Death-in-service benefit AND life insurance for mortgage?

Gillby1

Hi,

My partner and i are buying a house together, and are looking into life insurance options. We both get death-in-service benefits that would almost cover the mortgage, and are wondering whether we should still opt for life insurance to cover the mortgage.

Are there any statutory requirements, or should we just go with what we are comfortable with?

We will definitely be going for an income protection plan alongside this. Can this be a combined death/terminal illness income protection AND long-term illness or redundancy mortgage payment plan, or are these separate things?

Thanks!

Gillby

The_J

Generally I would say yes. You can use the death benefit as income replacement to maintain a similar quality of life for the survivor and children, plus it's cheap.

You can certainly take a multibenefit policy which includes Life Cover and Income Protection, it can sometimes be cheaper, sometimes be more expensive but it will only be one application.

holly_hobby

Hi,

Married/Civil Partnership ?

Single ?

Also appears to be a child from your signature ?


Term/Life assurance is not a compulsory requirement of your mge, although buildings insurance is.

If you are just looking at the mge, and have sufficient DIS benefits, then there is no need to effect any additional benefit in relation to the mge itself. (ensure an expression of wish re the DIS has been placed with your employer esp if single).

Your income protection (PHI payable after a waiting period, until recovery, retirement or death before cessation), should also be written to compliment any occupataional benefits provided - with max overall provision from all policies and benefits of max 70% of normal income (lower % for high earners).

ASU/MPPI - is payable for a max term of 12 mths.

Of course should your occupational benefits change, or you lose them through changing position etc, it would be prudent to effect replacement cover at that time.

If you are single and effect single life/term policies, often seen with "friends" or non-connected individuals buying, they should be effected under trust, or on the life of another - to avoid probate and estate administation delays or complications. Of course you can effect a joint policy (payable on 1st death)

If you are married then a joint life 1st death policy would be sufficient.

Critical illness cover would also be highly advised (if budget permits)

Min GSA would be for liabiliites, however you may want to consider additional cover for the surviving partner (and child ?), to help them maintain the property/lifestyle etc post 1st death, as they may not be able to return to their normal occupation, and/or take a prolonged absence from work, due to the emotional impact of the death.

If there is a child as it appears from your sig, then it is imperative that extra family protection (in excess of liabilities) is considered and effected (even if it means cutting down on that extra bottle of vino at the weekend to pay for it).

The appropriate family protection sums will depend upon several factors, and I would direct you to sit with an IFA for suitable guidance on life (inc CI) and income protection requirements.

Finally, its sensible to consider that family and income protection needs, should be frequently reviewed to ensure they remain relevant and sufficient as life progresses.

Hope this helps

Holly

dunstonh

If you use the death in service to cover the mortgage what are you going to use to cover lost income and pension entitlement?

getmore4less

Decide what risks you want to cover and plan based on that.

work through the risks

death of one or more
short term illness,
long term illness,
etc.

Most people do it the other way round look at the cover options and pick some ignoring the real risks.

Death is the easy one and can often be self insured through other options such as downsizing, simple life cover, cover cover through work, earning enoiugh not to have to bother, no mortgage/debt.

The real big one is

One of you becomes incapacitated and not able to earn and the other needs to give up work to provide care.

This requires income/capital for the high earner on the low earner becoming incapacitated.

Work cover
for long term sick/critical illness, some places manage you out before it kicks in.
redundancy means if ytou really need cover you end up needing it at atime you have no income and are older so more expensive.

Burridge60

You need Buildings Insurance to meet the lenders requirements. Any other insurance you BUY is for your own protection.

You would be surprised by how many people complain they were sold something they didn't want especially after 10 years when the accumulated premiums on a policy they haven't claimed on amount to so much.