How much life insurance cover do others have?

O

Ol School Skata

I am considering my life insurance and would like to know how much cover do people here have.

I am thinking of enough to
  • clear out all debts, (eg $900,000)
  • money for funeral and expenses and ($30,000)
  • sufficient funds to provide better half with an annual income of $XXXXX per year after net rents. eg if income desire is to be $60K, net rent of expenses is $30K then need an additional 30K pa ($500,000)

So in this example it would be approx $1.53M life insurance cover

Trauma Insurance to an equal amount $1.53M
Income protection - current have 2 policies - one covers 75% of gross wage to death, 2 year wait, Second policy is in super 75% gross wage, payable for 2 years, 1 month wait

Is this excessive, under covering.....any thoughts?

For the time being I have excluded Trauma, income protection for the purposes of this discussion.

OSS
 
Sounds like you have covered yourself pretty well.

Very personal decision I guess. I have enough cover (paid through my super acc. so I don't lose cash flow) to pay out all my debts, then my family can do what they want with my IP's - ie. sell off, or keep for an income without any debt to service.
 
Hi OSS,

We went through the whole insurance thing about 7 years ago, when we were adequately covered.

We revisited this issue just 6 months ago, and tripled my death cover and quintupled the wife's death cover. Despite this, and due to the insurance company not wanting to go any higher, we are stuck with a situation where the payout figure wouldn't go a third of the way to cover the outstanding debt.

We're stuck at that level of "non-coverage" unfortunately until the insurance company decides to catch up with the Bank's attitude. What can you do....

Due to this, both the wife and I have had a chat about what the surviving partner should pay off with the proceeds if that yuk event ever crops up. I don't think this would mean the surviving partner would need to sell anything, but there would be pressure from other family members to do just that, especially the conservative ones who aren't used to handling debt facilities.

We went for death cover only - cos we both reckon with any other form of cover other than death, by the time you've legally convinced the Insurance Co's solicitor's that you qualify for a payout.....you may as well be dead. Those were the exact words of the nurse employed by the Insurance co....I don't think the lawyers would of liked her sayign that...but anyway....

Awful subject really....but something very necessary as half a$$ed serious investors.
 
we've got enough for the survivor to comfortably live off for 5 years with no other income, but it doesn't pay off the debt.

i know this isn't much, but we feel that is enough to get the survivor back on their feet. ip's can always be sold and if it was just 2 left, we wouldn't want to stay in the rambling big house worth $1mil with no mortgage.
 
Steveadl - good point you raise about some/all of your life insurance being in your super fund. I certainly want the coverage and if possible will be looking for it in super, but wish to be made aware of any consequences if it is paid out in event of death and the effect of any taxation consequences if it is over the pension/lump sum limits.

Dazzling - thank you for sharing your experience. I assumed that the banks/insurance companies would have some form of limit for insurance. I can only imagine the medicals you would have had to go for in reaching this limit. I am not sure if we really do need to have all loans paid off entirely as you have discussed with your wife. Sure, it would be great but is it really practical or necessary - i guess it depends on the individuals involved.

Lizzie - again i think it becomes a personal matter on the level of cover. As we have no PPOR currently, for us i think that would be a priority to have sufficient funds to buy and pay for that.

This process is really quite detailed - more than i had previously acknowledged as it invovles confronting an uncomfortable issue, discussing the needs of each person, dealing with the practicalities, structures, tax implications, security, replacing income, estate planning, ownership of policies etc.

I am in the process of reviewing my will following my recent marriage and obviously the need for insurance is a part of that.

I would still be interested to hear, what others do in regards to this matter.

I can remember listening to a number of property seminar presenters talking about never paying off the debt, having the insurance companies cover the debt when you die, but as Dazzling has pointed out, this is not always practical.

OSS
 
I still have $1.5mil cover. This was sufficient at initiation to cover my debts.

I was looking to increase this by $1mil back in about '97 but I struck the same problem as Daz namely why do you want more cover, your estate will profit etc. In the end they agreed but by then I had lost interest and didn't bother.

These days its irrelevant (due to very +ve investment cash flow) but I do still maintain the original $1.5mil as part of my super fund.

I did look at the PD and income insurance but because I was income splitting the cover was inadequate as the insurable amount was only for a portion of your declared net income. (last time I looked) In the end we decided that we could simply have sold up our investments. Further we always had substantial financial reserve which really would have carried us through for some time.

Early '90 it became irrelevant so haven't revisited it.

Cheers
 
Hi OSS,

My wife and I each have enough life cover to pay out our total debts.

That way, in the event one of us moves on to the great real estate agency in the sky, the surviving partner can pay off the debts, and live on the rent and equity.

If both of us should happen to fall into some horrible mishap, then our two young children will be well looked after.

Mind you, as has been mentioned already, our insurance co are also starting to make noises about the total sum insured - they are happy to take our money, but seem to be about to make it difficult should we need much more of theirs....

Thanks,

BDM
 
We also have almost enough to cover our total debt for the same reason. If something happens to me, I want my husband to be able to leave work if he wants to and not have to earn a living to pay our loans, if he would rather chill out for a while and be a full time dad.

Similarly, whilst I don't work, we don't want for me to be put in the position of having to find a job to supplement the rental income.

I jokingly told our insurance broker that hubby didn't know how much I had increased the insurance to because I wanted to be able to sleep at night and not worry about him hitting me on the head. He asked me if I was serious and I laughed and said "of course not".

He said it has happened plenty of times.

Now I sleep with one eye open :p :p

Wylie
 
Ol School Skata ....

Your post about funeral expenses of $30K reminded me of the story about a woman comforting her friend who had just buried her husband. She said it was a lovely service and wondered how much it had cost.

Widow told her the total cost was around $30K.

Friend said that was very expensive and where did the money go?

Widow told her the split up -
$2,500 to the funeral parlour
$500 for the wake
$27,000 for the memorial stone

Friend said that it must be an impressive memorial stone.

Widow replied "Yes, about 2 carats".
 
Don't mean to sound morbid, but has anyone ever claimed (or know someone who has) their life insurance after spouse has passed on.

Only reason I ask is due to the fact that insurance companies are renowned for their 'get out of paying clauses' for one reason or another.

If so, was it a straight forward procedure?

Regards
Marty
 
Only story I have is that long ago my mother knew someone whose husband was drowned while on a fishing trip, and because his body was never found, she was made to wait seven years before the insurance company paid up.

I don't know if this still happens today.

Wylie
 
kissfan said:
Don't mean to sound morbid, but has anyone ever claimed (or know someone who has) their life insurance after spouse has passed on.

Only reason I ask is due to the fact that insurance companies are renowned for their 'get out of paying clauses' for one reason or another.

If so, was it a straight forward procedure?

Regards
Marty
Click to expand...

Marty,

This has been running through my mind as well. It is one thing to have all this cover, but what type of record does the insurance company have in paying up without too much fuss when it comes time to make a claim.

I have asked my broker to provide me with some comparable results on payout ratios - surely there is some governing body that would provide this?

OSS
 
I would think there may be hoops to jump through if you have cover that specifies they will pay up if you get some disease, but surely if you are dead, you are dead.

The only time I have heard about insurance not paying is in cases where there is doubt about actual death, where someone has gone missing, assumed dead, but no body.

Wylie
 
wylie said:
Only story I have is that long ago my mother knew someone whose husband was drowned while on a fishing trip, and because his body was never found, she was made to wait seven years before the insurance company paid up.

Wylie
Click to expand...

Wow. Thats an absolute disgrace...!!! :eek:

See ya's.
 
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