Critical Illness/Life Insurance - Is is worth it?

burns

Hi,

I'm about to apply for a new mortgage and the Bank that I am with are trying to force all sorts of Critical Illness/Life Insurance/Mortgage Insurance on us. What i would like to know is:

Is it neccessary?

Do we have to have it to have the mortgage?

Should I shop around and get it cheaper elsewhere?

Everyone I seem to ask never bothers with it.

Thanks

moneygum

burns wrote: »

Is it neccessary?

Do we have to have it to have the mortgage?

Should I shop around and get it cheaper elsewhere?

Everyone I seem to ask never bothers with it.

Thanks

1) No
2) No but some lenders prefer if you have it (as they know they will still get their money regularly) and they usually make money on the policy by selling you the insurance hence the sales pitch
3) You should always shop around first

IMO you should get the MPPI, as you never know... but there is nothing from stopping you from getting it from another company.

homer_j_3

i quite understand your resistance for this cover if you feel that it is being forced upon you and think that its because of the way people are sold this cover that makes people not want it.

so in answer to your questions:

depends on your personal circumstances
no
possibly but dont get drawn into cheapest is best because you can pay for what you get also.

burns

thank for the quick reply.

I expected as much.

Many Thanks

homer_j_3

moneygum wrote: »

1) No
2) No but some lenders prefer if you have it (as they know they will still get their money regularly) and they usually make money on the policy by selling you the insurance hence the sales pitch
3) You should always shop around first

IMO you should get the MPPI, as you never know... but there is nothing from stopping you from getting it from another company.

What a load of tosh

millsy1980

Life & critical illness plans are there to protect you in the event of a serious event happening in your life. If you don't take it fine, but do not go crying to the lender if one of these events arise and you can't pay your mortgage. I have it on my mortgage and I advise every customer I see to have it. Trust me, I have had customers decline it in the past and it is not a nice phone call when someone phones you asking what they should do as their husband has been diagnosed with cancer.

You have to see the benefit of such a policy. If you were to contract a critical illness you may not be able to work again. Could your family pay the mortgage and maintain the standard of living you have without your income. Even if you are able to work would you prefer the choice of being able to work or not? Ifyou were to die how do you want your family to be looked after? Mortgage paid and retaining th efamily home or having to uprrot and sell because the mortgage is too much?

It is a waste of money if you never make a claim, but then the choice is do you want to take the risk of finding that out?

burns

millsy1980 wrote: »

Life & critical illness plans are there to protect you in the event of a serious event happening in your life. If you don't take it fine, but do not go crying to the lender if one of these events arise and you can't pay your mortgage. I have it on my mortgage and I advise every customer I see to have it. Trust me, I have had customers decline it in the past and it is not a nice phone call when someone phones you asking what they should do as their husband has been diagnosed with cancer.

You have to see the benefit of such a policy. If you were to contract a critical illness you may not be able to work again. Could your family pay the mortgage and maintain the standard of living you have without your income. Even if you are able to work would you prefer the choice of being able to work or not? Ifyou were to die how do you want your family to be looked after? Mortgage paid and retaining th efamily home or having to uprrot and sell because the mortgage is too much?

It is a waste of money if you never make a claim, but then the choice is do you want to take the risk of finding that out?

Very true and a decision that i will not make lightly.

SoozyJ22

My Dad once told me that in his view you should only insure against things where you couldn't afford not to. That's just his point of view, but it makes sense to me. I guess what you need to do is look at your personal circumstances and see whether you'd be able to cope if you became ill or were made redundant and unable to work. Also definitely look into the small print because some of these schemes aren't as straightforward as they first appear.

When I took out my mortgage the company I worked for had permanent incapacity insurance so if you were unable to work through ill health they'd pay you 75% of your salary forever - which for me was more than enough to keep covering the mortgage payments. So I didn't take the cover out. I did regret that slightly when I was diagnosed with a "critical illness" two years later - I sometimes think how nice it would be if my mortgage had all been paid off. But really, the chances of that happening at the age of 26 were pretty low, so I could have been shelling out every month for 25 years with nothing to show for it.

homer_j_3

you are still not going to take it are u though lol

Clare11

hi everyone.
I am speaking from experience.
We had critical illness cover on our mortgage and very glad we did as my husband took a heart attack at the age of 48. The mortgage company paid out and it was reassuring to have this money.
If there is a history of any heart/health problems in your familyI would surely advise you to pay that little bit extra.
No one knows what the future holds. And if you have a young family I think to have critical illness cover is even more important
Kind regards
Clare

homer_j_3

I am a great believer in the cover and even though 99% people probably think that because of my job, I have to say that. This is not the case.

There is never a rule of thumb when talking about what protection should be taken with your mortgage. It really depends on the individual and their personal circumstances.

When you get some muppet that comes on here and qualifies the thought that all advisers are just flogging the non required, it helps people confirm that they are right not to take these things. Funny how that person has their own advertisement for cheap insurance is the first to jump in.

You need to balance the cost of cover and prioritise which is most important to you - of course full protection is ideal but not always a reality.

Cheapest is not always best.