Advice Required

BigNige

I have stopped paying my premiums on my life insurance for my mortgage, as I am strapped for cash for now. Is this a poor move or a risk worth taking? I am not married yet and do not have any dependents. What happens if the worst happens and I die? What will happen to my property (which is being rented at the moment anyway)

Is it better to reinstate the payments?

_Andy_

If there's no-one you want to leave it to then there's not really much point in having the life cover.

Mr_helpful

_Andy_ wrote: »

If there's no-one you want to leave it to then there's not really much point in having the life cover.

this is true though the question should be what happens if OP doesnt die but gets seriously ill and cant work

BigNige

well I am engaged to be married so I would want to leave it to her. Failing that I would want to leave it to my parents. Am I being foolish in not having life insurance?

poppy10_2

Life insurance is to protect the lender, not you. It pays out to the lender if you die, you never see a penny of it. If you die without life insurance then the house would still be passed on to your relatives, but the mortgage would still be outstanding - that's not the end of the world.

Rather than stopping paying the premiums altogether,though, why not see if you can slash the cost by switching to another insurance provider? The lender's own policies tend to be much more expensive. See Martin's article here:

http://www.moneysavingexpert.com/mortgages/cheaper-life-insurance

BigNige

Thanks.. I actually used a seperate insurance company as the lenders own policy was expensive.

I stopped because it was £39 per month I could do with keeping in my pocket (for now anyway)

bigbloke45

Life insurance is to protect the lender, not you.

Er, no! Life assurance is to protect your financial dependents. So you are being foolish. But I suspect you will not be able to "reinstate" payments on the life cover you had if it's been lapsed more than 30 days (think about it; if insurers let people reinstate whenever they liked, then they would get all the uninsurables coming back!)

Better to think of a life policy to cover your mortgage as a "debt canceller" i.e. it removes your mortgage debt from your estate on your death. If you want to pass on an "unencumbered" property to your fiance or parents, the only way is by insuring your life against the outstanding mortgage. Unless you have been "rated", I can't believe that you are that skint; term assurance is so cheap today.

I also think that Mr helpful has a point; death isn't always the worst that can happen.

I really think you need to sit down and list your financial priorities against outgoings to see what is really important to you.

Best of luck!

Finally, the only policy that is to prtect the lender is a "Mortgage Indemnity Guarantee" policy. Sorry, poppy10!