PPI / Life Insurance

lou-28_2

When we bought our house our mortgage advisor (the estate agent one I might add) set us up with different insurances but I don't know if they are actually necessary. We are paying:

Critical Illness / Life - £24.76 p/m for me and £35.56 for my partner as he's a smoker

Halifax payment protection - £41.60 (based on £100k mortgage)

Another payment protection with Connells Residential - £33.71.

Do we need all this? For instance would the bank write off your mortgage if you had a terminal illness or one of you died or is this why you would have critical illness/life as a separate insurance? Or does the payment protection just cover redundancy etc?

In terms of the two payment protections I guess I need to contact them to see what each one exactly covers us for.

But does this seem like a lot of money to pay out per month?

weighty1_2

Hi Lou-28,

Connells residential - never heard of it, so I can't comment on that

Firstly, NO, the bank wouldn't write off the mortgage just because one of you is terminally ill. It's your responsibility to ensure you have the necessary financial protection in place to prevent repossession if you can no longer afford the mortgage payments, whatever reason that may be.

You are likely paying way over the odds for the payment protection cover. Banks are notorious for charging the earth for this type of arrangement. The critical illness cover is probably overpriced to, presuming it's either a Halifax plan or from Scottish Widows. As you can only ever repay a mortgage once there generally has to be some form of justification in having 2 separate plans, as this costs more, so you could look at arranging a joint policy instead of 2 single ones.

The critical illness insurance and payment protection are both worth having since they cover you for different things. Many critical illnesses would prevent you from working again, so to have your mortgage repaid in the event ensures you always have a roof over your head. the payment protection will likely cover involuntary redundancy and accidents/sickness of any severity, not just critical illnesses.

It could be possible to arrange life cover for the mortgage and then a PHI policy for each of you with unemployment cover tagged on (if you feel you need it). Potentially this could be a good bit cheaper and can provide very comprehensive protection.

Without knowing your ages, term of your mortgage, type of mortgage, sick pay benefits it's difficult to say what would be best.

Yuo obviously were happy to speak to the mortgage advisor....why not speak to an advisor in relation to this then they can go through all the options. You can either go with one that is paid on commission, or one that charges a fee and rebates the commission back to ensure cheaper premiums, but either way you'd be getting regulated advice from someone in the know.