Do I need a Mortgage insurance product?

Financial_Savvy

Hi,

Is it a requirement on a mortgage to have a mortgage insurance product like life insurance or critical illness cover?

MortgageMamma

MOst brokers would recommend you take this cover but its not mandatory

dunstonh

In your subject, you say do you need it. We dont know as we know nothing about you.

It is not a requirement but whether you need it is a different matter. I was notified today of a 31 year old that had a stroke. Whilst he is ok and its not something you want to happen, especially at that age, he will quite pleased to hear from his partner who I spoke to that their mortgage was covered with a critical illness policy. He can recover and alter his lifestyle as required without having any money problems.

Joe_Bloggs

You may well be covered but does that guarantee a payout ? The way critical illness is marketed you have to balance on the edge of life to qualify for it. Are there any fully documented examples terms and conditions of a critical illness policy on line for those with doubts to read as to what is covered and what is not. Who makes the decision to pay out in the end ?
J_B.

dunstonh

Generally, anyone who hasnt lied on an application and has a claimable event will get a payout.

Joe_Bloggs

That was not an answer to my question. clearly some medical opinion is also a factor.
J_B.

dunstonh

Yes, a doctor is required to confirm the diagnosis.

HGLTsuperstar

Back to the OP, the only mandatory cover is buildings insurance, before the lender will release the mortgage. Contents insurance not essential but stupid not to; as for life assurance, CI cover, depends on factors like do you have dependants, and see if your employers cover it as part of your salary package anyway.

HelpWhereIcan

Hi Financial_Savvy

As every one has said - there are no insurances other than buildings which are compulsory. Having said that, to dismiss cover just 'cos it is not compulsory, or because someone you know does not have it, could be dangerous.

My youngest customer to claim on their Critical Illness policy was a 27 year old fireman for cancer - back to work within 18 months and now in full remission 3 years later with no mortgage.

Get some advice from an independent and weigh up your needs with an open mind before making your decision.

Joe_Bloggs wrote:

You may well be covered but does that guarantee a payout ? The way critical illness is marketed you have to balance on the edge of life to qualify for it. Are there any fully documented examples terms and conditions of a critical illness policy on line for those with doubts to read as to what is covered and what is not. Who makes the decision to pay out in the end ?
J_B.

That's a little bit of a generalisation Joe :beer:

All insurers provide their customers with a plan guide that will include a 'guide to definitions' as you ask. Every company will be different and I, of course, would argue that this is the reason that people should take professional advice with a product like Critical Illness or Income Protection. But then again, I would, wouldn't I!

But, to answer your question, here are two (remember every company is different):

http://www.brightgrey.com/downloads/plandetails.pdf

http://www.norwichunion.com/library/pdfs/pt07001.pdf

The one for your provider available from the adviser who arranged your plan.

Financial_Savvy

Thanks for the responses.

In my case I have a smallish mortgage at £26K. If I am ill I get 6 months full pay and 6 months half pay from my employer, so I am not to worried that I don't have a policy. I did have a CI policy but it was £13 a month and seemed to be a waste of money, as the clauses that they don't pay out on where huge.

dunstonh

You are aware that a guaranteed premium CI policy or income protection (PHI version) can be best value for money when bought when young. Once you start realising that you do need these sort of policies, you find that you arent looking at £13pm any more but closer to £50pm.