Life insurance policies with mortgages

stulloyd

My wife and I have a joint mortgage on our house and we have been told that we both need life insurance policies to cover the whole loan. My wife doesn't work and I only want to protect my life in the event I die. What are the rules please?

opinions4u

You can't be forced to take life cover that you don't want.

That said, a non-working wife is worth her weight in gold.

I believe it would cost around £30,000 to employ somebody to do all the work a typical wife does so I wouldn't automatically assume that she shouldn't be covered.

If you have kids, the death of your wife could force you to give up work or reduce your working hours. A life assurance policy on your wife could help alleviate the drop in income that would cause.

Price up joint cover and cover on yourself. You may be pleasantly surprised at how little extra a joint policy costs.

http://www.moneysupermarket.com/LifeInsurance/uk-life-insurance.aspx

(and cover is usually cheaper for girlies!).

Mrs_Bumble

Excellent response above, I can't really add anything to that. Joint life, to pay on first event is really going to be much cheaper than you think and will give you the benefit of paying the mortgage if anything did happen to your wife, it is very important in my opinion.

tomthelondoner

Yet better idea is to have two single policies under one plan rather than joint life first event - some insurance companies allow you to do it and do not charge a plan fee on the second policy. It usually costs 5-10% more in monthly premium, but potentially you are looking at two payouts - for instance, joint life first event £100k cover will pay the surviving spouse £100k if the other partner dies - policy then ends. In my scenario, if one partner dies within the term of the policy, the surviving partner will get £100k, but the policy carries on - in the event of second death, children or the estate (under the rules of testacy, or intestacy) receive another £100k. Seems like a better deal to me - pay 5-10% more for twice the cover. With most policies and in most circumstances it is advisable to write the policy in a trust - this speeds out the payout and ensures the proceeds of the policy end up in the right hands and may sometimes lower the Inheritance Tax bill (a whooping 40%!!!). Also, always a good to have a will. For these reasons, buying a policy online is not necessarily a good idea (no-one will offer you double cover under one plan online and there will be no advice about trusts), although you will save a few pounds a month by doing it online, without a doubt...

herbiesjp

stulloyd wrote: »

we have been told that we both need life insurance policies to cover the whole loan.

Who told you?

Ask them to put in writing that it is compulsory.

Now that aside, what has been stated in the other posts is spot on. Whilst not compulsory, almost certainly best advice to take the cover.

If it was a lender who told you this beware, as they may be tied to only one provider.

If it was an adviser, make sure they are either independent, or offer a panel of good providers.

koexelek

herbiesjp wrote: »

Who told you?

Ask them to put in writing that it is compulsory.

Now that aside, what has been stated in the other posts is spot on. Whilst not compulsory, almost certainly best advice to take the cover.

If it was a lender who told you this beware, as they may be tied to only one provider.

If it was an adviser, make sure they are either independent, or offer a panel of good providers.

Conditional selling is alive and well still then ? :rolleyes: