Alternatives to life insurance?

Sheveko

Three of us a buying a house together and we were wondering about alternatives to life insurance.

For instance we were thinking we might be better to simply shift any remaining debt (and a corresponding share of the property) onto whoever is left.

Good idea or bad idea?

holly_hobby

Then you effect the mortgage as joint tenants (obviously the mge payments and division of equity will then revert to the surviving mortgagors). However, it must be considered how the mge will be met by the remaining mortgagors, and how it will be redeemed upon 3rd (aka final) death (unless it is to revert to the surviving owners estate on death).

I would suggest though that you at least effect payment protection insurnace (PHI, ASU, MP) to assist in the event of long term illness (PHI) or involuntary unemployment (ASU, MP).

Hope this helps

Holly

chopper78

Life Insurance is cheap, why leave your debts to someone when you croak?

Annisele

I think that three people buying a property together is a situation that needs paid-for advice.

However, to make an attempt at a partial answer to your question - it depends! Could any one or two of you afford the entire mortgage on their own? (If yes, why are you buying as a three anyway? If no, you need life assurance unless you're confident the survivors would be willing and able to sell).

Meeper

You have now started 5 different threads about different aspects of this transaction, which leads me to conclude that you have no idea what you're getting into.

Stop asking for opinions on websites and consult professionals on a face-to-face basis such as mortgage advisers and solicitors. All of the things you want to do are unusual, and some actual advice that you can rely on and which is governed by legislation is what you need. Stop asking questions on here about it.

dunstonh

There is only one alternative to having life assurance and that is having savings/investments or a pension to same value as the sum assured.

Sheveko

Thanks everyone.

To Meeper: I can only conclude you hate the idea of people getting advice through the internet because it diminishes your standing as a financial advisor.

We are first time buyers so of course we don't know how the process works. We are consulting professionals on these matters. In fact we've already been through two solicitors, one that didn't know what they were talking about and another who wanted to overcharge us, upfront, and couldn't start for another week. We've now found a competent solicitor who doesn't want to charge us an arm and a leg and we're very happy with her but, based on our experience so far with "professionals", we also know it is prudent to get other opinions and be as informed as possible before consulting them. 5 different threads about the biggest transaction of our lives. How dare we!!!

Meeper

I quite like the idea of people getting advice here actually. Which is obvious, otherwise I wouldn't bother spending any time here.

But, there are so many questions that you have about so many out-of-the-ordinary issues that are going on with your transaction, that it would be foolish to reply on the advice of anyone here, as nobody will be able to provide you with any compensation if they are wrong. All I wanted to do was point you in the direction of professionals who can sit down with you and go through every aspect on an individual basis in order to pull everything together rather than examin every item piecemeal.

With regard to solicitors, how do you know that one didn't know what they were talking about? Did you know better than he did? If so, why bother seeing a solicitor who has trained for years, why not just do things yourself? Another one wanted to overcharge you? Overcharged compared to what? Was he just more expensive than the other guy? Perhaps he would have concluded the whole matter in 10 days, where the other guy might have taken 6 months. Charging and cost is relative to the service you receive.

It is prudent to get many opinions. But opinions that are backed up by consumer protection legislation beat random internet comments any day of the week.

Good luck.

M.

holly_hobby

It should also be noted that, a fourm is a faceless place, where as quite correctly stated by Meeper, no one has any financial or regulatory responsbility to ensure the guidance is relevant, correct or accurate.

I am a suitably qualilfied adviser (now focusing on compliance and audit within the industry), and there are many others - who wouldn't dream of giving comment on an area which they are not familiar with, or unsure as to the accuracy of the info provided.

However, there are several individuals currently active on the forum, who although have a strapline claiming to be a professional adviser, the content and details of their responses rather suggest the opposite - but thats the nature of forums.

That is why a forum such as this is great for getting a general idea, BUT, should never be relied upon as the holy grail. Any info should always be verified with a suitable professional in the relevant area, on a one to one appointment basis - its only for your protection, as relying upon inaccurate info (especially re tax advice) could be very costly in more ways than one.

Hope this helps

Holly x

handytips

So who are they Holly ?

getmore4less

The issue you have is the equity and the debt and what happens to those.

The debt is the mortgage and all the parties are all equaly liable even though you plan so split this on paper

The equity can go to someone else that is not liable for the debt which potentialy creates a problem unless you can tie the debt to the estate along side the share of the property.

If you can get one a joint life policy that pays off all the debt on first death that would make life for the rest a lot easier, might cost more than individual polices that are tailored to smaller amounts.

By going down the route of the debt and equity transfers to the remainders, then it is up to the remainders to decide what cover they need for the death of each of the other two, if they can affords it no life cover, if not they have an insurable interest in the other 2 people.

This could end up with 6 policies.

The key is that the person that could be left holding the debt insures themselves against that by insuring the life of the others

Who inherits the share of the asset could be an, because starting with 3 parties involved you could end up with more, eg no kids so parents are the likely inheritors that could end up with 4 on one death, more than that needs a trust.

Multiple deaths complicate even more.