Life Insurance or Mortgage Insurance?

danielle21_2

Me & My partner are in the process & will very shortly completing on the purchase of our first home. When we went to see Halifax re: the mortgage the advisor got us shaking in our boots abit about insurances etc. He advised us to get all the insurances going eg. Buildings. contents, life insurance, critical illness = £160 per month. However, a family member said as were so young (21) just take out buildings, contents & mortgage protection = £60 per month - this doesnt pay ur mortgage if ur sick (im not too sure what it does?? - does anyone?)

I look forward to hearing your advice.

dunstonh

First thing is DO NOT BUY YOUR INSURANCE FROM A TIED AGENT. You will pay over the odds and often get lower quality products.

buildings and contents is a must. You would be daft not to have contents insurance and you must have buildings as a condition of the mortgage.

Life cover, is common sense as you are buying jointly and the death of the other would mean loss of one income leaving the surviving partner with a struggle. I know people that now resent their dead husbands/partners because there was no life cover because they had to sell up and move down and the lifestyle was downgraded all because a £5-£10pm policy wasnt paid.

Income proteciton and CI is important if you have a claimable event. If you dont have a claimable event then you may consider it a waste of money. Just ask anyone who has had to make a claim if it was a waste of money paying those premiums. Remember, if you are unable to earn an income, how is the mortgage and bills going to be paid? If you cant pay the mortgage, how long do you think you will keep the house for?

£160 is very expensive but probably £60 of that is because you have went with a tied agent and not independent. You havent bought the insurances yet so get an IFA or indepedent protection adviser out to see you ASAP and compare pricing. At age 21 and if you were living in Norfolk/Suffolk, you would be looking at around £15pm for buildings and contents, £10 for life cover and £20-30 for mortgage protection. Critical illness would be around £15pm on top of the life cover (probably less). Compare that to £160 Halifax are quoting you.

edit: added following after post made....

An independent would have paymentshield available to them as a provider and they are offering 6 months free mortgage protection and 3 months free home insurance for first time buyers. Paymentshield are one of the biggest general insurance companies for mortgage related general insurance.