Mortgage Protection

droiderm

Does anyone know of any decreasing cover which takes into account overpayments?

kingstreet

droiderm wrote: »

Does anyone know of any decreasing cover which takes into account overpayments?

Decreasing cover for what?

droiderm

Your mortgage. I assume , not that i know much , that they will pay out the outstanding balance of your mortgage over a 25 year period ?
I expect this balance reduces over time , therefore the money on a claim would go down . In the case of over payment you would be paying in theory more than the cover you need.

Maybe i am confused !

kingstreet

No. You're not.

You're talking about decreasing life cover then?

The OP had moved on to unemployment cover, so I wanted to check what issue you were discussing.

Decreasing life cover (DTA) uses a schedule of repayments so the sum assured doesn't reduce much in the early years with later, bigger, reductions when the interest is a lower proportion of the monthly payment.

Making overpayments will obviously see the mortgage balance fall at an increased and spasmodic rate with the irregular frequency of those overpayments. No provider could factor-in such changes to happen automatically. What would actually happen is there would be money left over when the policyholder dies and the mortgage is paid-off, although it's worth bearing in mind there's no direct link between the two, so the money can be used for any purpose. I'd see having money left over as a plus, although I take on board the point that you're perhaps paying a higher premium.

As DTA is such cheap cover for younger, healthy non-smokers there's probably little to save in practical terms, making changing cover regularly a fruitless exercise.

Conrad

A broker / IFA can sacrifice some commision in order to ensure the premiums are as low as possible. No fee is needed either.

ALL mse people reading this should ask thier broker for lowest preium using this method and then double check it is cheapest by using a comparison site.

Ensure the cover is provided by a reputable insurance co.

droiderm

Thanks guys.
Maybe you could switch annually (or every two years) with different mortgage balances? Or would that not be cost effective?

kingstreet

Probably not, unless your overpayments are £10k or £20k a time.

daviecol

I think I would consider taking out life cover for the outstanding amount for both of you and critical illness too.

But personally I think saving up an emergency fund in case of redundancy might be a better option. For a start if you did lose your job you might find the 'cash in hand' more beneficial to spend on other things like food.

hulahoop09

daviecol wrote: »

I think I would consider taking out life cover for the outstanding amount for both of you and critical illness too.

But personally I think saving up an emergency fund in case of redundancy might be a better option. For a start if you did lose your job you might find the 'cash in hand' more beneficial to spend on other things like food.

Thanks. The cover is for death and critical illness to cover the mortgage monthly payments for the life of the mortgage also covers a secured loan we have for the remaining 5 years on it and also covers us for accident or sickness and we have to be from work it would pay the mortgage balance each month again for the life of the mortgage. So would you say to maybe not take out the redundancy with a seperate company and just try to save what we can?

We also have life insurance if one of us dies for the amount of 90k and I have a good sickness benefit at work whereby if I am off work for 6 months I get full pay and another 6 months I get half pay.

I am waiting to speak to the medical interviewers again as the underwriters want more info. I have a h/o depression but am not in depression but have since had periods of low mood but it is all okay. I have NEVER attempted suicide as I dont wanna die! I also have fibromyalgia (mild) and ibs which I am on 10mg amitriptyline which is an anti depressant but it is for the last 2 conditions. I am hoping they will cover me! Hoping the premium wont increase too much because of my h/o depression.

Thanks so much for all the advice.

Thunderbird_2

I would consider Income Protection Policy with Life Assurance Policy only.