Life Insurance

If you have a family the first question one should ask when planning your financial future is “how would my family survive if I’m not around?”

If you have a family the first question one should ask when planning your financial future is “how would my family survive if I’m not around ?”

Nobody likes to think about death, but Ben Franklin said it best “but in the world nothing can be said to be certain except death and taxes.”

Having been in this business in Luxembourg for more than 10 years I have witnessed first-hand the chaos and uncertainty faced by more than one family when the main bread-winner has unexpectedly passed away.

David Evans Life Insurance AdvisorWhen I ask this question “Do you consider you have sufficient life cover in place?”  I often get told “oh the house will be paid off and my company has an insurance policy on my life”; seriously – do the sums yourself ! It’s a very simple calculation to work out what your family would receive, but can you work out what your family would truly need ?

We need to take into account how much it costs currently to feed and clothe a family, provide education, go on holidays, have weddings, etc., and even if your employer does have an insurance policy on your life, would it really cover all those expenses ?

Some employers in Luxembourg have a pension/insurance scheme in place and the insurance element is normally 2 x annual salary (+ .25% per child) for death by natural causes; often this is doubled in the case of accidental death. So it could be that if you have 3 children and die accidentally then the maximum your family could receive is 5 and a half years salary. Please check individual polices for details.

How far will that go if a) you decide to return to your home country or b) remaining here in Luxembourg, do you really want your surviving spouse to have to get a job in order to continue to support your children and herself ?

A couple of examples: it can take as little as €720 per year to insure a 52 year-old man for €100,000, and €312 per year to insure a 41 year-old man  for the same amount; add to that the fact that your premium could be tax deductible and it makes even more sense.

I appreciate it is more cheerful to discuss and plan holidays, new cars etc. etc. but just think how much we spend on those per annum and by spending a fraction of what those cost you could ensure that your loved ones do not suffer financial hardship if the unthinkable happens.

Alas the “lecture” is not yet over, we also need to think about the spouse or partner, if one of you is at home looking after children you are also contributing to the family. What would happen if the stay at home parent was suddenly no longer there, how would the working parent cope without employing somebody to help out, this can be expensive, and may stretch income a little bit too far.



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