increase our level term assurance or new life policy?

evosy1978

Hi,

We have a level term policy each which we have had for 3 years as we have children. We have just brought a house. Should we take out a new joint mortgage life assurance policy or just increase our two existing level term policies?

Thanks

kingstreet

You can't normally alter a level term policy. The usual action is to do an additional policy, or take a whole new one to replace the current one, depending on the most cost-effective route.

However, if your term assurance is meeting a continuing family protection need, you should consider decreasing term assurance to cover the mortgage over and above that.

If cost is an issue, you could replace the term assurance with family income benefit, setting the benefit equal to the lost net annual income of the deceased. This is effectively decreasing term assurance, as you set the term based on the length of the need, for example your youngest child's 25th birthday, or retirement age if you have a non-working spouse.

Then do lump sum decreasing cover to cover the mortgage need, for the mortgage term.