What type of life cover would I need?

matt9713

I'm currently in the process of buying a property with my partner and are close to completion. My next step is to sort out life insurance as well as buildings and contents insurance. Whilst I'm comfortable choosing a buildings and contents policy, I'm really unsure what I would need for life insurance.

I guess ideally, I would like some sort of a joint policy that would pay out the other half of the mortgage if one of us passed away so that the survivor would still be able to afford to pay their half of the mortgage (we've chosen to be tenants in common if that makes a difference). Unemployment and sickness cover would be advantagous too, although I don't want to pay and arm and a leg for it.

Can anyone give me any advice in regards to what "type" of cover I would need, and is there a price comparison site for life cover?

Thanks, Matt

thejoose

matt9713 wrote: »

I'm currently in the process of buying a property with my partner and are close to completion. My next step is to sort out life insurance as well as buildings and contents insurance. Whilst I'm comfortable choosing a buildings and contents policy, I'm really unsure what I would need for life insurance.

I guess ideally, I would like some sort of a joint policy that would pay out the other half of the mortgage if one of us passed away so that the survivor would still be able to afford to pay their half of the mortgage (we've chosen to be tenants in common if that makes a difference). Unemployment and sickness cover would be advantagous too, although I don't want to pay and arm and a leg for it.

Can anyone give me any advice in regards to what "type" of cover I would need, and is there a price comparison site for life cover?

Thanks, Matt

Matt,

Probably your first priority would be to consider covering each other in the event of death. You can do this through a level term or decreasing term assurance. If your mortgage is an interest only product then you will need level term cover that pays a level lump sum at any point during the life of the policy should either of you pass away. Even on a repayment mortgage you could take the view that a level term assurance is better value over the full term when compared to decreasing cover as the further into the term you go, the higher the likelihood of either of you passing away yet the lower the lump sum cover provided by a decreasing policy.

First consider the prices of decreasing and level term assurance policies for the full mortgage balance over the term of your mortgage. Even if you are tenants in common I'm sure you would want to know that in the even of your death your partner would have no mortgage to pay not just that your 50% is taken care of.

As for unemployment and sickness cover I would strongly recommend you think it through and look at what benefits you would get from your existing employer first. Permanent Health Insurance is typically seen as superiour to other ASU policies (Accident, Sickness and Unemployment) policies when it comes to protecting your from being unable to work through illness as they will pay for the period you are signed off from work which could last for the remainder of your mortgage term or even taking you up to retirement age (bearing in mind any deferred period you stipulate when agreeing the policy) not just for 12 or 24 months. Yet they do not have unemployment cover although this could be tagged on under seperate cover if necessary.

Ask yourself how important unemployment cover will be and check the limitations on the cover of any policy. You may conclude that you could always find alternative work elsewhere and that the level of cover is not worth the premium. As ever, read the details of the policy.

matt9713

That's really helpful thanks for your reply. Just to confirm level term cover works on the basis that you pay £x in every month, and regardless of how much is left to pay on the mortgage, you will always get a set lump sum should the worst thing happen.

With decreasing term assurance, the lump sum payable at death decreases in line with how much is left to pay on the mortgage.

I know it's extremely difficult to estimate, but me and my partner are 24 and 23 respectively, both non-smokers and have no health problems, and have a mortgage for £106k on a repayment basis. With that in mind, what would you expect us to pay out on a monthly cost for a basic cover?

Also, is there anything else I should take into consideration for taking life cover out?

Thanks for your help so far.

McKneff

A Will !!!

As tenants in common your 50% of the house will not go automatically to your partner. If you do not specifiy this in a will it will go to your next of kin. I think this is correct but I am quite happy to be corrected