Mortgage Life Assurance

jimbugalee

Hi all,

My boyfriend and I have just bought a house - sorted the mortgage out etc (btw VERY good rate with the Post Office) but I've also seen such thing as 'Mortgage Life Assurance'.

I pretty much know what it is from reading the article on here but it's not totally clear whether we need it.

I am 24 and my partner is 27 - no dependants.

We've been quoted on a decreasing cover for 25 years (length of mortgage) for £34.24 per month (this includes illness cover).

Any thoughts on this?

Many thanks in advance.

Gemma

koexelek

It's worth having.

If you or your partner died or got a critical illness during the mortgage term, the mortgage would be repaid.

Get alternative quotes before you commit to the Post Office though.
As they don't deal with brokers, I can't comment on the quality of their cover, or the value for money.

Robert_Sterling_3

It is a relatively cheap form of insurance.
In theory it pays off your mortgage if the insured person dies.
In theory it lasts as long as the mortgage lasts.
It is for you to decide whether or not you want it.
As you say you have no dependants other than each other.

jimbugalee

Thank you both.

Just to be clear the Post Office isn't who's offering the Life Assurance policy.

Before going to the PO for the mortgage we went to 2 seperate brokers. Neither of them could beat the PO offer. I will have a little search on here to see whether anyone else has got a mortgage through them.

The Life Assurance is through the broker, with Scottish Provident. I will of course look into this myself also.

Agree that is is relatively cheap especially for both of us.

I'm loving the fact that suddenly everything is split in 2 as used to paying it all by myself!!

Robert_Sterling_3

koexelek wrote: »

the mortgage would be repaid.

The general idea is that the mortgage would be repaid.

However I do not think the payment you get is the amount outstanding on your mortgage.

I think the amount you get is the amount that would be outstanding on your mortgage if the mortgage you started with had continued without any changes in the interest rate over the duration of say 25 years.

example If you overpay your mortgage you would still get paid the amount that would have been owing if you had not overpaid.

example If you have underpaid your mortgage you will only get back only the amount which would be outstanding if you had not underpaid etc.

jimbugalee

Thanks Robert.

The FA said this was guaranteed for 100% of the mortgage at the time of payment but maybe they all say that and what you say still applies.

I will check!

Robert_Sterling_3

It is inconceivable that it would guarantee 100% of what was owing at the time it paid out. :eek:

Things have moved on since I took out my policy.

More up to date is the non commercial BBC website

http://www.lifeinsure.com/lifeinsurance/mortgage.asp

getmore4less

I have never bothered with seperate life cover.

When single just not needed.

As a couple no other dependants.

1. We have cover with our jobs that is adiquate to make both parties capable of picking up whats left of any debt.
2. we have always had enough equity that one of these options would work
   • could sell and get somewhere smaller.
   • could sell and rent
   • take on the debt alone anyway.

If it looks like extra cover it is not needed use the payments to overpay and bring the debt down.

Long term critical illness is another catagory which requires more thought since just paying of the debt may not be enough and many policies are very restrictive on what is covered.

koexelek

jimbugalee wrote: »

The Life Assurance is through the broker, with Scottish Provident. I will of course look into this myself also.

They are a very good company with good critical illness definitions