Term life insurance for loan protection

Hello everyone,

a term life insurance policy is to be taken out to secure the loan. The following questions have arisen;

1.) Amount: Should the entire loan amount be insured?
2.) Term: Should the entire loan term be insured?
3.) Should both partners (we earn similarly well, the wife will only receive Elterngeld Plus for the first 4 years, then a return to work is planned) take out insurance? Does a partner insurance make sense?
4.) Does a flexible amount make sense, which decreases each year according to the remaining debt in order to keep the premiums low?

Thanks for your assessment/experiences.

Regards

Since children are involved, I would calculate differently.

What costs does the RLV have to cover if only one partner alone has to take care of the child + house? Being a single parent often means greater restrictions than just the loss of the second income.

In some cases, you are already well off if the property is debt-free. In others, you still have to add something.

And yes, both should be taken into account.

First of all, review what else you have. Often there are one-time payments in the event of death (existing pension insurance, etc.). Then there is the widow's/orphan's pension and possibly company pensions that are paid. Finally, I agree with Caspar that ideally the death benefit should correspond to the outstanding balance. For us, it is about 75% declining sum and 20 years, which corresponds to the fixed term.

We have secured the entire remaining debt, so the amount is constantly decreasing. Each of us could live as a single parent without much worry on our salary if the house is debt-free. And for under 30 euros per month for coverage in both directions, you can't go wrong.

We secured the entire loan amount + 15% over the entire loan period, so effectively the coverage is higher than the loan. For us, this was because it made practically no financial difference (about 50 cents per month per person). The insured amount decreases with the loan amount (annuitized), but the payout amount is always higher than the outstanding loan balance due to the "overinsurance," so that funeral costs and/or prepayment penalties can be covered in addition to the loan. As I said, we only did it that way because it made no significant financial difference; otherwise, we would have been satisfied with just the loan amount. We don’t have a partner contract but two individual insurances, since this also did not make a significant financial difference (about 2 euros per month). We now pay 22 € monthly for both contracts together, with a 280,000 € insured amount annuitized decreasing over 30 years.

How you do it, of course, depends on the individual case. I would definitely insure both partners, whether in a partner contract or individual contracts is up to you; have someone calculate how much the premiums differ, often it’s not much. Whether you insure the entire loan (or even more) or only part of it again depends on the individual case. It depends on how well you want to protect yourself and/or your partner. Many insure "only" 50% of the loan, but that was too insecure for us. Regarding the term: I would at least insure almost the whole term, at least up to an amount where the outstanding balance is no longer so high that one partner can no longer manage it. You are about our age (I’m 27, my husband 29), so that still works well without the premiums rising enormously. I would strongly recommend an annuitized decreasing sum; it reduces the premiums quite significantly (at least it did for us)! Then better, as we did, insure a bit more than the loan and let it decrease annuitized, that was significantly cheaper for us than having a high constant amount over the entire term. Have you ever been to an independent insurance broker (e.g. Dr. Klein) or browsed Internet portals? Play around with the calculators a bit and see how the premiums change.

I earn significantly more than my wife. The house will definitely not be maintainable without me; her job simply does not allow for it, even if she worked 160 hours a week. Therefore, I have a RLV, the sum of which enables my wife to raise the children at home alongside her job, i.e. duration and sum calculated from birth + 25 years. After that, she would probably have to sell, as the incidental costs and maintenance in later years would deplete her liquidity. In this respect, the claim to have someone maintain this standard of living after my death is nonsense. I would never pay 30€/month (or rather 10,800€ over the usual 30-year financing period). The premium is 6-7€ p.m. due to the comparatively low end age. My wife also has an RLV with a significantly lower sum. This was calculated so that the additional effort for childcare from birth + 25 years is covered. Premium 3€ per month. Declining claim amounts didn't make much difference (whether 7€ then becomes 6€ doesn't matter). Partner tariffs were comparatively more expensive or at best price-equivalent; moreover, coupling can cause problems in case of cancellation. By the way, in financing discussions so far, no bank has insisted on RLV, most haven't even asked. And this despite my wife currently having zero income (parental leave).