Life insurance queries

sallyanne12

Apologies for my lack of knowledge. I don't have a mortgage but have kids so wanted to get life insurance. Is it paid out in one lump sum in the event of death or is it paid monthly? Is it paid immediately or when your kid turns 18? Finally, do most parents without mortgages get life insurance?
thanks

Atlantic Dawn

It's paid in a lump sum immediately to your estate or you may have someone nominated to get it.

A lot of people will get life insurance up to college age or thereabouts of their children so they will have a sum of money to get them to a stage in life where they should be able to be self sufficient in employment.

171170

sallyanne12 wrote: »

Finally, do most parents without mortgages get life insurance?

No. But most of the intelligent ones do!

Shop around - Bonkers.ie has a useful life insurance comparison page.

Liam D Ferguson

sallyanne12 wrote: »

Is it paid out in one lump sum in the event of death or is it paid monthly?

The more common types of policies pay a lump sum in the event of your death before a certain date that you would nominate. But there is a form of life insurance that would pay a monthly amount in the event of your death. Let's say your youngest child is now 3 and you wanted cover until s/he is 23, you could have a 20 year policy. A monthly income policy would pay the agreed monthly amount from when you died until November 2039. The monthly income type policies are cheaper than lump sum ones because the closer you are to the end of the policy, the less would be paid out if you died. The lump sum policy would pay out the full lump sum even if you died a few months before the end of the policy.

It's also possible to arrange a "whole of life" policy which will pay a lump sum whenever you die. There's no expiry date on such a policy. A whole of life policy is significantly more expensive than one with a fixed term, because there may never be a claim on a fixed term policy and the insurance company is hoping that there won't, but there will definitely be a claim on a whole of life policy as long as you keep it going. You're going to die someday.

sallyanne12 wrote: »

Is it paid immediately or when your kid turns 18?

It's paid out immediately after your death. If your kids are under 18 you should nominate an adult who would look after the money for your kids if you die before they're 18.

Heres Johnny

I was a life insurance advisor for many years and I think it's pretty important for parents to have cover. Put it this way, if you earn 40k a year and you die now, your family are going to lose 800k of income in 20 years until your kids are independent.

From this 800k

Take away what you reckon you spend on yourself, feeding yourself, clothing, car, pints with the lads, expenses that will no longer exist if you die, let's say that's 15k a year so 300k over 20 years.

Now take away increased benefits your family will get like a widows pension of 12k a year, this is 240k over 20 years

So 800 - 300 - 240 leaves a shortfall of 260k and this is the level of cover you should be looking for

Now, this is simplified but if you sit down with a GOOD advisor they should be able to arrive at a suitable figure, not just a random figure out of a hat because it sounds good.

There's also the consideration as to whether the mother of your children would have to give up work to mind kids if you died because she wouldn't be able to do both etc... In this case you've to add that back in to required figure.

So, that's what it's for and how I always went about it.

Remember to give yourself proper cover too in the event your wife dies and you are left on your own, a huge amount of men just think they'll be fine on their own but I disagree.

Liam D Ferguson

Heres Johnny wrote: »

Now, this is simplified but if you sit down with a GOOD advisor they should be able to arrive at a suitable figure, not just a random figure out of a hat because it sounds good.

+1. I've been a broker for decades and it still amuses / irritates me to see how life insurance continues to be sold in this country. Conversation goes along the following lines: -

<Salesman> Well Ms Client I've calculated that €1 million of life cover will cost you €120 per month.

<Client> Er...I hadn't planned on paying that much.

There then ensues a bit of horse-trading until the premium comes down to a level that the client is willing to pay. And that determines the amount of cover they get. You don't insure your car or your house using random amounts of cover and neither should you insure your life. Using a method like what Heres Johnny suggests in the post above can often result in an amount of cover that's lower than the meaningless rules of thumb used by some sales guys, e.g. "10 times salary" etc. And it has the benefit that you know why you have a particular level of cover.

P.S. @Heres Johnny - OP's username is sallyanne12 so I'm guessing that sallyann12 is female.