Dave & Emma
38 and 35, two school-age kids, both employed, decent equity, low protection
Snapshot
| Ages | 38 (Dave) and 35 (Emma) |
| Family | Married, two children aged 8 and 5 |
| Jobs | Dave: IT manager £62,000. Emma: HR officer 3 days/week £26,000 |
| Combined income | £88,000 |
| Home | £475,000, mortgage £290,000, 22 years remaining |
| Mortgage payment | £1,580 per month |
| Savings | £18,000 emergency fund + £40,000 in ISAs |
What Dave & Emma has today
- Dave: 6 months full pay then SSP, 2x salary death-in-service (£124,000).
- Emma: SSP only from day one, no death-in-service.
- Neither has critical illness through work.
- Neither has long-term income protection through work.
The gap
- Dave's death-in-service of £124,000 does not clear the £290,000 mortgage. £166,000 shortfall on day one.
- Two young children means 13-17 years of dependent-income needs ahead.
- If Emma cannot work, childcare costs increase by £18,000-£25,000 a year as her 3-day pattern is the childcare structure.
- Their £58,000 savings is roughly 7 months of household running costs. If Dave is off long-term and IP is not in place, they are insolvent inside 13 months.
Recommended cover, built in three tiers
| Tier | What it includes | Indicative /month |
|---|---|---|
| Basic | Two life policies (Dave £350k decreasing 22yrs, Emma £150k level 18yrs) plus Family Income Benefit £2,000 per month for 13 years. | £50-65 |
| Enhanced | Adds Income Protection for both. Dave £3,500/month 8-week wait, Emma £1,400/month 4-week wait. Both cease at 65. | £135-160 |
| Comprehensive | Adds Critical Illness Cover £75,000 each. | £195-230 |
Cumulative build. Each tier adds to the previous, not a flat choice. These are example structures. Your adviser will tailor cover to your budget, health, family and mortgage needs. Premiums indicative for a non-smoker in good health, subject to medical underwriting.
The case
The classic mid-career employed family. They have worked hard, got the house, growing kids. They think they are protected because Dave has good employer benefits. They are not.
Their actual risk is not sudden death. It is the long, slow risk of one of them being unable to work for years. Both need income protection. Both probably need it more than they need life cover.
Family Income Benefit is the under-used product here. £2,000 a month for 13 years tax-free if either parent dies is more useful for cash flow than a lump sum the family has to manage and invest.
Common questions
We've got savings, we're fine.
£58,000 of savings is 7 months of household running costs. If Dave is off long-term, you are out of money in just over a year. IP refills that bucket forever, not for 7 months.
Death in service covers us.
Only for Dave, only while he is still employed there, and only £124,000 against £290,000 of mortgage. Not enough on any of those three.
Emma works part-time, do we really need to cover her?
Yes. If she cannot work, your childcare costs go up by £18,000-£25,000 a year. Plus you lose her £26,000 income.
Why two single policies and not a joint one?
Joint life pays out once on first death and ends. Two singles pay out on each, and survive separation. Two singles wins for most couples.
Major Money Matters Ltd is an appointed representative of Sesame Ltd.
Your situation will be different
Every scenario on this site is illustrative. Your actual cover depends on your income, family, mortgage, health and goals. The only way to know what fits is to talk to an adviser.
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