Insurance advice needed - mortgage, income

ThriftSpender

I am just about to take out a mortgage for £150,000 and the lender is pushing their insurance products. Whilst I am under no obligation to take out THEIR policies, I believe (??) I still need to cover/protect myself & my partner.

My circumstances:

> Purchasing a 2nd property on a remortgage over 15 years, taking out £150.000. Mortgage will be in my name only
> Will be letting the property to cover mortgage repayments
> Employment: I work as a contractor
> Dependants: Have no children (yet?)
> Partner: in perm employment but in a poorly paid job

Which type(s) of insurance are necessary and, more importantly, reliable?

Which insurance companies have a good reputation?

Many thanks in advance :T

InsideInsurance

Given you are remortgaging what protection do you already have in place on your original mortgage?

In terms of protection you can have Life, ASU (sometimes sold as MPPI), Permanent health insurance and Critical illness.

Life, pays out if you die
ASU is generally a short term cover for accident, sickness and unemployment. Given you are a contractor you may not get the unemployment aspect, esp if you are a director of your own Ltd
PHI is a long term cover if you are unfit to work due to sickness
Critical illness can be long term or a lump sum and is paid out if you have one of normally 40ish conditions irrespective of if you are fit enough afterwards to continue working

As you can see, there is a reasonable overlap between the products and rarely will people want to take all of them. A decent IFA would be able to advise you on what you need and help you through the application process. There can be some reliability aspects as PHI can be based on "unable to do YOUR job" or "unable to do A job" - if you do office work then the two are possibly the same but if your job is more manual etc then the difference could be significant.

dunstonh

Never buy your products via the lender. Expect them to be as much as 40% higher in cost.

ACG

I say this a lot on here, but no advisor will recommend which you should/shouldnt take out on here. You will need to see someone. Generic advice is probably the best you will get which i think InsideInsurance has probably covered off what the main products are and what they do.

However the way to think of it is -
If one of you were to die, could the other afford it? If not there is a need for life insurance to benefit the one who couldnt afford it at the very elast.
If one of you were to be incapable of working, could the other afford it? If not then there is a need for some sort of health insurance (Critical Illness and/or IP).
and so on....

Your best bet is to just speak to a preofessional. A Mortgage or Financial advisor will be able to help with what you should have. As for which companies, people have differences of opinion depending on experiences they have had. The 1 company i consistanly hear bad things about at claim stage is Scot Prov. Im also not a huge fan of Aviva - they seem to be like marmite, people either love them or hate them.

ThriftSpender

Thanks for your replies.

InsideInsurance: the company I work for are currently going through a massive redundancy wave. A lot of my colleagues have been here for 15 years-ish, been paying into some form of income protection insurance for a good number of years and NONE are being paid out. Sad sad and scary.

They reckon the use a certain well known insurance company because they have a good repution at paying out when needed. Hm.
dunstonh: point taken. Their insurances would cost me around £100 per month, extortion !

InsideInsurance

Income Protection is a term that covers both ASU and Permanent Health Insurance. Personally I'd guess if it was an employee benefit it is more likely to PHI than ASU which doesnt cover unemployment

ThriftSpender

Sorry, I forgot to mention that the 1st property is mortgage free already (family wind fall).

ACG: Yes we could afford to cover the mortgage as it will be let. Even in-between tenants is not much of a problem. However, if I was to die whilst the mortgage term is still running, it would be very nice to leave my partner financially sorted. If he goes before me, I would be able to afford it also.

The incapability of not working is more of a concern as one would obviously be too ill to work and this would involve medical costs, etc.

As to talking to Mortgage or Financial advisor, I am always sceptical of them selling me products that would benefit their pay packets rather than my circumstances. And as we all know, insurance companies are notorious for not paying out at the most of distressing times.

ThriftSpender

Can the mortgage lender force me take out insurances? Or can I have an "unprotected" mortgage?

InsideInsurance

As far as I am aware there is nothing to stop them stipulating it as a condition of their contract that you have protection

ThriftSpender

Will read the contract with a fine toothcomb, many thanks

kai666

ThriftSpender wrote: »

Can the mortgage lender force me take out insurances? Or can I have an "unprotected" mortgage?

whether they force you or not, why on earth would you not take out insurance ? Surely an act of severe madness and stupidity not to