Mortgage Decreasing Term Assurance ?

tanith

We have decreasing term assurance on our mortgage , I'm retired now and OH will retire in 2yrs, our mortgage is now small and will finish when OH retires, we have enough to pay the mortgage off if necessary and I'm wondering why we are still paying for the decreasing term assurance. Do I have to have it? or could I cancel it now and save ourselves two years of monthly payments. thanks

kingstreet

No one here is going to advise you either way.

If the worst happens to one of you, the money can be used for any purpose, it doesn't have to be used to repay the mortgage.

Do you like the idea of having life cover? Do you feel you need it?

If you don't, you can cancel the cover, accepting responsibility for repayment of your mortgage and maintenance of your standard of living if one of you dies.

kidmugsy

We scrapped our insurance when we felt that we had savings enough to deal with the outstanding loan if I should die and that my pension scheme would provide enough for the survivors.

Logically you should simply ask yourself "If we didn't already have this life insurance, would we set it up now?" If the answer is "no", scrap it. If the answer is "yes" keep it. What you mustn't do is consider what you've already spent on it. That's a sunk cost.

tanith

Thanks for your thoughts folks I'm going to talk it over with OH and then decide..

opinions4u

The cover would probably pay out a bit more than the actual debt, as it will have been designed assuming highish mortgage rates throughout the term.

You are both older, so both more likely to die than at any other time during the policy term!

Equally, it sounds like you've both agreed that you could cope without the policy if the worst should happen. That would nudge me towards cancellation.

But would a modest ump sum be useful if one of you did pop your clogs?

Is there any reason why you haven't already paid off the small mortgage with the savings in question?