life insurance - advice needed

westy_1981

hi all

i am currently renting a property but looking to buy this year. I do not have life insurance, but have a young family and want to make sure they are looked after should the worst happen.

The questions are;

When we buy a property, how easy will it be to change the policy to cover the mortgage etc? Or will it be a complete change of policy?

If I go for a short term ie 10yrs (just to cover me for now) and then have a 25yr + mortgage will I need to change it all?

What is a ball park figure to cover myself for and what can i expect to pay / month roughly? I am 30, have 2 kids, married, non smoker.

Any other advice etc would be mosgratefully accepted.

Hope these questions make sense, but it is 0450am .. ..

Thanks

dwsjarcmcd

If your employed, then most employers offer life cover with your pension. Same for your spouse if s/he is working, so check this first.

If you do buy a policy now, you will not need to change it when you get a mortgage. Personally I would buy enough cover to include what you think you will be borrowing and maybe add a year to the term, so you have enough at the end of the mortgage. Buying life cover alongside a mortgage is very sensible but not compulsory, so you will not need to ditch your policy when you get a loan.

Cost - You can never really have enough life cover with a mortgage and young family. Consider what cover your employer gives, if any. There are several factors that will determine the cost - the amount and your age/smoking habits you know about but there are others.
- Your current state of health
- What type of cover do you want? - Level or decreasing, with or without critical illness cover? At your age, the difference between level and decreasing won't be massive but it will be much, much more expensive to include critical illness. There's a good reason for that in that you are much more likely to claim for this than die within the term. The cost therefore comes down to 2 things - affordability and what is important to you and yours.

Finally, a couple of things to watch for - Do NOT by life cover from your lender (Bank or Building Society). They make massive commissions and charge the most.

Insurers pay commission up front (mostly) to whoever arranges them and if someone cancels with a 4 year period they reclaim the unearned commission if the policy is cancelled within that period. Watch out for 'jokers' who make you sign up to pay their commission even if your circumstances change and you cancel the policy within 4 years. So if the commission is £800 and you cancel after 2 years, you get a bill for £400!

I think you need to research what you need/want/can afford to undertand that first.

ACG

You can sometimes change a policy but they may ask for you to send in medical info.

It would be better to take out a policy for the full term. You could get any sort of medical ailments in the next 10 years that could stop you being able to get cover in 10 years time.

As for cost, it can vary but if you go with £100k for £10 you wont be too far off.

dunstonh

When we buy a property, how easy will it be to change the policy to cover the mortgage etc? Or will it be a complete change of policy?

If it offers guaranteed insurability options then very easy. However, if it doesnt then it may be harder. Although, taking out a new policy may be better. Trying to do the family protection and mortgage debt and income replacement in one policy/segment is usually inefficient and costs more over the long term.

smartiedriver_2

You shouldn't need to change the policy. Take out a policy with a large enough sum insured that it will cover mortgage and additional lump sum required to provide for your family.

As advances are made in medical treatments, life and CI policies tend to have more exclusions, therefore a policy taken out in say 2 years' time is likely to have more exclusions than one taken now. The policy isn't actually linked to your mortgage so you buying a property (and subsequently selling it, if appropriate) is irrelevant to the policy itself.

Life insurance tends to be cheaper than life & CI for obvious reasons, but bear in mind it can cost an awful lot to live if you are seriously ill/become disabled.

stephenni1971

smartiedriver wrote: »

Take out a policy with a large enough sum insured that it will cover mortgage and additional lump sum required to provide for your family..

Nonsense. YOU have more than one need and it's a bad idea to try and cover them all under one policy.

smartiedriver wrote: »

As advances are made in medical treatments, life and CI policies tend to have more exclusions, therefore a policy taken out in say 2 years' time is likely to have more exclusions than one taken now.

More nonsense. You don't take cover out now just in case the terms change... Also new policies can have BETTER benefits - for example many CIC policies used to require loss of two limbs to pay out whereas many now will have one only specified.