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    • ST1991
    • By ST1991 17th Oct 16, 2:10 PM
    • 135Posts
    • 51Thanks
    ST1991
    Life Insurance with property purchase
    • #1
    • 17th Oct 16, 2:10 PM
    Life Insurance with property purchase 17th Oct 16 at 2:10 PM
    Apologies if this is in the wrong section... but this is the first house we are purchasing and i lurk here alot!

    Does anyone have any advise for Life insurance/critical illness cover?
    Ours seems to be quite expensive... (£66PCM for me and my husband) and our mortgage is by no means large (167k)

    We do have pre-existing medical conditions (My husband has Asthma, i dabbled with anxiety/depression for a year so that's stuck on my file forever) but that didn't bump the quote up that much, according to our mortgage broker.

    Anyway, i guess what i am asking is - does £66PCM seem excessive to you?
    Does anyone else want to induldge me in what they pay (if anything?)
    And... is it a requirement of the mortgage, or just a sensible addition to your new home?
Page 1
    • mattk_180
    • By mattk_180 17th Oct 16, 3:50 PM
    • 268 Posts
    • 213 Thanks
    mattk_180
    • #2
    • 17th Oct 16, 3:50 PM
    • #2
    • 17th Oct 16, 3:50 PM
    Some lenders will make it a requirement of the mortgage, but not in all cases, and even so I'm not quite sure how enforceable it is.


    Me and my partner have life insurance for the amount of our mortgage and income protection (opted for this rather than critical illness) that pays each of us £1000 a month until retirement if we were unable to work. They both come to £92 a month and that is with me consuming some form of nicotine in the past 12 months and other half being type 1 diabetic.


    By the sounds of it I wouldn't say those figures you've got aren't particularly excessive but then I can only compare against my own circumstances.
    • G_M
    • By G_M 17th Oct 16, 4:02 PM
    • 37,082 Posts
    • 41,039 Thanks
    G_M
    • #3
    • 17th Oct 16, 4:02 PM
    • #3
    • 17th Oct 16, 4:02 PM
    As with any purchase, shop around. Easy enough to do these days online.

    Compare premiums AND compare the cover provided. Cheap quotes might provide so many exclusions to cover as to be not worth having. Just as a cheap property might not meet your housing needs.

    Only you can know if it's a requirement of the mortgage provider. Have they told you it is?

    If not, it is sensible if you think the death or critical illness of one of you would make it hard/impossible for the other to maintain the mortgage alone and hence stay in the home.
    • Thanetia
    • By Thanetia 17th Oct 16, 4:04 PM
    • 40 Posts
    • 37 Thanks
    Thanetia
    • #4
    • 17th Oct 16, 4:04 PM
    • #4
    • 17th Oct 16, 4:04 PM
    Can't say without knowing your ages and the cover (167K?) - may be a condition of the mortgage loan - your conveyancer will confirm if this is so. Otherwise consider what you would do and how you would pay the loan in the event of your death or serious illness and decide based on that. Shop around - you can do this online even with pre-existing conditions these days - make sure you declare everything asked and look carefully for exclusions on the CI element.
    • pinkteapot
    • By pinkteapot 17th Oct 16, 4:08 PM
    • 6,112 Posts
    • 7,825 Thanks
    pinkteapot
    • #5
    • 17th Oct 16, 4:08 PM
    • #5
    • 17th Oct 16, 4:08 PM
    We pay £28 per month for two of us to have decreasing term life assurance on a £240k mortgage, and hubby has a complex medical history. We didn't bother with critical illness.

    Life assurance may be a mortgage condition. It would be unusual for critical illness to be a condition.

    With the life part, check it's decreasing term. What that means is the payout declines over time, like your mortgage balance. So at any given point in time it'll be roughly enough to pay off the outstanding mortgage. It's considerably cheaper than level term, which would pay out £167k today or £167k in 20 years.

    My advice would be:

    1. Find out exactly what - if any - insurance is actually a condition of your mortgage. You will need any types on this list.

    2. For the other types, decide if you actually want them. Look at what they cover and imagine what you'd do in various scenarios. Some critical illness policies are limited to a specific range of named conditions and quite limited in how long they'll pay out for if the worst happens.

    3. If your broker has found these prices, ask if they're a whole of market broker for insurances. Our mortgage broker was whole of market for mortgages, but tied to a few companies for insurance, so his quotes weren't competitive at all.
    Last edited by pinkteapot; 17-10-2016 at 4:11 PM.
    • ST1991
    • By ST1991 17th Oct 16, 4:08 PM
    • 135 Posts
    • 51 Thanks
    ST1991
    • #6
    • 17th Oct 16, 4:08 PM
    • #6
    • 17th Oct 16, 4:08 PM
    Thanks everyone for your comments so far.

    I am 24, husband is 30. We are borrowing £167K.
    We did look at other quotes online and although they did come out cheaper, i haven't looked into the policy wording.
    The quote we have (from our broker) is with Legal and General, and ready to go from completion.

