Please Help with rearranging life insurances

1992jersey

Hi, can anyone help advise us on life insurance? We have been told we have too much! We are struggling for money at the moment so any cut backs would help.

We have mutiple polices from each time we re mortgaged. We really need an unbiased opinion on which policies we no longer need, which I know our bank will not give us.

I now suffer from depression and we have been told that any new policies we take out will be 'loaded'. The advice we have been given is "hang on to what you have got" but we are over insured.

We currently have 5 polices with HSBC, Marks & Spencer and Scottish Provident. Some are joint.

Thanks for looking, Hope to hear from someone soon.

shaunrc

Hi 1992 jersey

Firstly I am an IFA but please do not take this post as formal advice as that has a specific meaning for a regulated person like me.

Do your policies match your mortgage? What I mean is are they for the same term and if you have a repayment mortgage are they decreasing cover?

Secondly how does the total sum assured compare with your mortgage size?

Do you feel you need life cover for any other reason?

Lastly can you be more specific about your depression and its severity? Sorry if this is uncomfortable but it is the only way I can get an idea of how likely it is you can get a new policy.

Finally can you give me the details on the policies individually.

Sorry for all the questions but these will give me a guide.

Shaun

1992jersey

Hi Shaun,
Thanks for helps us out, Its very much appreciated.

Firstly my depression. I had a breakdown 4 years ago, I was put on a high dose of antidepressants. Over the last 4 years I have suffered from depression, It's not a severe case but enough to keep me on a lower dose of antidepressants. It was all brought on by exhaustion when caring for my mum when she had major surgery. I am now in the process of slowly reducing the medication and hopefully soon get off them.

Now the figures:-
MORTGUAGE
We have a repayment mortguage (moved to Abbey Oct 2007) of £140,000 which finishes 2027.

LIFE/MORTGUAGE COVER
(1) SCOTTISH PROVIDENT Husband only £145,000 death only; and
Husband only £58,000 death/disability
Term 2007 - 2027 benefit increases yearly
current cost £48.40 per month increasing yearly. This was taken out
when we moved our mortguage in Oct 2007

(2) HSBC Joint cover £78,500 decreasing term death/critical illness
Term 2003 - 2022
current cost £47.53 per month increasing (not sure if its yearly)

(3) HSBC Anna only £195,714 level term death only
Term 2003 - 2022
current cost £10.49

(4) HSBC Anna only £61,061 decreasing term death/terminal illness
Term 2006 - 2026
Current cost £8.04 per month increasing (not sure if its yearly)

(5) M&S FAMILY PROTECTION PLAN Joint cover £162,891 death/terminal
Term 1997 - 2022 benefit increases
yearly
Current cost £36.18 per month increasing yearly

So we are paying £150.64 per month at the moment. Hope you can make sense of all this - we struggle to!

What we want to do is (a) pay off the mortguage if either of us die; and (b) have a lump sum if either of us die so we can not work/reduce work while we have children at school (they are 12 and 13 so a sum to tide us over for approx 5 years)

shaunrc

Hi Anna

Firstly this is not formal advice as I said before.

The issue around your depression and apologies in advance for the subject matter would be essentially if they consider you to be a danger in terms of suicide. A horrible subject but if you are only a mild depressive then this is quite common as an illness and might be treated as such. To progress I would need to know more but understand if you do not want to publish this.You can send me a private message which would be more discreet.

As to your policies you seem to have quite a few which rise annually did no-one ever suggest a guaranteed premium?

Taking them in order

Policy 1. what does the death/disability benefit cover? Also is it level or decreasing?

Policy 2 is clear but for a term that does not match either of your needs.

Policy 3. Again this is clear

Policy 4.clear

Policy5. clear ( presumeably benefit rises with the premium)

How much per year would either of you need to support the children or how much as a lump sum?

Finally so I can consider some numbers can I have your date of births if you smoke and if either of you have any other illnesses.

Also please do not cancel anything before you know you have a replacement, always be sure first.

1992jersey

Hi Shaun,
Thankyou so much for all this, It's a real help. Jamie is just looking up our papers again to answer your questions so thought I'd give some insight into my depression.
2004 = My mum needed major surgery and I looked after her night and day and also had a family of my own to look after. I got totally worn out and had a breakdown. I wasn't amitted to hospital. I was put on Antidepressants as I was an emotional wreck. I was up and down for a couple of years. I was never sucidal. In the last year I have been very well and now my antidepressants are slowly being reduced. I'm hoping by the spring that I will be free of them. I would view myself as being Mildly depressive.
Hope this helps. Don't worry about asking more.
I'll pass you on to jamie!

1992jersey

Hi Jamie here.

You are right that no-one suggested a guaranteed lump sum! What we have is a number of 'decreasing' policies from HSBC left over from when our mortguage was with them (apparently they do this to lower the cost!). When we moved mortguage away from HSBC we didn't cancel all the policies because we were worried Anna would not be offered the same level of cover now. We cancelled polices in my name only which were replaced with Scot Provident. We kept Anna's sole policy and also kept joint ones only because Anna was on them and we thought she wouldn't get critical illness cover again.

The Scot Provident policy which started with our new mortguage is 'on an increasing basis linked to the retail price index' (their words) so from 1 Dec 2008 I now have £151,925 life and £60,847 life or earlier critical illness benefit. The critical illness cover seems comprehensive, from alzheimers to blindness, major cancer, stroke etc (31 conditions in all)

Policy 5 does raise with the premium.

As to lump sum to support the children, we are guessing at a figure really. HSBC suggested this to us years ago and I think they suggested figures to us. We have 6 years until both children are 18. I 'guesstimate' household bills and food at £12,000 pa, so would it be wise to top it up to £15,000 pa for 6 years, ie £90,000 cover? Do you suggest this kind of thing to clients or was it just HSBC fleecing us for all they could?(!)

Jamies DOB 13.01.67 and Annas 23.12.73. We are both non-smokers, occasional drinkers. I have asthma which is well controlled, no other complaints.

Thanks for taking the time to look at this for us. We have kept all these policies so far because I am nervous to cancel and be under insured.

shaunrc

Hi

Thanks for the info. Going forward there are 2 issues.

You can get what you want quite cheaply if you have a clear health history. Depending on how severe your asthma and depression are rated by insurers will determine what you actually pay. How was this treated when you took out the policy in 2007? This will be a guide.

Also I notice that you have critical illness cover. This is a difficult area for me to suggest anything on as it really depends on whether you feel that you need it. Also your medical history will definitely lead to a rating in some form if you were to look at a new policy.

It is possible the waters have got muddied and it is the critical illness area that has led to talk of big ratings etc.

For covering your family for the 6 years there are policies which can be enacted cheaply again depending on your health record. Please do not cancel anything until you are sure you have a new policy in place.

Shaun

shaunrc

Hi Guys

I notice that you stopped replying,what happened?