Mortgage protection

Glastoun

Is mortgage protection necessary? e.g. loss of job, illness, accident. Mortgage broker seems to be quite hot on it, but I think that's probably commission-related.

And does £60 per month for a working couple seem reasonable on a £130k mortgage? Seems like a lot to me, but then I'm not very risk averse.....

kingstreet

Only you can determine your needs and how much you are prepared to put aside to meet them.

Issues such as death, illness and unemployment could result in a massive reduction in your standard of living, possibly the roof from over your head, or your family's.

Ensure you are using an advisor who is whole market for protection products as well as mortgages and who is not tied to just one protection provider.

Glastoun

I think they are fee-free, whole of market, yes.

Moneysupermarket gave me a quote for £13 a month, accident and sickness cover from day 1, pays out for up to 12 months. I'm sure the devil's in the terms and conditions, but I'd be interested what the broker can tell us about the £60 cover, and it had better be made out of Waitrose chocolate.

ACG

£60 and £13 - sounds like the cover is going to be completely different.

What would happen if either one of you were to die?
What would you WANT to happen if one of you were to die?

What would happen if either one of you were to be off work for 1 year, 5 years and 10 years - due to ill health?
What would you want to happen?

What would happen if you were made redundant?

Sounds like really daft questions, but if you put a level head on and think about it.... If either me or my partner were off work due to ill health, we would struggle financially. Same if one of us were to die.

If one of us were to be made redundant, between us we know enough people to be able to get a job.

So in my eyes, my needs are to protect our finances in the event of ill health and death, unemployment i couldnt care less about.

The average claim for sickness is around 6-7 years, the governments sick pay is pants and its only getting worse and harder to claim, so i wouldnt rely on that.
You need to decide what your needs are.

You might not want (or be able to) to cover your full needs in which case you can work with your broker to come up with a budget.

But dont just look at the commission and think hes after making a quick buck, you do more than likely have a need there and it should be addressed, even if its not to the maximum possible (some cover is better than none).

Annisele

Glastoun wrote: »

And does £60 per month for a working couple seem reasonable on a £130k mortgage? Seems like a lot to me, but then I'm not very risk averse.....

It really depends.

If you're both 50-year-old overweight smokers with a history of heart disease/cancer/stroke, then £60 a month is an absolute bargain (so much so that I'd suspect a mistake).

If you're both 18-year-old non-smokers in perfect health, with no family history of anything unpleasant, then £60 a month for life and critical illness only would be pretty pricey.

Whether mortgage protection is necessary or not depends on your circumstances. Personally, I have income protection cover but nothing much else (other than a bit of life and critical illness through my employer's pension scheme) - but the one thing I can guarantee about your circumstances is that they're not the same as mine. If you don't trust your adviser, it may be time for a new one...

kingstreet

If you've got joint life & critical illness cover (forty conditions, part-payments and ABI+ definitions) with guaranteed rates for the amount and term of the mortgage, income protection with guaranteed rates again for the two of you on an "own occupation" basis with the benefit paid until retirement and split unemployment cover on a thirty-day back to day one basis for the amount of your mortgage, you've done pretty well to get that in for sixty quid a month.