Do we need more life insurance?

Question

My husband & I have a joint life insurance policy that will pay off the mortgage if one of us dies. Apart from that, we only have about £10,000 life cover each on other policies (single policies,not joint). Is this enough? Our children are 18 & 15 this year. My husband retires in 6 years. Will £10,000 be enough for the other person to manage on if the other dies? We both work.Any advice please, we would be most grateful for any help.

Answer 1

Hi Chocoholic - love your ID.  If you wish, you may reach me by my email on my profile page. I suspect if I knew more facts about your situation, that you may need little, if any, more life insurance. Remember that salespeople only eat if they sell you something.  Whether you actually need it at all, or need as much as they wish to sell you is secondary to the goal of getting the big commission they get from your early premiums. Note the suggestion above to buy $1,000,000. This is an irresponsible suggestion based on the facts you gave. If you have saved a significant amount and have pension benefits coming in as well, you may be fine just as you are.  Write me if you care to.  Good luck.

Answer 2

First I must say I'm American so things may be slightly different.  Here people are advised t have 8-10 times their annual salary in quality term life insurance for the primary wage earner.  The secondary wage earner or stay at home spouse needs only enough insurance to provide replacement for their income  or replacement services they perform at home.  With your spouse retiring in that time frame the children should be out of the house by then and only enough is needed to supplement your survivors pension to keep you comfortable. (Both scenarios assume the money is invested in quality investments and you spend the proceeds)

Insurance to pay off the mortgage is usually not a good idea as it is more expensive and decreases in value as the amount due decreases without decreasing the premium.  I'd suggest replacing it with good term insurance as described above..

Answer 3

Usually the main provider carries $1 million in life insurance to cover the mortgage, child care costs, and re-education for the surviving spouse.  If the wife is a stay at home mom usually about $200,000 of insurance on her.

Answer 4

I think you want to ask yourself. What is your life style? Are you going to pay for your children's education? If both of you work, and you have a healthy lifestyle, not prodigal, you should have saved a lot of money. Anyway, I can't imagine living purely on 10000 pound insurance mony!