Life Insurance etc

LondonGirl252

swaledale wrote: »

What advice is given to FTB's these days? I thought that most were advised to take out a life insurance policy that covered the mortgage, or are they advised to obtain life insurance cover for the mortgage and then another life insurance policy to provide a lump sum for other things?

Me and my bf are FTB's going through this at the moment, the mortgage broker did a quote for level life and critical illness cover to cover the mortgage. We were a bit clueless and have done the application but since then read up on it a lot and a very kind MSE'er on here did some comparisons for me to show it was about right. We don't have any dependents but he is in the army so high risk job, we could just about manage on my salary alone but not his so we decided to be sensible and get decent cover. I also have death in service and private health with work. He's going to look into what the army provides if anything happens to him, we aren't married though so might not protect me if I inherit the house, not sure how it works.

jacobtheamish

swaledale wrote: »

Yeah it's horses for courses, and I can see the merit of additional policies, I guess it depends on how much you deem is comfortable. To be honest I'm more concerned about the circumstances which aren't covered by either DIS or Life Insurance, such as critical illness. The cover provided by my company seems to be better value than some market quotes so far (conditions are the same, monthly cost is lower), albeit with a gap to the mortgage amount.


@dunstonh - I just checked my DIS with the company and it is 12x salary. £1.8m refers to the limit for auto acceptance apparently. Agree about the pension limits, the total payout is likely to remain tax free. Also, DIS is the name given to the 'benefit' to the employee, the policy provided to the employer is group life assurance.


Thanks folks

Are you planning to remain with your employer for same period as the mortgage? If not what if the new employer does not offer the same benefit, would you turn that job opportunity down? What would you do if the employer withdrew the benefit? Life Insurance only gets more expensive the older you are at application, ignoring possible future medical conditions that could remove it as an option altogether.

Perhaps Family income benefit could be considered for replacement of income after death and Income Protection with a deferred period of 2 years (I'm not sure of a provider that offers a deferred period of that length and would have to check) to provide an income in the event of an illness or accident.

amnblog

LondonGirl252 wrote: »

we aren't married though

This means you may not be the beneficiary of any army benefits on death.


You should both write a Will.

[Deleted User]

Yep all sorts of options. Can spend a fortune on insurance these days.

Any new job would be considered on many factors, benefits included.

[Deleted User]

LondonGirl252 wrote: »

Me and my bf are FTB's going through this at the moment, the mortgage broker did a quote for level life and critical illness cover to cover the mortgage. We were a bit clueless and have done the application but since then read up on it a lot and a very kind MSE'er on here did some comparisons for me to show it was about right. We don't have any dependents but he is in the army so high risk job, we could just about manage on my salary alone but not his so we decided to be sensible and get decent cover. I also have death in service and private health with work. He's going to look into what the army provides if anything happens to him, we aren't married though so might not protect me if I inherit the house, not sure how it works.

Get him to propose

jacobtheamish

swaledale wrote: »

Any blew job would be considered on many factors, benefits included.

Glad to see someones getting some action this morning! :rotfl:

pjread

amnblog wrote: »

'Guys' who have paid cheques out to widows and people with Cancer and MS certainly consider it is 'their job'.


Unfortunately, clients are generally far too blas! about protecting themselves and their families and we often have to get quite insistent.


We don't apologise for that and we are several clients who are glad we were including one widow who my colleague chased 24 times (yes count them) to get her late husband to return a new direct debit mandate.

Sure, I even followed that with saying it might be a good idea, no need for such an appeal to pathos But clearly advisers are incentivised to push the insurance products.

I don't doubt most genuinely believe in the benefits, and it fits for some people - maybe even most. But overall it's a numbers game and needs to consider individual circumstances including risk tolerance. If the premiums weren't higher than the pure "risk of claim x payout, minus insurer costs" then the products wouldn't be on the market as the insurers would be losing money on them.

So where I don't explicitly need insurance I tend towards the self-insure philosophy - so I don't pay for phone insurance for example, because at the end of the day I can just buy a new one and it'd probably be cheaper than paying insurance; with something big like a mortgage most of the risk of this is front-weighted (assuming you're comparing on the basis the premium is either paid or used to overpay the mortgage). I'd suggest anyone plays with the mortgage overpayment calculator on this site to model each option - the best life and critical to cover my first mortgage was coming in at around 30-40% of the mortgage payment, so not an insignificant impact - and it cascades down as it got me from 90 to 75LTV over 2 years, so I'm probably paying half a percent less on the whole (slightly smaller) mortgage now than if I'd taken the insurance.

Obviously if you know you wouldn't overpay or save/invest/do something productive but would use the cash on chips and gin that might be another factor in favour of the insurance