Life Assurance or Mortgage Life Insurance

jamesd

guardianangel wrote: »

the Mortgage advisor advised me to purchase Mortgage Life Insurance to cover the money I am borrowing.

guardianangel wrote: »

As an employee I get death in service benefits. I am only borrowing £65k and only have savings but thats it.

Mortgage life assurance is just life assurance. You need it only if you have dependants who you want to get the house with the mortgage paid off if you die.

With no dependants this means that your mortgage adviser is probably contemplating a mis-sale that will subject them to an obligation to pay you redress for selling you a product that you don't need. Nothing in the circumstances you have mentioned here requires life assurance and even if it did, the death in service benefit from work does the job.

The mortgage adviser or their employer will receive commission payments from the insurance company for the insurance sale. They may be required to offer it to you by their employer but in your circumstances that appears to be a very poor choice for you. You should ask them to put in writing their reasons for recommending that you take out life assurance beyond that provided by your death in service benefit.

There is an insurance type of policy that you may want to consider but you probably should visit unbiased.co.uk and find an IFA to buy it from. This product is permanent health insurance. This will pay out a specified income for the remainder of your working life if you become unable to work. It protects your lifestyle if that happens. Part of the payout can be used to make the mortgage payments, the remainder can cover your other living expenses. It'll start out more expensive than life assurance. You can set a delay period before it starts paying out and a lower percentage of your salary to reduce the cost.

Cazza

lisyloo wrote: »

I think it's a bit more complicated than that.
In theory this is correct, house sale covers the mortgage.

However there are a few pit falls.

Absolutely correct, I was just being a a little lazy with typing out a full explanation!

guardianangel

Thank you for your advice, it has really helped. xx