Should I cancel my Life Assurance?

Toodlepip

Hi
We are currently paying £45.75 a month life Assurance (with critical illness cover) and I'm thinking of cancelling this as it seems extortionate considering our mortgage status. So here's our status;

- We took out an endownment mortgage in 1991 for £38,000

- We moved house in 2000 taking the endownment with us and adding a £17,000 repayment mortgage to cover the cost of the new house.

- In 2003 we reduced the interest only part of the mortgage to £25,800
and upped the repayment part to cover the forecasted shortfall of the endownment (£12,200 predicted shortfall)

- Our current mortgage balance is just under £44,000

So am I right in my calculations ......the endownment will pay £38,000 if one of us dies leaving only £6000 left to pay off the mortgage for which we are currently paying cover of £45.75 per month. I realise I have to take into account that there is some critical illness cover in this amount but I could take out a separate policy for this if needed and if we cancelled the life assurance we would only have £6,000 to come up with if the worst happened.

This seems fine to me as if there were only one of us left, then just by selling the other's car (which would obviously not be needed) it would cover the £6,000.

So am I right...or have I missed something???
Should I cancel?



Just an afterthought, we have no children.

dunstonh

In the event of death, would clearing the mortgage be enough? Would the surviving partner be able to earn enough to cover the costs left? Would child care costs be required or reduced hours or even giving up work?

- In 2003 we reduced the interest only part of the mortgage to £25,800
and upped the repayment part to cover the forecasted shortfall of the endownment (£12,200 predicted shortfall)

No provider will predict the shortfall. They issue projections which may or may not reflect the likely outcome. Some projections understate the "likely" result and others overstate. Projections alone are not a reliable source of information as to the end result.

Toodlepip

Hi
Thanks for your reply. In answer to the points raised;

We have no children/dependents so would be able to carry on working.

We live in quite a large house so if one of us died the remaining partner would probably be inclined to sell up as the house would be too big. However if they stayed income is adequate to cover running costs etc.

I understand what you're saying about the endownment projections but feel we are adequately covered by upping the repayment to cover the projected shortfall (the current projected shortfall is £8000 compared to the previous £12200...although I realise this cannot be relied upon, hope it's an indication that things are heading in the right direction)

We have 8 years remaining on our mortgage.

I am so tempted to cancel the life assurance as if the worst happened £6000 would not be a huge problem. I would then consider taking out a critical illness policy and feel we should be able to get comparable cover to that included in our life assurance package at a far more competitive price.

What do you think?

Anyone else please feel free to give your opinion too!

Toodlepip

Anybody?????
I just want to know I'm not missing anything blindingly obvious...coz I'm usually quite good at that!

Coops10

If you are thinking of cancelling a life and critical illness policy, and replacing it with just a critical illness policy, don't be fooled into thinking it will be much cheaper.

Firstly, most life companies include life cover as an extra add on (for pence) because the likelihood of contracting a critical illness is far more apparent than death. It also depends on your age, health etc which may have an adverse effect (it is cheaper the younger you are!).