Mortgage Life Insurance Discussion

silvershadow21

hello everybody,
Single guy , no dependants, aged 38 here
i have just completed on my one bedroom local authority flat, and have a small mortgage of £22500 over 15 years.

I have taken a policy with best insurance to protect against unemployment only, at a small rate of £3.30 amonth, (mortgage payment £200 a month).

I am not a fan of Life & critical illness policy's, and wont be taking one of these, but have been looking tonight at getting a
Decreasing Life assurance policy, just incase oif the worse scenario .

I had used a IFA to arrange my mortgage, and he has offered me a policy thru "friends provident (£22500 decreasing over 15 years) at a rate of £5 a month.
I am not expecting to get anything cheaper than this out there, but curiously looked at a few 2night, and one in particular was "sainsburys", who's policy came out at £5 a month, based on £36000, decreasing over 15 years, (this is the cheapest one they offer), but this policy included terminal illness cover at no extra charge, and had guaranteed premiums.

Does this sound ok, and does it make any difference to me, that i have to accept a policy that covers a lot more, than my overall mortgage amount.

cheers

tom

dunstonh

Virtually all plans now have terminal illness cover at no cost.

Why are you looking at life cover when you are single with no dependents?

silvershadow21

dunstonh wrote: »

Virtually all plans now have terminal illness cover at no cost.

Why are you looking at life cover when you are single with no dependents?

I asked myself the same question, but basically it was that i didnt want to burden anyone with hassles, incase i snuffed it.
At least there would be a house for someone to either, live in or sell.

I wasnt going to take it, but i am led to believe this was the norm.

The flat is worth about £60K, and i only have a mortgage of £22500, so there is plenty of equity here i suppose.

But what would be the procedure if i didnt have it, and i was 2 die 2morrow.

How would this pan out with my mortgage payments etc

cheers

Darkstar

If I were in your shoes then the only reason I would take out insurance would be in case I can't get it later in life and believe me that can be a problem. I used to be single aged 35 with a mortgage and never thought about insurance. I am now married with two kids and 43 and I am struggling to get competitive quotes, over weight and high blood pressure to blame. This was made worse when I changed job and found my new employer did not provide free life cover. I have taken out a £250K level term and now 18 months later I am about to add £180K mortgage cover. Between the two policies I think I should be covered at a total cost of £52/month.

dunstonh

But what would be the procedure if i didnt have it, and i was 2 die 2morrow.

How would this pan out with my mortgage payments etc

The payments stop. The house is sold and the mortgage repaid.

silvershadow21

dunstonh wrote: »

The payments stop. The house is sold and the mortgage repaid.

So am I wasting my money taking this out in your opinion?

As a newbie to the mortgage market, some guidance on these matters would be appreciated.

£5 a month didn’t seem much to be honest, but over 15 years I suppose it’s a saving of £900

dunstonh

So am I wasting my money taking this out in your opinion?

Yes

Dont be eager to pay insurance you dont need. I bet you that your income protection isnt up to scratch or your retirement planning isnt good enough. It may only be £5 a month but it will be better spent elsewhere.

silvershadow21

dunstonh wrote: »

Yes

Dont be eager to pay insurance you dont need. I bet you that your income protection isnt up to scratch or your retirement planning isnt good enough. It may only be £5 a month but it will be better spent elsewhere.

thank you very much for your advice

cheers

Tom

Cookiecrumble

Hi
I'd like some advice please.
15 years ago we took out an endowment mortgage for £42,000. The insurance company was Abbey Life and the premium is £90.50 a mth. Would it be possible for us to separate out the life cover part and shop around for a cheaper deal? I have phoned Abbey Life but the person I spoke to couldn't understand what I was asking. I don't know it she was being deliberately unhelpful because they don't want to lose business.

dunstonh

Would it be possible for us to separate out the life cover part and shop around for a cheaper deal?

Yes and no. You cannot do it within that plan but you could convert the investment element by switching to a stocks and shares ISA and then arranging a standalone decreasing term assurance.

I've done quite a few of those. However, it isnt something you should do unless you know what you are doing.

Abbey Life but the person I spoke to couldn't understand what I was asking. I don't know it she was being deliberately unhelpful because they don't want to lose business.

Abbey respond that way as the person you are asking wont have a clue what you mean. They are not being unhelpful. They are not able to answer questions that could be considered advice. They do not hold the FSA authorisation to do it.