FTB looking for life assurance urgent!

garbled_2

I need to exchange contracts on a first time buy this week and was told by the solicitor that it is advisable to have the life assurance in place at the time of exchange to cover the period up to completion.

I would like to take proper IFA advice since I think there is a need for me to write my life assurance into a Trust. Nevertheless, I do not want this to be a reason to delay the exchange so I tried to obtain quotes for a 1-5 year period quoting the total mortgage amount. This generated some very favorable quotes and I thought I could set this rolling while I seek advice and change the insurance arrangements possibly in the 30 day cool-off period or later. All looked good till I found on one comparison site (moneyminder.com) that one of the assumptions in arriving at the quote is :

• For mortgage protection (also known as decreasing term assurance) quotations, your outstanding mortgage balance and the number of years left on your mortgage are the same as the quote you have requested.

If I apply that condition (the mortgage amount for the full duration of 25 years) the quote jumps from £10.40 to about £25. The above assumption is explicitly stated only on the comparison site and not by the insurer generating the quote.

Do I stand a chance of putting these temporary arrangements into place with the lower quote or is there no other option but to keep the term of the cover to match the duration of the mortgage even if I have no intention of going the full duration??

Any advice or help from experienced posters would be greatly appreciated so that I can action this ASAP.

dunstonh

I would like to take proper IFA advice since I think there is a need for me to write my life assurance into a Trust.

You would not normally use a trust on life assurance plans earmarked for debt.

Nevertheless, I do not want this to be a reason to delay the exchange

It wont.

Do I stand a chance of putting these temporary arrangements into place with the lower quote or is there no other option but to keep the term of the cover to match the duration of the mortgage even if I have no intention of going the full duration??

You always set up for the duration as you never know what the future brings. At least you do on the plan you intend to keep running.

garbled_2

dunstonh wrote: »

You would not normally use a trust on life assurance plans earmarked for debt.




It wont.



You always set up for the duration as you never know what the future brings. At least you do on the plan you intend to keep running.

Re writing in trust:
Good point! I intend to go for a more comprehensive policy later that would include cover for debt and more but forgot to mention that.

Re. duration:
Right but I am pretty certain that once I've taken all the needs into consideration and discussed it with the IFA I would need to change the plan/provider in that case wouldn't it make sense to save some money for the time being by investing in a bare bones plan that covers the most pressing need?

ACG

Mortgage Protection can be a little misleading in the name.
Its basically just decreasing term assurance (decreasing life insurance) where by the life insurance decreases in line with your mortgage.

If you chose a 20 year term and your mortgage was for 25 years the life insurance would still pay out on a valid claim - it would just pay out less than your mortgage outstanding amount.

Speak to an advisor, they will be able to set it up for you if your not sure.

dunstonh

Good point! I intend to go for a more comprehensive policy later that would include cover for debt and more but forgot to mention that.

That isnt a very efficient or sensible way of doing it. You cover the need. Chances are you have multiple needs which have different periods. So, you either segment the cover or take out multiple plans. Having just one all encapsulating policy would end up being expensive and unsuitable for most people.

kingstreet

told by the solicitor that it is advisable to have the life assurance in place at the time of exchange

Life cover from exchange is a good idea, but is obviously not essential as those single with no dependents have no need for life cover at all.

What are your circumstances?

I wouldn't rush to buy cover just to satisfy exchange. Take your time and talk to an Independent Financial Adviser about your needs.

You may feel income replacement cover has a higher priority.

garbled_2

Thanks all for the responses, they have all given me new insights but a few doubts persist.

Background: Family of 3 that includes besides me my wife who works part-time to look after a child with very special needs.

1. I ought to separate the mortgage insurance from any other insurance like 'income protection' or a 'level term lump sum/monthly family income' insurance.

2. The above could then be written into trust while the mortgage protection need not/cannot?

3. From the insurance guide on this site it would appear that the consensus opinion is that 'critical illness cover' is a real hit and miss type cover so it might be more advisable to go for 'income protection'.

4. However, being in the education sector with yearly contracts (wife as well) I do not know whether any underwriter would allow 'income protection' when my income is any way not guaranteed beyond the contract period.

I will definitely go for independent advice but any further insights you all may provide will only make me better prepared to ask the right questions and understand clearly how 'protected' I am or can be and at what cost!!

Thanks!