Sufficient insurance cover?

Gunderful

Hi,

I have recently taken out a mortgage and rejected the lender's attempts to sell me life cover and mortgage insurance.

That got me wondering if I have enough cover. Currently I have the following through work:

- Personal Accident Insurance (up to £200k)
- Permanent Health Insurance (PHI)
- Life Assurance

Do I need anything else to protect me against the mortgage?

OshayAway

It depends on your circumstances, a bit more information is required to make comment. I.E. Term of and mortgage amount, details of your exisitng life assurance, family situation etc.

From what you have said you dont have any unemployment cover, so that may be something you want to consider? You mention you have £200k personal accident insurance. I'm not a fan of these plans personally as they are very limiting. It's like taking out car insurance which only pays for claims that occur on a Tuesday.

Gunderful

c.200k mortgage 25 year term. Married, children (very young).

My main concern is that if I am unable to work (not redundancy, a medical issue) I would be covered.

The employer life assurance is 4 times basic salary.

lisyloo

My main concern is that if I am unable to work (not redundancy, a medical issue) I would be covered.

PHI provides an income up until retirement (when your pension kicks in).
Hopefully it shoudl start paying out when your sick pay at work ends.

I believe there is a limit of 75% of income legally (I might be out of date on that).
This is because there needs to be some incentive to go back to work otherwise some people would elongate their time off.

So the problem is largely covered.
However bear in mind your pension might not be being paid if you were long term sick and there is an insurance you can get for that (called waiver of contibutions).

Largely I'd say you were covered, but there are always things to worry about if you want to.

OshayAway

PHI it is then. Some allow 50% of your gross salary to keep it simple. the most generous, in terms of maximum benefit permitted is based on the following calculation:
70% of the first £10k gross Salary
60% of the next £20k
50% of the next £40k
40% of gross salary over £70k

Does your 4x DIS cover the mortgage balance? if not you can choose to cover that seperatley or top it up with a level term assurance plan for the shortfall.

mbenson

Just to throw a spanner into the works, PHI does not always pay out until retirement, alot of organisations have been restructuring their PHI/income protection plans to have a maximum payout period of 5 years as this aligns better with an employees working life at the company. It is important to have a look at the terms of your employee benefits.

Batchy

mbenson wrote: »

Just to throw a spanner into the works, PHI does not always pay out until retirement, alot of organisations have been restructuring their PHI/income protection plans to have a maximum payout period of 5 years as this aligns better with an employees working life at the company. It is important to have a look at the terms of your employee benefits.

Good idea look in company handbook etc, ours covers to retirement, it also covers pension contributions too. But no one scheme is the same as another!