Going direct for life insurance?

UserX

I'm in my mid 40s and on my own with 2 kids. Work full time and have mortgage of about £220k. I have no savings - the divorce lawyers wiped that pot

I DO have life insurance but I recently moved and there would now be a shortfall on the lump sum to cover the mortgage. So I do need to get something sorted. It's an old policy and I suspect not too competitive on price; I was in a better financial situation when I took it out and didn't shop around much.

Obviously I don't have a crystal ball to know how my life will pan out (could have done with one the day I met ex-DH but never mind!) So I know I can only take a best guess but....

I currently have level term insurance with a critical illness element BUT a shortfall of about £70K on the mortgage. It will also expire before the end of the mortgage now :eek:

For the same monthly cost (roughly) I can extend to decreasing term across the full term and extent of my mortgage BUT lose the critical illness cover - that's a quick estimate from Tescos. I can't afford to drastically increase the monthly premium (and in fact would love to reduce my outgoings, but maybe life insurance isn't worth cutting too many corners on)

What I don't have, unfortunately, is the spare cash to pay for a lot of financial advice.

My kids will be financially dependent on me for about 10 more years. The current mortgage term is 24 yrs. I don't plan to move again, or extend the mortgage in anyway. I have never had any health issues (although I am overweight).

Taking all of those things into consideration, I'm interested to know what the thinking might be about my options.

M.R.W.

UserX wrote: »

For the same monthly cost (roughly) I can extend to decreasing term across the full term and extent of my mortgage BUT lose the critical illness cover - that's a quick estimate from Tescos. I can't afford to drastically increase the monthly premium (and in fact would love to reduce my outgoings, but maybe life insurance isn't worth cutting too many corners on)

What I don't have, unfortunately, is the spare cash to pay for a lot of financial advice.

Hi there


In my opinion the critical illness cover is every bit as important the life cover so I wouldn't lose this important element. Like you say, it's not worth cutting the corners on.


Do remember that financial advisors can still be paid commission for insurance products, so you wouldn't necessarily have to pay anything from your own pocket up front (unless you wanted to pay fees instead of course). It wouldn't hurt to get some quotes from a financial advisor just to see what they can get for you (there are some insurers who only sell through intermediaries who may offer a good deal).

kingstreet

How would you pay your mortgage and your other living costs if you were unable to work due disability as a result of accident or illness?

Having critical illness cover alone may result in you wishing you had a more severe case of a different illness.

Income protection/permanent health insurance pays a tax-free monthly income benefit if you are unable to work. The better plans are based on your inability to do the essential duties of your own job, improving your chances of a successful claim; where critical illness cover requires you to have one of a list of conditions, up to a required qualifying level, in many cases.

UserX

Thank you M.R.W. and Kingstreet. Food for thought.

The plain fact of the matter is at the moment, I have a modest amount of debt (about £5K, manageable) so for the next 10 months I can't afford life insurance with spangly-sparkly other benefits to cover the entire amount & term of my current mortgage.

I can continue as I am (under-insured, both in terms of amount and term!) or I can increase the amount & term of the insurance to fully protect my mortgage but ditching the CI cover.

I could probably set aside a very modest (£20 or so) amount each month to extend the provision I have in some way, but I certainly can't go all the way yet.

I don't know the best way to go about finding proper financial advice that is affordable to me, and it makes me anxious thinking about it!!!!

ACG

There are 3 main types of protection.
Income Protection
Critical Illness
Life Insurance.

You are more likely to claim on CI than Life and Income Protection than CI - so it does not make sense to cancel something you are more likely to claim on.

Another way to look at this is, instead of having CI cover, look at Income Protection - ok it wont pay out a lump sum, but it will ensure you can pay your mortgage until its cleared and life insurance on top.

Im not suggesting/recommending this - but it is another view to take.

I would suggest you speak to a broker - but you could argue im biased. They will not only look at prices but also ensure you have protected as many eventualities as possible for whatever your budget is. You can then bump up the cover or do a full review in a years time once your back on top.

M.R.W.

UserX wrote: »

I don't know the best way to go about finding proper financial advice that is affordable to me, and it makes me anxious thinking about it!!!!

You can visit http://www.unbiased.co.uk/ which lets you search for independent financial advisers in your area. No need to be anxious - remember you are the customer here! Find a local firm, give them a call or email telling them what you're looking for and your budget, and that you'd like their costs to be paid through the product commission rather than fees. If they can help you then they will!

bouncydog1

Do you have any cover at all via your employment package? Might be worth asking HR if you are unsure just to make sure you don't end up paying for something that's already available.