Mortgage Life Assurance - Please help

Twins

Hi everyone,

I posted below but I understand I may not have been clear and so I've dug out the paperwork relating to the existing policy I have so hope this helps.

My husband and I have a joint Life Assurance policy on our mortgage and pay £161.11 per month which I think is too high.

Paperwork states we are covered for basic sum of £35,802 plus bonuses and also our policy covers critical illness.

If I stop the policy and change will I get any payments back? It looks like from the paperwork I can cash it in early but what will be the disadvantages or should I just leave it where it is? We do have about £18,000 debts in cards etc so this could help clear those.

Any other tips?

Thank you very much!

dunstonh

My husband and I have a joint Life Assurance policy on our mortgage and pay £161.11 per month which I think is too high.

That is very high for a term assurance on a mortgage....

Paperwork states we are covered for basic sum of £35,802 plus bonuses and also our policy covers critical illness.

However, that sounds like an endowment policy so that premium sounds much more reasonable.

If I stop the policy and change will I get any payments back?

No.

It looks like from the paperwork I can cash it in early but what will be the disadvantages

Depends on the type of policy but if it is a low cost endowment then you would suffer penalties on early surrender with most (although some may allow early exit points without penalty).

We do have about £18,000 debts in cards etc so this could help clear those.

You probably need a cost analysis to see if its best to keep it or surrender/sell it. Low cost endowments are typically used against an interest only mortgage. If yours is and you surrender/sell the endowment then you will need to switch the mortgage to repayment basis and that will significantly increase the mortgage costs. It may be the right or wrong thing to do but not possible to tell without facts.

Twins

Dunstonh,

Thanks very much for your reply.

Well you were right, it was due to having an existing endowment mortgage and we changed that about 5 years ago to repayment.
I called Norwich Union up and they advised that I can cash this in. Of course they advised not to do so as I wouldn't qualify for the next bonus which is due in Dec etc etc....

But I went onto Cavendish and had a look at mortgage life assurance and got a quote and it came back at around £23 per month for CIC too! Wow, what a difference to the £116.11 per month I am paying.

I couldn't quite understand how to click on mortgage protection as it only offered premium protection.

Do you think the comprehensive cover is a good one to go for?

Thanks very much!

payless

Twins wrote: »

Dunstonh,


But I went onto Cavendish and had a look at mortgage life assurance and got a quote and it came back at around £23 per month for CIC too! Wow, what a difference to the £116.11 per month I am paying.

2 very different products ... Cavendish offer no advice, and from what you have posted , I think it would be wise to get advice on these matters

jamesd

Twins wrote: »

Wow, what a difference to the £116.11 per month I am paying.

It's different because the products are so different. The cheap price is just the insurance, the current one is the insurance plus the regular monthly investments into the endowment policy. So you'd also need to consider whether you want to be investing the difference in the price of the two, perhaps in a stocks and shares ISA.

Clearing the cards is good in the short term, longer term if you do this and want to be in a better financial position you should probably be thinking of putting the card repayments money and the monthly premium difference into investments, savings or a mixture.

Twins

Hi Payless,

Yes the original policy was based on endowment and also gives a lump sum at the end of the policy life (in 15 yrs). But as we are so much in debt I was thinking of cashing this in and paying off our debts.

The new policy I undetrstand is just a normal life assurance that covers the mortgage on death and CIC etc.

Wanted to get some idea on whether cashing in my existing policy was a good idea. Really need the money!

Thanks

jamesd

What is the current redemption value of the policy?