Family Protection – How Much Life Cover Do I Need?” which raises the question of whether the life cover we have in place (if any) is really enough?
To be fair to most adults who have dependents, they will already have some form of Life Assurance Protection in place. The questions here though are – Is it enough? and How much cover do I actually need?
If you have a mortgage on your family home no doubt you will likely have, as a condition of the loan, Mortgage Protection cover in place but this will do no more than to clear the mortgage in the event of your death or the death of your spouse/partner.
You may also have felt that you were being very responsible by putting in place and arbitrary amount of cover in place for family protection purposes. Is this enough though and how much is enough?
Needless to say, everybody’s circumstances and needs are different and hence it is critically important to seek good advice.
The critical reasons that effect the amount of cover you should have are:
- The elimination of the liabilities related to loans, particularly a mortgage.
- The replacement of lost income if one or more of the family earners were to die prematurely.
To help illustrate that need for carrying out a review let’s look at “Ciaran Murphy” aged 37, married with a young family, has a salary of €75,000 and a mortgage of €250,000. Ciaran feels he has been very responsible by having Mortgage Protection cover in place on both himself and his wife for €250,000 plus he has also got an additional €100,000 Life Policy in place. Is this enough?
The answer, unfortunately, is no. If all he wants to do is have the outstanding mortgage cleared and then provide a lump sum to his family to replace his income to the tune of 80% of his future net fixed income for a period of 30 years, then the total cover he needs is in the order of €735,000 – a shortfall of €385,000.
If the family is also dependent on any income Ciaran’s wife brings in, this would also need to be taken into consideration. The key to getting good, sufficient and appropriate cover in place is to start with a review of your needs. That’s where our expertise comes in and we would be delighted to carry out the exercise with you.
To find out more about our service, contact us today on 091-394187, email email@example.com or book an appointment through our Contact Page.
Fahey Financial Solutions Ltd is regulated by the Central Bank of Ireland.