Cavendish - terminology help!

JMU-95

Hi please can someone help me with the terminology I am coming across when filling out the online form for Mortgage Protection Insurance.

I am currently paying £62.70 for a comprehensive policy taken out 3 years ago with Friends Provident through an insurance broker - insured for the amount of £55000 I have 17 years left to run on my mortgage.

Since then the amount of cover we now need is £70K

So:

I definitely want a policy that will cover all eventualities so

1) do I select CIC + TPD (any occupation) or do I select Comprehensive?

2) What does Rates: Reviewable or Guaranteed mean and what is best?

3) Is Self Assurance Mortgage and Mortgage Life Assurance the same thing? (ok I know this probably is but just want an extra opinion to back me up)

4). When filling out the form the Mortgage rate is set at 8% - do I leave this be or do I set this to what my mortgage rate currently is (4.95% fixed/5yrs)


Thanks for any help at all


ps. I apologise in advance I realise the above questions may seem silly to anyone that knows anything at all about Insurance but honestly I haven't got a clue about insurance at all and don't want to go wrong here.

dunstonh

1) do I select CIC + TPD (any occupation) or do I select Comprehensive?

comprehensive is best.

2) What does Rates: Reviewable or Guaranteed mean and what is best?

One is reviewable (usually after 5 years) the other is guaranteed for the term. Guaranteed is best.

3) Is Self Assurance Mortgage and Mortgage Life Assurance the same thing? (ok I know this probably is but just want an extra opinion to back me up)

One is a brand name of a product and the other is a "modern" generic name.

4). When filling out the form the Mortgage rate is set at 8% - do I leave this be or do I set this to what my mortgage rate currently is (4.95% fixed/5yrs)

Leave it on 8%.

ps. I apologise in advance I realise the above questions may seem silly to anyone that knows anything at all about Insurance but honestly I haven't got a clue about insurance at all and don't want to go wrong here.

Dont rule out pension decreasing term assurance as that may be cheaper. Depending in your personal circumstances, it may also still be beneficial to utilize a trust depending on what other assets will exist on your death.

JMU-95

Dont rule out pension decreasing term assurance as that may be cheaper. Depending in your personal circumstances, it may also still be beneficial to utilize a trust depending on what other assets will exist on your death.[/QUOTE]


Hey, thanks for the info.

Two further questions:

what is the differeence between oridnary decreasing term assurance? and pension decreasing term assurance?

what does 'utilize a trust' mean?

dunstonh

what is the differeence between oridnary decreasing term assurance? and pension decreasing term assurance?

pension term assurance applies to the life cover part only (and not CI for example) but it allows you to get tax relief upto 40% (or even in effect 72% if you have working/childrens tax credits). This can make it much cheaper than standard level or decreasing term assurance. It is possible currently to purchase a single packaged plan with pension term assurance and CI.

what does 'utilize a trust' mean?

On death, the life cover is paid out as per the instructions given in the trust or if no trust exists, then the other policy owner if joint or into your estate if single life, single owner (ignoring life of another to not over complicate it here).

If there is no trust in place and the proceeds go into your estate then your beneficiaries could face an inheritance tax bill of 40%. In effect, if you are above the IHT level and have a life policy that isnt in trust and pays out £70k, you could see £28,000 of that go to the Govt all because you didnt you didnt place the policy in trust.

You may not need a trust in your case. Not everyone does but it should be considered as it costs nothing to do. Its one of the most common things forgotten by people arranging their own life cover.

JMU-95

ok ... 'got' all that thanks - now one last question. We took out an additional loan last year attached to our mortgage of 10K. If I go down the 'decreasing mortgage term assurance' line and opt for cover for the full amount of the mortgage and loan (total 70,000). Will the company pay out just the remainder left of the mortgage or the remainder of the mortgage and the remainder of the loan?

Just wasn't sure what total to put down of cover (mortgage amount or mortgage + extra mortgage loan)