Life Insurance without the house

MyMoneyTime

Hi

I am usually on the bankruptcy forum but wondered if anyone could help with a question I have.

We aren't BR yet but intend to be as soon as possible.

We (married couple) have a mortgage decreasing life with critical illness cover which is £114 a month. This is based on £150,000 and started in January 2006.

First off, members have been outraged at the cost whereas I just thought that was what they cost. We did get it through a financial advisor rather than applying ourselves so whether its more comprehensive (although death is death at the end of the day) or we have been ripped off I do not know!

Anyway, thats by the by, my question is this......

whilst being BR is it worth keeping this insurance?

if we cancel it and then we get knocked down by a bus or get critically ill, our kids will be left with nothing

if we don't cancel it then are we just throwing money down the drain because if something did happen to us and we are BR, as the insurance is mortgage related, would it not pay out anyway as we will not be making mortgage payments?

I hope you can see where we are coming from??!!

Just to say, we will take out life cover that is non mortgage related once we are settled.

Ta in advance....

lisyloo

so whether its more comprehensive (although death is death at the end of the day)

Some policies cover critical illness as well as death.
But does sound a lot.
I pay £10.06 for £120K just for myself.

if we cancel it and then we get knocked down by a bus or get critically ill, our kids will be left with nothing

It's always a trade-off between the cost and the consequences.
It's unlikely for both parents to be struck down by a bus at the same time, so you need to consider what would happen if one of you dies.
How will you manage? What do you need?
You also need to look at whether the policy you have is good value for money.
So you need to see what the cover is and whether it's now suitable to your current circumstances.

if we don't cancel it then are we just throwing money down the drain because if something did happen to us and we are BR, as the insurance is mortgage related, would it not pay out anyway as we will not be making mortgage payments?

Yes it would pay out.
Although it was taken out to match a mortgage, it's a standalone product, so you would get a lump sum.
However you really need to review it on both a cost and cover basis especially as it sounds so high.

I hope you can see where we are coming from??!!

ALL insurance is a trade-off.
In an ideal world we'd all have insurance for death, accident, unemployment, sickness etc. However normally people can't realistically afford to have everything, so you need to consider...................
What would happen if the event (death, sickness, accident, unemployment) took place? and what cover do you need for it?
Then you need to prioritise as you probably can't have it all.
Everyone has to do the same process as even if you're realtively well paid, you normally can't afford it all so you have to work out how each event would affect your family.