    Essentially as no-one has yet said 'that is a ridiculous figure' i'm quite happy that we are not vastly overpaying
    • marsman802
    • By marsman802 17th Oct 16, 4:09 PM
    • 528 Posts
    • 231 Thanks
    marsman802
    • #7
    • 17th Oct 16, 4:09 PM
    • #7
    • 17th Oct 16, 4:09 PM
    Ours is £150pm on a £380k mortgage.

    However ours are two separate policies so pays out twice if we both need to claim. Effectively that's £760k of cover.

    Does seem as though yours is coming in quite pricey but every situation is unique.
    • G_M
    • By G_M 17th Oct 16, 4:15 PM
    • 37,082 Posts
    • 41,039 Thanks
    G_M
    • #8
    • 17th Oct 16, 4:15 PM
    • #8
    • 17th Oct 16, 4:15 PM

    Essentially as no-one has yet said 'that is a ridiculous figure' i'm quite happy that we are not vastly overpaying
    Originally posted by ST1991
    No one has said that because there are so many variables affecting quotes that no one can know.

    shop around.
    • Brightspark87
    • By Brightspark87 17th Oct 16, 4:20 PM
    • 1,411 Posts
    • 3,622 Thanks
    Brightspark87
    • #9
    • 17th Oct 16, 4:20 PM
    • #9
    • 17th Oct 16, 4:20 PM
    Hi I am an IFA and often deal with this type of quote. I would suggest that you have a reasonably priced offer here but shop around a little (do some quotes online yourself). Does this price include the medical history or are these standard terms? Often it is not until underwriting that final terms are issued and we often see these increase.

    For instance, mine recently increased with full underwriting due to my family medical history.

    You also could think about reducing the level of critical illness to reduce cost. Perhaps £100,000 would be sufficient in the case of one of you becoming ill. that would save a few £££.

    Overall I always recommend critical illness if you can afford it - I have seen it be claimed on and the one thing you don't want that the time? To worry about money.

    Also, you don't mention but worth checking out too - is the amount decreasing? If you are on a repayment mortgage and this amount is level again, you could save some £££ by choosing a decreasing option.
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    • Kynthia
    • By Kynthia 17th Oct 16, 5:43 PM
    • 4,702 Posts
    • 6,715 Thanks
    Kynthia
    Life assurance is relatively inexpensive and the costs will depend on lots of different factors. Is it joint or two seperate policies, is it level or reducing term, what are your medical histories, what is the level of cover, are the premiums fixed or reviewable. All these things change the cost as well as which company you buy it from.

    Critical illness cover is more expensive and it's important to get advice or research where to buy it from as to every company covers the same illnesses. Again it depends on the level of cover, your ages and your medical histories. What amount do you think you'll need if you get one of the listed illnesses?

    Some people don't get critical illness, some get PHI, and some get both. It depends what you think you need. Not many mortgage companies requite you to get any insurance other than buildings insurance but you need to check your lender's requirements.
    Don't listen to me, I'm no expert!
    • getmore4less
    • By getmore4less 17th Oct 16, 5:55 PM
    • 26,297 Posts
    • 15,807 Thanks
    getmore4less
    I thought life cover as a condition of lending was abolished.

    Do you need the cover is the first question.

    There are other options if one of you dies.

    Worst case is one of you becomes incapacitated and the other becomes carer and can't work. Life insurance is no good for that.
    • SuzieSue
    • By SuzieSue 17th Oct 16, 7:56 PM
    • 3,317 Posts
    • 3,669 Thanks
    SuzieSue

    Some people don't get critical illness, some get PHI, and some get both. It depends what you think you need. Not many mortgage companies requite you to get any insurance other than buildings insurance but you need to check your lender's requirements.
    Originally posted by Kynthia
    I would look seriously at PHI/income protection rather than critical illness. Critical illness polices have too many exclusions. However, you need to make sure that the PHI policy provides own occupation cover:

    http://www.telegraph.co.uk/finance/personalfinance/insurance/incomeprotection/9166885/800000-waste-money-on-worthless-income-insurance.html
    • rosyw
    • By rosyw 17th Oct 16, 8:01 PM
    • 422 Posts
    • 584 Thanks
    rosyw
    I thought life cover as a condition of lending was abolished.

    Do you need the cover is the first question.

    There are other options if one of you dies.

    Worst case is one of you becomes incapacitated and the other becomes carer and can't work. Life insurance is no good for that.
    Originally posted by getmore4less
    You need to think of all eventualities.

    My personal experience tells me that critical illness cover is definitely needed, we didn't bother and should have as my husband developed an illness which, although he survived it, would have been covered had we taken out the insurance. The stress his illness caused meant I as unable to work the hours needed to cover his loss of income and the financial pressure was very great. We really SHOULD have taken out that insurance cover!

    Having recovered enough to be able to work again my husband pushed himself to the limits in order to get the finances back on track, this, coupled with the stress, caused him to die of a heart attack. Thankfully we HAD taken out life cover and I could pay off the mortgage.

    The last thing you need to be worrying about if one of you is critically ill, or dies suddenly, is money! Yes,there are other options if one of you dies, as in selling the house or whatever, but would you really want to be in that position? until it has happened to you, you cannot begin to understand how it affects you.
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