Insurance For New House Buyer

sheffieldsaddler

Hi
Myself and my wife have recently bought a house and now need to sort out what protection we both have.
I have read various articles and seem to think we need 2 things:
1. Mortgage Payment Protection Insurance to cover us for accident, illness and unemployment.
2. Life Insurance to cover us for death.
Is there anything else we need to be looking into?
Thanks

brianabbott

In an ideal world, you would protect yourself against everything, but unfortunately everybody can't do that.

The other things to look at are:

critical illness protection, can pay off your mortgage on payout if you choose that option - it covers you if you don't die (e.g. heart attack, stroke, multiple sclerosis, invasive cancer, kidney failure, heart bypass etc.). A lot more expensive than life cover only, but ask yourself what you would do in those circumstances and what impact it would have on your partner. The younger you are, the cheaper it is.

permanent health insurance (PHI), - long term sickness cover (accident, sickness and unemployment cover will have a short benefit period, typically 12 months, but can stretch to 24 months). You can have both and have a long deferred period on the PHI to reduce the cost and it can kick in after the short term benefits expire. Some professions may not get this type of cover and the price can vary dependent on profession.

The above is very simply put. Speak to an adviser, who will expand. You are better off speaking to an IFA that deals with the whole of the market, rather than somebody who works from a panel of providers. You may be charged a fee, but you will be getting advice on a very important subject.

I am an ex-adviser. I now deal with wills and refer on home insurance.

Regards,

Brian Abbott

James_Stirling

sheffieldsaddler wrote: »

Hi
Myself and my wife have recently bought a house and now need to sort out what protection we both have.
I have read various articles and seem to think we need 2 things:
1. Mortgage Payment Protection Insurance to cover us for accident, illness and unemployment.
2. Life Insurance to cover us for death.
Is there anything else we need to be looking into?
Thanks

This is probably going to look terrible as one of my first posts but I will try to discuss this as best as possible without sounding like advertising lol.

Those coverages are great. Most times you can have them bundled together, even the life insurance. However, before you consider buying them review your group benefits from your employer. You can often offset the cost of mortgage protection insurance by reducing the benefit in relation to how much coverage you have through work.

For example if your mortgage is $200,000 and your payment is roughly $1,100 and you are covered for 1 X Salary (Presuming a salary of $50,000) and you have a similar disability benefit you can reduce the coverage you get for mortgage protection.

Now having said that, I have recently started a Mortgage Protection Insurance company in Canada through my regular employer. Now depending on where you are from the information on our site may not be of use to you. However if you are Canadian you can read through our product outlines to get a better idea. We offer everything out there, even the new products: Life, Accidental Death, Disability, Critical Illness and Job-Loss protection.

You should strongly entertain the idea of discussing these coverages with an independent firm as opposed to a bank; I say that as we have often come in at more than a 50% lower premium.

If you want more information, the link to our site or have questions just ask.

-James

brianabbott

I would agree with James if you are on a budget, but I am of the opinion that you should have life cover for your mortgage and separate life cover for your family. What if part of your life cover from work is used to pay off your mortgage and your wife/husband is left with the children to support, but this support has been greatly reduced by the mortgage liability? What if there were no children, but your spouse was so grief stricken that they couldn't work? Each person is different. Some are strong, some are not.

Of course, each person will have different requirements as far as the amount of life cover they will require. For family cover, ask yourself how many years you may need to be supported. How much per year? What requirements do you have? Income or lump sum? Level or increasing cover? Don't forget the effects of inflation on what you may receive. £100,000 today will be worth a lot more today in real terms than in say 15 years time.

Regards,

Brian

James_Stirling

Brian you are absolutely right. But I will say that most often the life coverage offered under a group plan would cover off some debt, probate fees and perhaps funeral expenses at the most. A Flat $10,000, 1X or 2X salary isn't the greatest coverage so I find using it to balance out your net worth by reducing regular debts is usually my suggestion. If their isn't a terribly limited budget as you mentioned I would move the conversation to estate growth. Use the coverage for your mortgage and from your group benefits to settle the current obligations off. Then utilize a $500,000 or $1,000,000 policy to grow your estate to insure your family will have a lucrative nest egg to live on.

All good approaches.