Mortgage cover Life assurance… so confused

julybride

Okay here goes I need some clarification on my circumstances and what I need cover for… so I get the right deal. Here goes

· Me and hubby own 2 properties:

Property1. Value £147000 Mortgage £127000 (Rented)
Property 2. Value £127000 (Valued 2007£150000) Mortgage £114700

· I am expecting our first child end March 2007
· I am 27 not smoked for 9 months
· Husband 28 not smoked for 2 years
· We currently hold a level term life assurance policy for 125000 (aprox £45)
· Buildings cover on both properties

Questions now we have a little one to think about…
· I’m guessing we should get new quotes on our life assurance with the no smoking thing?
· Are you usually tied into a policy for a year?
· Do I need Mortgage and Life cover or can I just get life cover at a level to cover both the Mortgage on one property and a lump sum?
· Am I totally missing the point of what each type of cover gives you? My aim is: one mortgage paid off (in trust), and enough for funeral expenses, so that my sister could look after baby, with a lump sum to invest, the other property would be sold to clear that mortgage and any additional money that came out of it . So I am guessing one life assurance policy would be sufficient? for around £250000
Is there anything i've missed?

jasonking

· I’m guessing we should get new quotes on our life assurance with the no smoking thing?

- Once you have been non-smokers for 12 months most insurance companies will class you as non-smokers. Your existing insurers may agree to switch you over to non-smoker rates or you may have to reapply with a new company.

· Are you usually tied into a policy for a year?

- No, you can usually cancel term assurance policies whenever you wish without penalty. If you used a broker originally there might be a fee agreement you should check first.

· Do I need Mortgage and Life cover or can I just get life cover at a level to cover both the Mortgage on one property and a lump sum?

- Yes you can use one policy to cover all your needs, as long as the sum assured and term are suitable overall.

· Am I totally missing the point of what each type of cover gives you? My aim is: one mortgage paid off (in trust), and enough for funeral expenses, so that my sister could look after baby, with a lump sum to invest, the other property would be sold to clear that mortgage and any additional money that came out of it . So I am guessing one life assurance policy would be sufficient? for around £250000

- Its very difficult to say without more detail than is possible on a discussion board. You are certainly underinsured at the moment. There is no simple answer/formula but a guide can be to put in place enough to repay all debts plus 5-10 x salary in the event of either of your death.

Is there anything i've missed?

- trusts, indexation, income protection, critical illness cover, family income benefit plans, waiver of premium, death in service benefits...see a specialist broker for some advice and you could save a packet in the long term.