Life assurance for mortgage.

mercmanricky

My wife and I have just taken out a mortgage and the broker is also trying to push life assurance, giving some "light" scare tactics of what if's.

The facts are that the mortgage is less than half of my wife's salary and only a 3rd of mine, so we could pay it 5 times over while we are still working.
We are in our mid 20's, both fit and healthy non smokers.
We have no Children and no other financial commitments (no debt, car finance etc)

This leads me to believe that life assurance would be a waste of time for us in our current position. If one of us dies, the other can still quite easily cover the mortgage and living expenses and if both of us die then it doesn't matter anyway.

Am i looking at this from the correct perspective?
If we have children in the next few years then i would seriously re look at this issue and i think life assurance would be very important.

opinions4u

Don't consider the mortgage in isolation.

Work out the financial impact on the survivor's overall lifestyle (including mortgage affordability) if the other died.

If it would make virtually no difference, then you may not need life cover. Perhaps considering critical illness cover or PHI would be a better use of funds.

Remember, a policy taken out now will probably be cheaper than an identical one taken out in later years.

Regardless, if you get a quote compare it against www.moneysupermarket.com/insurance and then consider seeing an IFA.

(If you agree that critical illness cover is most appropriate for you, find out how much life cover on top of the CI plan is. It can often be pennies extra).

Thrugelmir

We are in our mid 20's, both fit and healthy non smokers

A dear friend of mine died at the age of 39 with a brain turmour. Very fit, non - smoker, didn't ever drink achohol.

Whether you do or don't have life assurance depends on your personal view of the risk. Statistically someone will die.

If you opt not to. Then I would suggest that you save with a long term view using ISA's and Pensions.

_Andy_

mercmanricky wrote: »

g.
We are in our mid 20's, both fit and healthy non smokers.

Which would make it a great time to get life cover (as it will be cheaper). Rather than waiting until you're older/possibly not healthy, when it will be more expensive.
For the sake of the relatively small premium it would be worth looking into.

dunstonh

The premium at that age for a typical mortgage is likely to be under £10pm. It doesnt really seem to be worth not having it.

Death can also affect people in different ways. If one of you dies, the other may not want to live in the same house but may not be able to afford to move.

Senior_Paper_Monitor

In your shoes I would lean towards Serious/Critical Illness cover - dying is cheap, living sick isn't !

herbiesjp

mercmanricky wrote: »

We are in our mid 20's, both fit and healthy non smokers.
We have no Children and no other financial commitments (no debt, car finance etc)

This leads me to believe that life assurance would be a waste of time for us in our current position.

That is exactly WHY you should look to take out now - while you are young fit an healthy.

If you wait for a medical event to happen or until you are older, the cost may become prohibitive and/or declined cover outright.

menollyke

My husbands brother died 4 months after taking out a mortgage. No symptoms, his heart just stopped whilst he was on his way to work. Before that he would be classed as healthy. The health isurance covered the mortgage and his girlfriend who stayed behind was able to stay in the house they only just bought.

Because of that reason we didn't think twice and took out life cover. To cover the entire mortgage we only pay 9.5 pounds per month, but it is worth having it. We don't really want to have money worries after one of us dies.

Jackinbox99

As others have said, it depends on your personal circumstances. In my case ive never bothered with life insurance as i have no dependants. If i died, the house would go to my parents and its upto them what they do with it.

If you have a partner who can afford the mortgage if your not around, then fine, thats not a problem, so id not bother. But, if they will struggle, then get some sort of life insurance cover.

mercmanricky

Ok,

Thanks for pointing out that very important issue.
The next question is, if i take out life cover in 5 years, will the saving i make in the mean time outweigh the higher cost of taking out a policy in 5 years?

Edit that, i've just done a comparison on moneysupermarket.comm and the premium is only about £8 a month (worlds apart from the £35 a month the broker was recommending us)...for the sake of one days worth of diesel, i think we'll take it out!

My attitude is similar to what Thrugelmir pointed out. We are saving about 40% of what we currently earn for the future and still living a very comfortable lifestyle.

Thank you all again for your superior wisdom!

herbiesjp

mercmanricky wrote: »

Ok,

Thanks for pointing out that very important issue.
The next question is, if i take out life cover in 5 years, will the saving i make in the mean time outweigh the higher cost of taking out a policy in 5 years?

Edit that, i've just done a comparison on moneysupermarket.comm and the premium is only about £8 a month (worlds apart from the £35 a month the broker was recommending us)...for the sake of one days worth of diesel, i think we'll take it out!

My attitude is similar to what Thrugelmir pointed out. We are saving about 40% of what we currently earn for the future and still living a very comfortable lifestyle.

Thank you all again for your superior wisdom!

No one could give you an accurate savings figure, as you do not know what pricing the companies would be charging at that point in time, and you do not know if any medical history gained in that 5 year period would increase your premiums.

I'm guessing, by the huge difference in premiums, you are not quoting like-for-like.

But well done for realising the implications and looking to set something up.