Do I Need Life Insurance with mortgage?

jen999_2

Hi,

I am currently looking for my first house to buy and working out all the costs etc.
The mortgage advisor mentioned life insurance and mortgage protection type things...

Do I NEED these?? I am a Police Officer so have a secure job, 6 months full pay if god forbid I become ill..
It is just me buying, no partner or dependants so no one to have to take on the mortgage if I should die?
What do you think is best?

Also, my work do an insurance scheme, which includes life insurance, critical illness, travel ins, breakdown - for £24 a month. If i do decide to cover myself, does this look like a decent price?

T.I.A.

ACG

You dont NEED to have it. Infact if your single with no children then im surprised your being recommended to take it out.

You should maybe look at Income Protection. Its great that you have 6 month full pay. But i read a statistic the other day, i think it was from LV - Their Income Protection has been paying out for 7 years on average. So how would you pay your mortgage for those other 6 1/2 years if you were in that position.

Your advisor sounds like he is going after the easy sell whether you need it or not. Maybe ask for his reasoning behind the recommendation.

Sorry - As for the £24 for insurance, a lot depends on how much cover is involved. If the Critical Illness is for say £10k then its probably not worth it. If however it would pay out enough to clear your mortgage then it could be worth it. You need to give a bit more info on whats on offer for £24.

jen999_2

Thanks for the reply.. looking at the insurance scheme now.. it is only 10k for critical illness.. theres more for 'total disablement' (100k) and 'accidental loss of use benefit' (60k) but if i'm understanding correctly, say I got cancer and was off sick for say a year or two, it wouldn't really benefit me? i'm thinking of leaving it initially to be honest.. and re-considering when i have a partner/dependants.
But if i do go for some cover.. i'll ask for help and advice on here..:)

magpiecottage

jen999 wrote: »

Thanks for the reply.. looking at the insurance scheme now.. it is only 10k for critical illness

One of the problems with people saying they have cover from their employer. Unless you know exactly what that cover is then you do not know whether you can rely on it.

Another problem is that it is not allocated to anything specific so it can be relied on to meet a number of needs when, in reality, it will only be able to address one of them.

There is also the fact that you are reliant on the cover continuing and that depends on the employer continuing to provide it and you remaining in employment.

ACG

You would probably be better using that £24 for something more useful.

Stand alone ciritcal illness or Income Protectioon you should maybe have a look into. Even if its not the full amount of cover you need for £24, some cover is better than none :-)

weighty1_2

Hi,

Following on from ACG's point, income protection (PHI) would generally be my first recommendation for single clients, with or without dependents, however, you'll struggle to obtain a decent long term income protection plan because of your occupation. Many insurance companies will not offer income protection to police officers and the majority who do will offer it on what's called a "work tasks" definition. This is whereby you are unable to complete 3 of between 5-7 tasks, depending on the provider. The level of incapacity needed to claim on a work tasks definition is EXTREMELY high and in some instances can mean that it better to arrange a critical illness plan to cover the mortgage, plus additional critical illness cover to help replace income in the event of long term disability.

If you speak to a decent adviser who knows the protection market well they may be able to sort an income protection plan with an "own occupation" definition of disability. This is what you really want to be looking for.

Hope this helps