What kind of insurance do I need - Mortgage agreed?

katie_saver

Hi,

I have just had my mortgage agreed. However they then passed me on to someone in their bank who wanted to sell me life insurance, citical illness insurance and payment protaection insurance...
I'm confused! Which one do I need? I have life assurance through my job (it's a benefit) I could have critical illness cover too for a fee. I also have buildings insurance which is shared with the flat above my future property.

thanks.

TheMiner

You only definitely need buildings insurance, probably a condition of the mortgage being granted. The others are merely good ideas just in case something untoward happens, BUT it is a good idea to shop around - they are only trying to sell you their own products which will most likely be more expensive. I actually went with Nationwide's Buildings and contents because they were able to charge monthly and didn't put any interest on top which meant it was competitive (and less hassle)

Check with your job how much you get paid out if the unfortunate happens (I've got it too but it only pays twice my salary if I park it during the course of my job - nowhere near what the mortgage is). Life assurance on a mortgage is there to pay off the debt if you aren't there to do so (similarly with MPPI - mortgage payment protection insurance)

Hope that helps

katie_saver

Hi

Thanks, I get 4 times my salary in case I die whilst working for my company, which would cover my mortgage. I suppose then by that logic if I change jobs/get made redundant I would then need life cover.

I knew the bank were trying to scare the wits out of me - their quote was outrgeous (I did shop around a bit whilst he was on the phone).

TheMiner

No probs - I would check under what conditions your work would pay out just in case. Life assurance is pretty cheap IMO and I'm sure you'd want to leave a nice legacy (and a paid off mortgage)

keith969

You don't have to have any of those if you don't want them. Banks do like to try it on... I did not take up any of the various things the bank offerred to me - got buildings/contents insurance through quidco and got £50 back

Gambit

Hi katie_saver, I'm in a very similar position and know that the lender's products probably wont be the best so will be shopping around. What I cant decide on is the 'Critical Illness Cover' as just read the following article from Martin who doesnt seem to rate critical illness cover since it doesnt always see all illness' as 'critical'

Any thoughts on this? :think:

G_M

As with any product, read the small print! Critical illness cover varies a lot both in cost and in circumstances where it will pay out.

Only you can decide whether you want to potentially waste your money, or have the security of cover if you get ill, and for what range of illnesses.

Emmzi

do you have any dependents?

if not
- home and contents
- possibley *some* critical illness cover as you are a sole income generator
- maybe redndnacy cover, only you will know the likely risk of that
- no need for life insurance

MrsManda

When we bought our house we asked for the precise definitions of the illnesses covered under 'critcal care insurance' and just got a blank look so decided to pass. Didn't get MMPI because my husband's work will pay him up to 6months sick leave and if he's not likely to be better after 6 months solid off they'll medically retire him and he'll get paid out of that so it wouldn't cause that much of an issue.
Did take out life insurance for my husband, though not through the mortgage company, because I'm a student so if he died I'd be left with no way to pay the mortgage so we got enough insurance so that I'd have the money to pay it off.#
Didn't bother for me because a) the mortgage isn't based on my salary, b) if I died DH would be financially better off - freaked the mortgage advisor out slightly by discussing this in front of him - think he thought we were being slightly callous.
You'll need buildings insurance but don't necessarily need to get it from the mortgage lender, other than that you don't have to buy anything so if you're unsure, think about it and then go to the provider, don't let them talk you in to it.

VIGILANT22

keith969 wrote: »

You don't have to have any of those if you don't want them. Banks do like to try it on... I did not take up any of the various things the bank offerred to me - got buildings/contents insurance through quidco and got £50 back

keith969 If you become unable to work and are not in receipt of your income with have no savings, how will you pay your mortgage?

Fire_Fox

katie_saver wrote: »

Hi,

I have just had my mortgage agreed. However they then passed me on to someone in their bank who wanted to sell me life insurance, citical illness insurance and payment protaection insurance...
I'm confused! Which one do I need? I have life assurance through my job (it's a benefit) I could have critical illness cover too for a fee. I also have buildings insurance which is shared with the flat above my future property.

thanks.

Think carefully about the critical illness and payment protection - what would happen if you fell ill or got made redundant? Do you have sufficient savings for the first three months of mortgage payments? After that 'Support for Mortgage Interest' will help towards the mortgage interest (not capital), service charges and ground rent. Other than that you will get £64 a week JSA and your council tax paid. Are your commitments more than £64 a week?

Bear in mind that any money paid to you from an insurance policy counts as income against any benefits entitlement, any money paid DIRECTLY to your lender or creditor should not affect benefits entitlement.