Advice re life insurance please

archie9uk

My husband and I currently have two decreasing term life policies - one is just for me to cover my mortgage on the property I let out. There is about £54k on this mortgage, and the policy costs £12.44 per month (22 years remaining). The other policy is a joint one to cover the mortgage on our home. There is about £98k on this mortgage, and the policy costs £58.55 per month (34 years remaining). I understand both policies include critical illness cover, which seems to be the big thing pushing up the premiums. I am 28, my husband is 26 and neither of us smoke. We are both in good health, but I am medicated for high blood pressure. (We don't have kids yet, but are thinking of trying soon, if that makes any difference.)

So, in total we are paying £70.99 per month for this cover, which seems like a lot to me (more than my car insurance, my husband's bike insurance and buildings/contents insurance put together!). I have looked into getting a single level term policy to pay out enough to cover both mortgages, wondering whether this might be a better option. I found a really cheap life insurance quote, but when I stick critical illness in there it goes haywire! I have read Martin's article about life insurance, but am a bit confused about income protection policies - do you have one each or one to cover everything? If one of us was critically ill, the other would need a lot of time off work if not giving up altogether. My employers are very understanding, but my husband's are not at all, and he would likely get sacked if I was critically ill! Obviously without cover we would be screwed...

Any advice on would be greatly appreciated. Thanks.

dunstonh

I understand both policies include critical illness cover, which seems to be the big thing pushing up the premiums.

Yes. You are more likely to claim on CI during certain ages (30s to 50s) than the life assurance.

but I am medicated for high blood pressure.

That will have an impact as well.

So, in total we are paying £70.99 per month for this cover, which seems like a lot to me

Not really. Although considering your ages it doesnt seem that great value. Did you buy it from a bank or tied agent (most expensive ways to buy)?

more than my car insurance, my husband's bike insurance and buildings/contents insurance put together!).

Odds of claiming on home insurance are low. Car insurance will pay out a few grand every now and then. Life assurance sum assured is far higher and has a 1 in 5 chance of claim before retirement. Whats more important, your family or your car?

I have looked into getting a single level term policy to pay out enough to cover both mortgages

Not the best way of doing it unless mortgages are on interest only basis.

I found a really cheap life insurance quote, but when I stick critical illness in there it goes haywire!

Make sure its life assurance and not insurance. Insurance tends to mean restrictions. Typically used by over 50s plans or accidental death plans. However, some Americanisms have come in with a few providers who call theirs life insurance when they mean assurance. Martin has dumbed down his article as well.

I have read Martin's article about life insurance, but am a bit confused about income protection policies - do you have one each or one to cover everything?

Depends on what type you are after and the level of cover you require.

A decent PHI policy has to be single life, single owner although some providers do have an option that allows you to have "segments" where you bolt on options and can pay a single premium but effectively have multiple plans. Whilst convenient, it is unusual for these to be the absolute best option. Sometimes the cheapest but at the expense of quality.

koexelek

The critical illness definitions are very important when considering cost.A CI policy that cost £50 per month and rotects you against 30 illnesses is probably going to be better value than one that covers you for 15 illnesses at £40 per month