Life/ Mortgage Protection Insurance

Milky_Mocha

I have recently taken out a mortgage and the broker is about to sell me life insurance. As I know nothing about this I want to do some research before meeting him. He explained that there is a level term policy and a decreasing policy and that the policy will pay out in the event of death. I have life insurance from my employer of 4 x salary and I think I recall reading somewhere that one cannot claim from two policies. Is this generally true?

Secondly are there any good money saving deals such as use of discount codes like you can get with home / car insurance? The policy I was verbally quoted on a £345 joint mortgage is £40 per month level term. Does this sound great or is it just about average?

Thirdly, is the total amount usually paid when only one of us dies or will they only pay out half of the sum insured?

I will also need ASU cover. Is there a policy that covers both life and ASU? I'm hoping it would be cheaper to obtain a combined policy if this exists.

Final question, please. if we do not claim in say ten years and we cancel the policy will we get back a chunk of money? If we do not cancel but require a bit of cash is it possible to make a withdrawal against the policy?

Thanks for reading this. I look forward to your replies. I appreciate that all these answers can be answered by the broker but I don't think he would give me info about deals outside of his commission remit so I would be interested to hear your opinions / experiences.

Milky_Mocha

Perhaps my question is in the wrong forum. I will post in the mortgages section. Thank you.

dunstonh

Perhaps people are out on a Saturday night and 90 minutes isnt a long time to wait for a response

and I think I recall reading somewhere that one cannot claim from two policies. Is this generally true?

You can have as many policies as you like.

Secondly are there any good money saving deals such as use of discount codes like you can get with home / car insurance? The policy I was verbally quoted on a £345 joint mortgage is £40 per month level term. Does this sound great or is it just about average?

Why level term? If its a repayment mortgage you should have decreasing term assurance.

Thirdly, is the total amount usually paid when only one of us dies or will they only pay out half of the sum insured?

if joint life first death, then it will be paid in full on first death.

Is there a policy that covers both life and ASU? I'm hoping it would be cheaper to obtain a combined policy if this exists.

Some companies can package the two together as segments but its not often a good way to do it.

if we do not claim in say ten years and we cancel the policy will we get back a chunk of money?

No. Insurance is about pooling the premiums and paying out to those unfortunate enough to have to claim.

If we do not cancel but require a bit of cash is it possible to make a withdrawal against the policy?

Life assurance is like household or car insurance. It is not a savings account. There is no value.

I appreciate that all these answers can be answered by the broker but I don't think he would give me info about deals outside of his commission remit so I would be interested to hear your opinions / experiences.

I feel sorry for the broker you are dealing with in that you have so little faith in him.

None of the questions you ask have anything to do with commission.

Milky_Mocha

dunstonh wrote: »

Why level term? If its a repayment mortgage you should have decreasing term assurance.

Thanks for responding. So will the mortgage company only pay out the balance on the mortgage because it is a repayment mortgage regardless of the fact that I'd taken out a level term policy? I'm thinking that if we go for level term then the surviving spouse could benefit from the excess over the mortgage outstanding.

dunstonh wrote: »

I feel sorry for the broker you are dealing with in that you have so little faith in him.

None of the questions you ask have anything to do with commission.

No, not all my questions have anything to do with commission but two of them do. I was referring to the possibility of obtaining a better deal elsewhere, e.g. online using a cashback site. The broker will get commission from the insurance co. if I go with him. I do have faith in my broker. They are excellent and I'd recommend them highly but i do realise that it would be in my broker's interest if I went for one of their deals as opposed to an alternative MSE recommendation.

dunstonh

Thanks for responding. So will the mortgage company only pay out the balance on the mortgage because it is a repayment mortgage regardless of the fact that I'd taken out a level term policy? I'm thinking that if we go for level term then the surviving spouse could benefit from the excess over the mortgage outstanding.

Its going to take very many years for you to see any real gain and in that time you would have paid more for it.

If you have two needs, then you take out two policies. One for mortgage, one for family.

What happens if you move in years to come and the mortgage is altered? You end up having to take out a new policy and the whole lot would be based on your age at that time. By having one for mortgage, one for family you only have to alter the mortgage one. Not the family one which remains priced on you being the age you are now.

They are excellent and I'd recommend them highly but i do realise that it would be in my broker's interest if I went for one of their deals as opposed to an alternative MSE recommendation.

Commission shouldnt drive the recommendation. When the adviser does the check, a list of companies will appear on the printout in premium order. Whilst the cheapest doesnt have to be chosen, it does have to be documented why it isnt used. Often the cheapest will be reviewable premiums or yearly renewable term/current costed which are awful for most people. However, if you have any doubts, ask to see the research.

Whole of market advisers have to give best advice. You cant just pick one from the hat. If they refuse to show research then you can read what you like into that. If you see the research and you are happy with it, then you will have peace of mind.