Mortgage Insurances

patch3228

Hi hope to get some opinions regarding insurances linked to the mortgage

The condition of the mortgage is to have Building Insurance, which is fine

However, the mortgage advisor has also mentioned many other types of insurance to consider:

• Critical Illness
• Health Protection
• Redundancy/ Accident Cover
• Life Assurance

I am going to take out Buildings & Contents. My employer already provides Life Assurance (for free) and Critical Illness (too many caveats for my liking)

Can anyone advise whether any are particularly worthwhile? The thing I like about this, is that the premium is fixed over the duration of the mortgage and so for example, in 5 years time (when my age group becomes more risky) the premium may be sky high for life assurance? Or perhaps I no longer work for my employer and so this benefit ceases

Or would the Internet comparison sites mean there are better saves online?

Thanks for looking!

koexelek

patch3228 wrote: »

Can anyone advise whether any are particularly worthwhile?

all insurance is a waste of money unless you have to claim......:cool:


... but dare you take the risk and not bother ?

I daren't

dunstonh

and Critical Illness (too many caveats for my liking)

Yet it has a 1 in 6 chance of paying out before retirement compared to 1 in 5 for death. Plus, the success rate on claims is over 85% with most providers.

Can anyone advise whether any are particularly worthwhile?

You have already eliminated the product with the second most likely claims stat so any of the rest are not going to meet your criteria.

herbiesjp

patch3228 wrote: »

The thing I like about this, is that the premium is fixed over the duration of the mortgage and so for example, in 5 years time (when my age group becomes more risky) the premium may be sky high for life assurance? Or perhaps I no longer work for my employer and so this benefit ceases

This is exactly why you should look at your own cover.

You cannot guarantee being with your employer for the term of the mortgage, and so therefore it is normally better to set up your own independent protection arrangements while you are younger and with (possibly) less medical history to disclose.

And by taking guaranteed premiums with with the life or CI cover, the premiums will not change during that mortgage term.

Any employer benefits would go towards helping the family, as opposed to these which would clear the mortgage debt.

theartfullodger

OP stated
================
The condition of the mortgage is to have Building Insurance, which is fine

However, the mortgage advisor has also mentioned many other types of insurance to consider:

• Critical Illness
• Health Protection
• Redundancy/ Accident Cover
• Life Assurance

==============

Well, he would wouldn't he.. Call me cynical but he's probably hoping that if you decide to get any you'll do it through him///

Go with just buildings & contents, but get it through ANYONE but mortgage company or mortgage advisor. Mortgage lender may need to see proof you have buildings cover (fair enough).

Cheers!

Artful

patch3228

Thanks for all the replies. I have decided that:

1) Life Assurance - we will not take up. Our occupation will always be salary-office based and more than likely offer good employer subsidised (if not inclusive) life assurance anyway.

2) Critical Illness - there are too many caveats for this to be worthwhile. Also, the cover period I believe is for 12 months usually and so not too big a deal, seeing as we have already set aside for 6 months of contingency (and this will be increasing with each month that passes).

3) Redundancy Cover - is also for 12 months, so again the same contingency pot has been allocated to cover this.

4) Building and Contents - will be going for this BUT using online comparison sites.

Generally way too many different forms of insurance - generations before have got through without all these fancy variations of a product. I understand times have changed (hardcore recession) and all that, but I reckon a gentle balance is better than full blown cover.

dunstonh

You appear to be mixing up MPPI with CI as your explanation of CI doesnt match the product.

opinions4u

patch3228 wrote: »

1) Life Assurance - we will not take up. Our occupation will always be salary-office based and more than likely offer good employer subsidised (if not inclusive) life assurance anyway.

It's your choice. As and when you have a family, or one of you gives up work, you will almost certainly have a need for nearer 10 times income for life cover. It has always amazed me that people often only cover their mortgage debt, and not their lifestyle.

2) Critical Illness - there are too many caveats for this to be worthwhile. Also, the cover period I believe is for 12 months usually and so not too big a deal, seeing as we have already set aside for 6 months of contingency (and this will be increasing with each month that passes).

