Life Insurance with no Mortgage

RS_Clio

Hi,

Hope this is the right place to post this.

Me and my OH currently have Life Insurance which would pay off the total outstanding balance on our Mortgage should the worst happen and one of us dies.

Thinking ahead, if and when we are lucky enough to be Mortgage free, what is likely to happen if one of us dies then ? Do we need to re-evaluate our cover etc after last mortgage payment made ? Would we set an "agreed payout value" etc ? Is it related to the value of the house ?

Any advice welcome, as i'm not really clued up on Life Insurance as you can probably tell from my questions !

Thanks.

ACG

You should re-evaluate your insurance often, just like you would car insurance etc.

Once you have cleared your mortgage your life cover will finish too by the sounds of it. Therefore you will have no cover.

Do you still work, do either of you rely on the other for income? ie if they were to pass away would you still have bills coming in that their income will no longer cover?
What is the value of your estate? Is it over the IHT threshold? Do you have kids? You might want a seperate life policy to cover your IHT liability for your kids.

dunstonh

Do we need to re-evaluate our cover etc after last mortgage payment made ?

not really. You should already have other protections in place to cover other needs (if any). So, as the mortgage ends, the mortgage life cover ends leaving your other protections in place. These would be addressed in any periodic review you should have.

Would we set an "agreed payout value" etc ? Is it related to the value of the house ?

nothing to do with the house. It is to do with your financial needs. That will depend on your incomes, pensions and other potential needs.

RS_Clio

ACG wrote: »

Do you still work, do either of you rely on the other for income? ie if they were to pass away would you still have bills coming in that their income will no longer cover?

Yes we both still work. I'm 34 and OH is 42. We dont rely on each other for our income. We would just about survive financially on our own so to speak.

ACG wrote: »

What is the value of your estate? Is it over the IHT threshold? Do you have kids? You might want a seperate life policy to cover your IHT liability for your kids.

Estate I guess about £250k so not over IHT. No kids.

Thanks for reply.

RS_Clio

dunstonh wrote: »

not really. You should already have other protections in place to cover other needs (if any). So, as the mortgage ends, the mortgage life cover ends leaving your other protections in place. These would be addressed in any periodic review you should have.

Ah, as far as I know we haven't got any other protections in place.

Can you give me some examples please ? As in Critical Illness Cover ?

ACG

Income Protection - this pays out if you are off work due to sickness or ill health for a period longer than your works sick pay pays out for.
Critical Illness - you seem to have come across this.
Unemployment cover -
Those are the most common.