Level term insurance/ paying off mortgage early

rev229

This may be a stupid question but our level term insurance was taken out with out mortgage and due to finish in 2025 with the final repayment. However the mortgage will be paid by the end of 2013. What do we do?? Carry on paying or what??

ACG

You can keep the policy or cancel it - its entirely your decision.

rev229

So would the policy pay out even if the mortgage is paid in full??

ACG

Yes.
It seems like the plan was to pay off the mortgage and leave some sort of lump sum on top of that to allow for whatever it was you discussed with the broker.

Any life policy sold now a days would pay the lump sum to you (or the beneficiary) and then that money can be used for anything - it can be used to pay off the mortgage but if you decide to upsticks and spend it on fast cars, women, drink and expensive holidays then thats your choice.

I think some older plans were set to pay the lump sum to whoever the lender was but i think theyre about 20 years old (i could be wrong, a member or 2 on here will now more about those).

rev229

The policy was taken out in 2000 with the original mortgage. We never thought that we would ever pay it off early! But we became moneysavers and then started aking overpayments! Now we have about 10 months left and we will be mortgage free!! The policy has remained in place with the same company due to DH long term health issue.

jonesMUFCforever

rev229 wrote: »

The policy was taken out in 2000 with the original mortgage. We never thought that we would ever pay it off early! But we became moneysavers and then started aking overpayments! Now we have about 10 months left and we will be mortgage free!! The policy has remained in place with the same company due to DH long term health issue.

To be honest with what you have said about DH's health if you can afford to carry on the policy - I would.
He won't get life assurance any cheaper IMO.

rev229

jonesMUFCforever wrote: »

To be honest with what you have said about DH's health if you can afford to carry on the policy - I would.
He won't get life assurance any cheaper IMO.

This is the reason why we have never changed insurance as we knew that it would be an issue with other companies.

ACG

If the cover amount you need has decreased then you can speak to the insurance company and ask them to reduce the amount of cover - it might save you a bit of money each month.

It all depends on what you want and need.