protection insurance on mortgage

becky4131

I have just been to halifax to renew my mortgage after my 2 year fixed rate came to an end. I managed to sort a good deal on my mortgage but the mortgage advisor was pushing their protection for life insurance.

It basically pays off my mortgage if i die or will pay a lump sum if i get a serious illness (only if it is listed in the documents).

I am only 25 and didn't think this was really necessary...if it paid my mortgage if i was off sick from work for say 6 months i would be interested but according to halifax no policies offer this. Anyway i signed up for the insurance at £14.65 a month but after getting home and reading documents im not sure i need it?

Do you think its a good idea for me to have this level of cover at 25? I am single with no dependants so only me to worry about.

Any advice appreciated as im really considering cancelling.

HappyMJ

becky4131 wrote: »

I have just been to halifax to renew my mortgage after my 2 year fixed rate came to an end. I managed to sort a good deal on my mortgage but the mortgage advisor was pushing their protection for life insurance.

It basically pays off my mortgage if i die or will pay a lump sum if i get a serious illness (only if it is listed in the documents).

I am only 25 and didn't think this was really necessary...if it paid my mortgage if i was off sick from work for say 6 months i would be interested but according to halifax no policies offer this. Anyway i signed up for the insurance at £14.65 a month but after getting home and reading documents im not sure i need it?

Do you think its a good idea for me to have this level of cover at 25? I am single with no dependants so only me to worry about.

Any advice appreciated as im really considering cancelling.

YES!!! but you can get it MUCH cheaper than the Halifax premium. Read the MPPI article on MSE above and you can get an idea of costs with other providers. As you are 25 the premium is very cheap.

Life insurance also is very cheap elsewhere. You could pay £5 a month to get some or most of your mortgage paid off and leave something to pay for your funeral expenses and selling costs of the property. If you have some equity in your property to be able to pay for your funeral and the selling costs of the property and are not concerned about leaving anything for anyone then you probably don't need life insurance.

ACG

Im presuming its life and critical illness you have? That seems quite cheap but saying that we dont know how much it is for.

What you want is called income protection (if your looking on the internet your best searching for Permanent health insurance - PHI) as there are a few different types of income protection so you dont want to get the wrong one.

PHI would pay a percentage of your income - typically upto around 65% of pre tax income. This can then be used for whatever you like - mortgage payments, bills, care, or a trip around the world. I would usually recommend it along side life and CI in certain circumstances.

The advisor you spoke to either doesnt know enough about it - or isnt able to provide it, but its a complete lie to say no policies exist.

Also, if you go and see a mortgage or financial advisor who doesnt work in a bank - you could probably save yourself a few bob at the same time as getting full advice.

Senior_Paper_Monitor

.... and you might well get a cheaper mortgage too !!!

and life component written into trust (which may well be appropriate in your circustances).

There is simple rule about buying insurance from banks - don't !

opinions4u

becky4131 wrote: »

It basically pays off my mortgage if i die or will pay a lump sum if i get a serious illness (only if it is listed in the documents).

I am only 25 and didn't think this was really necessary...

Are you immune from death? Would somebody else be worse off if you died?

Is it impossible for you to be seriously ill? Would you struggle to pay the bills if a serious illness stopped you from working?

A few weeks ago I was watching a football match and one of the fittest young men in the country collapsed on the pitch after a massive heart attack.

It can happen. It does happen.

Whether or not you need the cover is one question. Where you buy it from is another.

becky4131

I understand that i do need cover to protect income but the cover i have taken out doesnt seem relavant. If i was to die then my appartment would be sold, i have no dependants to worry about.

I am more concerned about protecting myself if i have to have a period of time off work due to sickness/unemployment. I am going to cancel this policy and take out income protection.

Thanks

ACG

Do your research before you purchase it as there are a few different types.
Reviewable, guaranteed premiums, short and long term cover (ie 12 or 24 months or to cover until the chosen end date...which can be your retirrement date).

Any questions though just ask away on here, there are plenty of knowledgeable people on here.

HappyMJ

becky4131 wrote: »

I understand that i do need cover to protect income but the cover i have taken out doesnt seem relavant. If i was to die then my appartment would be sold, i have no dependants to worry about.

I am more concerned about protecting myself if i have to have a period of time off work due to sickness/unemployment. I am going to cancel this policy and take out income protection.

Thanks

Just did a quick quote on i: protect for you at 25 years of age and £100 of cover would cost you from 38 pence per month for 6 months of payments after a waiting period of 6 months for Accident and Sickness only. Or the maximum would be £2.13 per £100 of payment for 12 months of payments on a 0 day waiting period back to day 1 policy. You need to be out of work for any reason of Accident, Sickness or Unemployment for 30 days and the policy pays in arrears.

opinions4u

becky4131 wrote: »

I understand that i do need cover to protect income but the cover i have taken out doesnt seem relavant. If i was to die then my appartment would be sold, i have no dependants to worry about.

Fine. That suggests no obvious need for life cover.

While there is almost certainly a need for critical illness cover you are absolutely right to consider cost and value issues.

If you decide to take critical illness cover a life assurance add on is usually very cheap though.

I am more concerned about protecting myself if i have to have a period of time off work due to sickness/unemployment. I am going to cancel this policy and take out income protection.

Thanks

Permanent Health Insurance would be my starting point.