Mortgage Protection Plan - is it worth it?

suiko

I have been paying into a mortgage protection plan (£8.86 per month) since getting my own mortgage a few months ago after separating from my husband.
The mortgage is provided by St. James's Place, the company that brokered my mortgage, and it seemed a good idea at the time, as I have 2 children and the company said the plan would pay £57.000 in case of death.
I am a part-time teacher and every penny counts, so I have been reconsidering this choice. Is it a good idea to keep on paying this? Or am I wasting my money?

opinions4u

If you died, what would provide them with what you provide them at present?

Gut reaction is that this would be a false economy. If anything, £57k isn't enough.

By all means get a quote for life cover elsewhere, but many place may have a £10 minimum premium. If you could get more life cover or a critical illness add on for that, it might actually be worth paying.

Let_Us_See

Although you do not mention the ages of your children, your mortgage life protection is basically providing them with a home if you die - the sum assured should be sufficient to repay mortgage balance. if they are very young and would not be able to look after themselves you should consider making a will to clarify how the sum assured should be best used for the benefit of your children.

At £8.86 per month you cannot afford not to pay for this basic protection. Please note the sum assured should repay the mortgage, but will not replace your income/living costs of your children. If they are approaching 18 years then this might not be an issue.

If insurance was free we would all be covered to the hilt, but at the end of the day it comes down to cost and available budget.

ACG

Let_Us_See wrote: »

Although you do not mention the ages of your children, your mortgage life protection is basically providing them with a home if you die - the sum assured should be sufficient to repay mortgage balance. if they are very young and would not be able to look after themselves you should consider making a will to clarify how the sum assured should be best used for the benefit of your children.

You could/should place the policy into trust - this is free to do (unlike a will).

There is too much information missing here to give any real recommendations - are you and your ex ammicable or not? Do you want your husband to have the £57k or do you want the kids to have it? It will go to your husband by default unless you place it in trust or have a will.

Life cover will provide them with a lump sum to help towards bringing them up or giving them a ncie start in life if theyre older...i suspect theyre probably quite young though.

You almost certainly have other needs where you should be looking at additional insurance (Income Protection being the one that is crying out) so to reduce what you have seems like it wouldnt be a great idea.

Obviously if its a case of food or insurance then the insurance would have to be cancelled but you should atleast try to keep it in place where possible.

suiko

Thanks. The kids are 13 and 6. Husband earns plenty of money and would obviously look after the kids, but "amicable" is definitely not the word.

Splurge

Providing that your insurance currently protects you against a list of commonly suffered illnesses such cancer, heart attack and stroke, then it would be worth while as it provides protection and peace of mind. If you got cancer, who would pay your mortgage? So would you loose your house as a result of being unable to work? If you get critically ill, the last thing you need is to loose your house! I'm suprised that you were not contractually required to have mortgage protection as a condition of your mortgage. You can find some useful info on critical illness insurance here: Critical illness insurance

ACG

Critical Illness is more expensive.

It would probably be more beneficial for you to have income protection or critical illness if you know your kids will be looked after in the event of your death. Atleast then you will have some money should you be unable to work. But these are more expensive than life insurance.

dpac123

It is definitely worth keeping the policy as life cover is absolutely crucial for a mortgage. If every penny counts, it may be worth getting another quote elsewhere - it is probable that it would be more expensive, but the cost of life cover has come down over the last few years, so it may be worth a try. For a free quote, check out London and Cover.

Wutang_2

dpac123 wrote: »

It is definitely worth keeping the policy as life cover is absolutely crucial for a mortgage. If every penny counts, it may be worth getting another quote elsewhere - it is probable that it would be more expensive, but the cost of life cover has come down over the last few years, so it may be worth a try. For a free quote, check out London and Cover.

No PM ME!! ME ME ME ME!! not DPAC