Critical Illness Pay-out Advice

DorsetBV

Hi,

We are in the unfortunate position where our life assurance policy is about to payout on Critical Illness, due to my wife being diagnosed and being treated for cancer.
We currently have around £150K to pay on our mortgage with 15 years to go.
As we would like to pay off our debts and have some money left over to do the things on her TTDBYD list, we are thinking about either:
1) Overpaying £100K on the mortgage, so hopefully being able to shorten it to 5 years left. Using the remaining to be debt free and trouble free.
2) Converting our existing mortgage into a Offset Mortgage and putting the £100K into the offset savings account. Using the remaining to be debt free and trouble free.

1) should be more simple (we have no penalty charges on overpayments) but 2) does seem to allow some flexibility on getting to money should anything unforeseen happen.

I would welcome anyone's opinions on what they consider the best option? I intend to re-start an insurance policy on myself for the remaining mortgage sum, once the current policy pays out by the way.

Wh05apk

Sorry to hear off your situation, and wish your wife well.

As an advsior I sell these policies everyday, quite often with a struggle as they are not cheap, when you hear of a payout like this it just confirms I am doing the right thing.

This can only be your choice, and ultimtely is not down to money, as you appreciate, other things are far more important, option 2 looks the most flexible.

opinions4u

I would assume the worst could happen sooner rather than later.

1) Make sure you both enjoy some of the money now!

2) Make sure that if one of you did die (without life cover) the survivor could afford any remaining debt that hasn't been repaid

3) I assume the payout cancels your life policy. Consider replacement cover for yourself, to protect your wife should she outlive you while debts remain (Edit - missed the bit where you said you're considering this!)

DorsetBV

opinions4u wrote: »

I would assume the worst could happen sooner rather than later.

1) Make sure you both enjoy some of the money now!

Yes, we thoroughly intend to hit her TTDBYD list, including some holidays with the kids. Unfortunately we have no idea when the worst could happen but statisically (unless new treatments come along), her 5 year survival rate is quite low - however her specialist is optimistic based on her age and current condition.

opinions4u wrote: »

2) Make sure that if one of you did die (without life cover) the survivor could afford any remaining debt that hasn't been repaid

3) I assume the payout cancels your life policy. Consider replacement cover for yourself, to protect your wife should she outlive you while debts remain (Edit - missed the bit where you said you're considering this!)

(As you noted in edit ) I intend to start a new policy and also have good employment based cover as I work for a FTSE 100 company.

GMS

Really sorry to hear of your situation.

Spend as much quality time with your family as possible and hit the list. Unfortunately you will not get the time back so enjoy it to the maximum.

You will know how much you need to set aside for the mortgage so go with your instinct. Work out what you could afford to leave to remain affordable for you alone.

Best wishes to you and your family.