Critical illness cover insures against life threatening illnesses such as cancer and pays out on diagnosis. This gives you a lump sum, usually the mortgage debt amount (although, like life cover, you don't have to insure your mortgage debt only). You don't appear to have read up on what critical illness is, so why have you discarded it? Read up the statistics on the likelihood of suffering cancer (I haven't even mentioned things like kidney failure, heart attack, loss of two limbs etc. There is a lot more to these policies than people realise.

3) Redundancy Cover - is also for 12 months, so again the same contingency pot has been allocated to cover this.

That pot could disappear very quickly. Why not shop around for a policy that only pays out after 3 months, in order to reduce premiums? You should also consider permanent health insurance (PHI). Something that pays out if you suffer a long term illness (not necessarily a life threatening one), kicking in for the period after your employer stops paying you. If you lose your job, you may want to preserve the contingency pot. If it takes you 6 months to find work, and you find a lower paid job, you may want your contingency fund to help you adjust to lower income then. Especially as you'll have lost your life cover and need to review that!

4) Building and Contents - will be going for this BUT using online comparison sites.

Makes sense. Don't forget cashback sites too.

Generally way too many different forms of insurance - generations before have got through without all these fancy variations of a product. I understand times have changed (hardcore recession) and all that, but I reckon a gentle balance is better than full blown cover.

I agree with this sentiment. But if you get the balance wrong and bad luck comes your way, your lifestyle suffers first and then you lose your house.

Employers can remove non-contractual benefits at any time.

I admire you for taking the time to give serious consideration to what cover you should/shouldn't have. I do think you need to give yourself for research time though.

At present, you are more interested in protecting your widescreen tv against being pinched in a burglary. A severe illness can cost you your job, your income and your home. You won't get much for your tv on Ebay when you're trying to raise money for a mortgage payment!

herbiesjp

patch3228 wrote: »

2) Critical Illness - there are too many caveats for this to be worthwhile. Also, the cover period I believe is for 12 months usually and so not too big a deal, seeing as we have already set aside for 6 months of contingency (and this will be increasing with each month that passes).

As Dunston says, this is not how a CI policy works.

A CI policy pays out a lump sum sum as aopposed to a monthly benefit.

The lump sum is deisgned to clear the mortgage debt entirely - NOT cover the monthly mortgage payment.

Too many people make the same mistake with this definition, and as a result are excluding a valuable policy on the wrong basis, as it is not fully understood.

With 1 in 3 people expected to be diagnosed with some form of cancer you can see how it is a very important part of any protection planning for that element alone (high profile cases like Jade, Swayze & Kylie show that it can indeed hit anybody at any age) - with a CI policy at least the mortgage debt will be cleared and you woudl not have the stress of worrying about clearing a mortgage debt and having treatment at the same time.

patch3228

For Critical Illness, is there an age point you reach where the premium jumps up significantly? I understand there are many factors to take into account, but I just want some general opinions...(I am 22 and healthy low risk individual)

I have to look at the premiums quoted, but I think the mortgage advisor said this Critical Illness cover can be fixed for the duration of the mortgage at ~£20 (need to check)

Oh ok, so CI can clear the mortgage debt entirely, whereas MPPI will just cover the monthly mortgage payments?

MPPI will cover accident/sickness/redundancy, whereas CI is against a specific set list. Will have to find out ball park figures for MPPI premiums.


I am guessing most people generally go for a combo of:

- Building and Contents Insurance
- Life Assurance
- Critical Illness

dunstonh

For Critical Illness, is there an age point you reach where the premium jumps up significantly?

Low to mid 30s - thats when you start entering the areas where claims go up. A CI plan with guaranteed premiums would of course not increase in cost as you get older.

I am guessing most people generally go for a combo of:

- Building and Contents Insurance
- Life Assurance
- Critical Illness

Dont know if thats average but I would expect to see a considertaion of PHI in there as I would prioritise that above CI, MPPI and PPI.