Advice on Mortgage Assurance Please.

unicorn

My partner is buying a house to renovate and sell he has been told by his mortgage advisor that he needs life insurance however they have come up with a policy of £31 per month. I have been on Cavendish and got one for £20 per month , my question is he has taken it over for the full term of the mortgage is this needed as he hopes to resell in a year.

Any advice would be greatly received. Thank-you.

lisyloo

Does he have dependents?
What would happen if he died (presumably with no dependents they would repossess the property).

I suspect it is not mandatory (although the advisor would like to sell it ecause they gt commission).

I suggest he thinks about whether he really needs it and what would happen if he died during the next year.

If he doesn't want it then he should say no.
If the advisor is forceful then tell them you are going elsewhere.

victoriaplum1

Do you think the mortgage adviser may have meant he needed life cover in general, rather than taking it out just to cover a house he is only gonna own for a year? I would have thought something like income protection and critical illness cover would be more useful to him esp if you don't have dependants. You wouldn't need 200k life cover without dependants would you ...just enough to cover cost of funeral and to pay off debts etc?

I would contact an IFA but bear in mind although the advice is generally free first off if you do take a policy with them some have a claw back clause whereby if the policy is cancelled within first few years (as it would be in your case) you gotta pay them a proportion for the comission they will have lost. I found that out yest after seeing one so now I am arranging my life cover myself...for 200k over 25 years term More Than have quoted us for joint policy 19.25 a month and the premiums are fixed.

dunstonh

Do you think the mortgage adviser may have meant he needed life cover in general, rather than taking it out just to cover a house he is only gonna own for a year?

If a 20 year liabilty (for example) exists, it doesnt matter if you plan to pay it off in a year. You may not. One thing experience has shown me is that most people's plans do not occur as planned. So the adviser is right to suggest the term of the lending.

However, if its a strong chance that it will be repaid, then a yearly renewable term assurance may be sensible as it acts as the middle ground between the two options. Probably cheaper in the short term as well.