Mortgage Life Insurance: We dont think we need it

Hugbubble

Hugbubble wrote: »

My partner and I have life assurance (decreasing term) for the mortgage for £17 per month. Seemed silly not to spend this small amount when spending all that money on a property/ mortgage. (FYI we have no children, are 31 and 38years old and both smoke so if you are younger and have a healthier lifestyle it'll probably be cheaper).

Actually I just checked my bank account, and in fact we pay £12 a month (was getting mixed up with my home contents insurance in my original post).

benjo

Home contents insurance - ah now thats a different matter.... do you need it? I have 3 manic labradors, hell yeah I need it (touch wood, never claimed though)

rinkydinkpanther

Are you sure you don't have any death in service benefits associated with your job / pension ? My husband and I both have this - mine is 3x salary, his is 4x.

JoeA81

Thanks for some well-reasoned replies. Food for thought.

With regard to where the other would live after selling the house, I would think the surviving partner would probably rent or lodge or something - after all thats what we have done up until this point. Renting is what you do when you are not quite sure where life is going to take you next, and I would imagine that our entire life would need re-thinking at that point. We certainly wouldnt be locking ourselves into a new mortgage on our own when everything was in a state of flux.

Having said that, I can see that not having to worry about selling a house at such a traumatic time would be a good thing, so we will both investigate and see how much it is likely to be.

I work for a very small company and get no benefits at all, and dont have a pension, but my GF is a civil servant so she may well get some sort of death in service benefit. Again we will look into it.

Cheers.

Hugbubble

rinkydinkpanther wrote: »

Are you sure you don't have any death in service benefits associated with your job / pension ? My husband and I both have this - mine is 3x salary, his is 4x.

My partner and I both have death in service benefits too, but it still comes with a footnote saying something like "payout is at the discretion of the trustees"- maybe it is different for married couples but I still wouldn't rely on this for unmarried partners, even if you have nominated each other for this benefit (especially given the supposed state of the pension funds these days). Besides, who knows how long it would take to pay out?

magpiecottage

Hugbubble wrote: »

My partner and I both have death in service benefits too, but it still comes with a footnote saying something like "payout is at the discretion of the trustees"- maybe it is different for married couples but I still wouldn't rely on this for unmarried partners, even if you have nominated each other for this benefit (especially given the supposed state of the pension funds these days). Besides, who knows how long it would take to pay out?

Actually there are sound reasons for this. If it is not at the discretion of the Trustees then it may count as part of the estate, get entangled in probate, become liable for inheritance tax and take months to pay out.

Because the Trustees can pay at their discretion none of that applies.

And in most cases, the employer maintains an insurance policy on all scheme members so the insurer pays out not the pension fund.

An "Expression of Wish" form needs to be completed and submitted to HR, though.

And make Wills - otherwise if one dies their family will take precedence over the survivor if you are not married.

Hugbubble

magpiecottage wrote: »

And make Wills - otherwise if one dies their family will take precedence over the survivor if you are not married.

Is this the case, even if you have filled in the necessary expression of wish form & passed it to HR/ Pensions office?

opinions4u

Hugbubble wrote: »

Is this the case, even if you have filled in the necessary expression of wish form & passed it to HR/ Pensions office?

The form itself is an expression of wish. The trustees can, and occasionally (but very rarely) do, use their discretion when making a payment if they feel that it is appropriate to ignore your wishes.

This can mean that your intended beneficiary for the lump sum doesn't get the money (although you would expect the trustees to make the payment to the person most deserving of the funds).

This isn't linked to the point about making wills. If one of you dies and their half of the house passes to a member of the deceased person's family, it can get horribly messy. Wills can ensure this doesn't happen.

jillie1974

mortgage life assurance will also cover you if you are diagnosed with a critical illness, disability, and other things. its not just 'if one person dies'
i think a small monthly prremium of about £20 iw worth it. you say you would sell the house but could you really sell the house that you may have lived in for years together?? would you want the stress of selling a house along with the emotions and devastation being bereaved brings?

worried_jim

I cancelled mine years ago, I live on my own, I die, I don't care. Enjoy the party.