Life Insurance or Mortgage Protection??

danielle21_2

Hi All,

Me & my fiance's first house purchase is due to complete on Friday

The question im wondering is what insurances to take out?

Obviously we will take buildings & contents but were both 21 & want to keep outgoings as minimalistic as possible. We have been advised that mortgage protection, buildings & content will be around £65 a month (if that). I got a quote from my mortgage provider, Halifax for basically all the insurances, life cover, mortgage protection, buildings & contents & this came to £157 a month, as you can see this is a big/huge difference in payments!!

Can I have your advice please on which insurances to take out?

Thanks in advance,

dunstonh

Can I have your advice please on which insurances to take out?

We are not allowed to give financial advice on the forums. It would be a breach of board rules and FSA rules (providing advice without knowing facts).

However, we can discuss generically what you "could" need.

buildings and contents are straightforward enough but do note there are a number of addons and differences between policies so do not go on price only. Also be wary of claiming discounts on things that may not be in use (i.e. window locks or alarm)

Accident, sickness and unemployment (ASU or MPPI as some call it) or permanent health insurance (PHI) are income related protections. Some people are better off with one or the other and sometimes both depending on their circumstances. We cant tell which would be best for you.

Life cover is an easy thing to consider and there are two main ways of doing this with repayment mortgages and that would be decreasing term assurance and pension decreasing term assurance. Which would be best would depend on ages, sex, smoker status, amounts and personal tax position. You also need to be wary of reviewable premiums instead of guaranteed. Some providers offer reviewable to shave a few pounds off the price. That could be false economy. Life cover usually comes with critcal illness cover as a bolt on and again depending on your circumstances it could be worth you adding.

For the last few years I have had more clients claim on Critical illness cover than life cover (with one being aged 26 as the youngest!). Remember this mortgage is going to go on until late in your life and whilst somethings may not seem likely at age 21 (like heart attacks), they may be later in the term. At age 21, the insurance will be cheap and if you go with guaranteed premiums you will save more in the long term (just ask anyone getting quotes for CI cover in their 30s and you will soon realise the cost difference).