mortgage insurance

gaz141

hey all,

Sorry if this has been covered a million times, but quick question. My IFA recommends I take life and income protection insurance to cover my new mortgage. Premiums will be about £80.00 per month. Do I really need this? He gets £1700.00 commission if I sign up. I have no issue with him earning a commission, but this seems really hefty to me to be paying every month, and maybe I'm being a bit suspicious he is looking at the commission rather than what I actually need.

Anyone know if this is market rate and what I should be looking at paying?

thanks

ACG

There is no market rate as such, it depends on your age, health, occupation, term, smoker/non smoker, male/female plus so many other factors.

If the premium is too much then tell your IFA that. He will be able to work to a budget.

He has probably covered the maximum possible on your income on Income Protection....do you actually need that much to survive if you were unable to work for any length of time?

When i took out Income Protection i didnt take the maximum i was entitled to because i didnt need it. I took enough to cover my mortgage and bills plus about 10% extra.

Do you need life insurance? Do you have a partner or kids? If not then you may not really need that. You could also potentially change it to Family Income benefit which pays out a monthly amount rather than a lump sum - this is usually a little cheaper.

Speak to your advisor, theyre working on your behalf so if you cant afford it or dont want to pay that much they would prefer you to be upfront about it rather than cancel it 2 months down the line.

As for the commission - that £1700 covers the liability we have for the rest of the policy and beyond should it turn out to be bad advice. Also its unlikely they will get anywhere close to the full £1700...to give you an example i only receive around 60-65% of what it shows on the quote.

gaz141

single gay man 40 yo
no kids, never will be
non smoker
3 x salary group employer insurance

dunstonh

Premiums will be about £80.00 per month. Do I really need this?

We dont know your financial circumstances. Do you need it? Chances are you do have a financial need as nearly everyone does.

but this seems really hefty to me to be paying every month

Premiums are largely based on the risk. The higher the premium, the more likely an event is going to happen (broadly speaking).

maybe I'm being a bit suspicious he is looking at the commission rather than what I actually need.

Well, that would be a breach of FSA rules and a potential fine and even losing his authorisations. Do you have any evidence to believe that rules are being broken? If so, then you should complain. However, if you are like most people and have an income that is only paid if you work and stops within a short or relatively short period if you are ill then you will have a need for it.

Insurance is always expensive until you suffer a claimable event. Then it becomes a life safer. If you don't suffer a claim then you think it is a waste. Are you going to suffer a claim or not?

£80 is about the price of a Sky subscription now and some people pay that in the mobile phone bill each month. Many pay more than that to insure their car. How much do you think your income is worth protecting?

gaz141

i have no objection to paying, I am only looking for advice on potentaily not getting ripped off is all

ACG

Why has he recommended life cover?
No partner, no kids, no likelyhood of kids...if you die who would be financially worse off and/or burdened with the mortgage? He needs to justify everything he sells to you (which is done in a letter), what is the justification for life cover.

Your sexuality has nothing to do with the premiums btw.