Term life insurance: Sum insured

Hello,

this may not quite fit here, but maybe you can still give me a tip.

I don't know which insurance sum I should choose. It is said that you should set 3 - 5 times the annual gross monthly salary.

The house costs €250,000 (plus €25,000 incidental costs + €25,000 renovation costs). The loan amounts to €200,000. Term 20 years. So far only partner, children desired.

If I set 5 years' gross salary, I am well above the loan amount. Does that make sense? Actually not, right? Should I therefore take the loan amount (€200,000) as the insurance sum?

Regards, Volkmann

Hello! I think you are confusing something. A pure risk life insurance policy is meant to "protect" you and your partner in case one of you dies and the other cannot repay the loan alone.

It might make sense to take out a risk life insurance policy together. I am married, so this question never arose for me. The costs of a risk life insurance policy for 100-200k are also manageable. There are many models here. A decreasing sum (analogous to the loan), a fixed sum.

We have a decreasing sum & a 20-year term. Corresponding to the repayment schedule. It is important that the health questions are answered truthfully. We personally signed with a reputable company and not a direct insurer.

Yes, I am aware of the difference from a regular life insurance. But I still have to specify an insured amount, and I read this tip on the internet about 3 - 5 years' gross salary. But it doesn't make sense to be above the loan amount. A decreasing sum would also make sense.

In my opinion, it is not just about paying off the loan and everything being fine.

What if you have just had a child and something happens to you, the additional costs for the house and the normal living expenses should possibly also be covered for a few years.

why shouldn't it make sense to exceed the loan amount?

You can also take out a 350k term life insurance. The insurer will be happy if nothing happens and they collect the premiums for 20 years. It is just a risk coverage. I find the statement of 3-5 years' gross salary too general.

It really depends on what you want to achieve with the risk life insurance [Risiko-LV].

Do you want to purely secure the construction loan? Then a risk life insurance [R-LV] covering the construction amount is sufficient (although in the event of death, the surviving dependents usually cannot repay everything immediately but must continue to follow the agreed payment plan).

Do you want to provide your family with coverage that goes beyond the construction loans (meaning the construction loans can be paid off through the risk life insurance [R-LV] and additionally the family has some money left to cover other costs or to support the children's education, living expenses, etc.)? Then set a higher sum insured. If necessary, you should also choose a contract term that exceeds the loan term.

Payment is only made in the event of death.