated.

PaulM1977

You would be better off speaking with an independent financial adviser to take you through all your options and possible cover levels that you may both require. They will need to get all your financial information from you before giving you an indication of the cover you may require.

Atlantic Dawn

You should also look for serious illness cover for your wife, if she got ill and was unable to look after your child you would then have to cease work or hire a carer/child minder.

Bank of Ireland: Nicola

Hi whatawaster, Nicola here from the Bank of Ireland Talk to forum.

There are a number of factors that need to be considered when you're looking at your cover, including the types of cover needed (life cover, serious illness, income protection etc) and what quantity of cover you'll need.

We've more information and a calculator you can use to get a protection estimation here.
It'd be best to speak to a qualified adviser who'll go through all of the suitable options to make sure that any cover best meets yours needs and the needs of your family.

If you’ve any questions feel free to drop by our Talk to Forum.

Thanks
Nicola

PaulM1977

Whatawaster,

Just make sure that you get Independent advice on this. Banks will only be able to advise on their own suite of products and not what is the most suitable policy for you on the market. Each provider has different additional benefits and costs associated to their products so make sure you talk to someone who can research the market for you.

PaulM