Help to buy life insurance

Craigjames

Hi MSE people,

Sorry if this has already been posted or asked. Theres a lot of threads to look through. What it is i need some advice. Im in the process of completing a mortgage, part of which is help to buy for first time buyers. Ive been quoted some ridiculous prices for life insurance to cover me and my girlfriend from the mortgage broker (£90 per month). I have seen policies a hell of a lot cheaper online and have told the broker the prices i have seen. She seems to think that there is a special type of life insurance you need for the help to buy portion of the mortgage.

Is this correct? I thought aslong as you were covered for the whole borrowing amount on a level term cover it would be fine.

Any help or advice on the matter would be much appreciated.

Cheers
Craig

Credit-Crunched

Craigjames wrote: »

Hi MSE people,

Sorry if this has already been posted or asked. Theres a lot of threads to look through. What it is i need some advice. Im in the process of completing a mortgage, part of which is help to buy for first time buyers. Ive been quoted some ridiculous prices for life insurance to cover me and my girlfriend from the mortgage broker (£90 per month). I have seen policies a hell of a lot cheaper online and have told the broker the prices i have seen. She seems to think that there is a special type of life insurance you need for the help to buy portion of the mortgage.

Is this correct? I thought aslong as you were covered for the whole borrowing amount on a level term cover it would be fine.

Any help or advice on the matter would be much appreciated.

Cheers
Craig

Hard to answer, however there is not 'special' type of insurance.

However, how old are you, how big is the mortgage, do you have any medical conditions, does it go into later years (past 70)

Only then can one ascertain if £900k is excessive. If it is to cover a million pound mortgage then no, if its covering a £20k mortgage then yes.

kingstreet

FWIW we do decreasing term on the mortgage and level term on the HTB equity loan. It's not perfect as the equity loan redemption could be higher if the property value increases.

Are you sure it's only life cover and there isn't critical illness cover included?

kingstreet

Here's an example;-

M N/S 32NB Class 1 Occupation

F N/S 31NB Class 3 Occupation

£212,000 decreasing life cover
£37,500 level life cover

£106k CI for each applicant

£900 IP for app one and £480 IP for app two, three months deferred.

Thirty-five year term. Total cost £93.18 DEFAQTO five star rated CI & IP cover.

Craigjames

Thanks for the response.

Im 30, fit bill of health, occasional smoker
My partner is 23, fit bill of health, non smoker

Mortgage is 118,900
HTB is 33990

Ive checked prices to include critical illness cover and im getting quoted around 35 a month at places like zurich and legal and general.

Can you not just keep both of the sections on a level term? I really dont understand why it has to be 2 seperate parts aslong as the whole sum is covered?

Cheers

kingstreet

Assuming a 25 year term and clerical occupations;-

£118,900 joint decreasing life cover - £10 - 12 per month

£118,900 joint decreasing life & critical illness cover - £36 - £40 per month

£33,990 joint level term - £5.50 - £7.00 per month

£33,990 joint level life & critical illness - £16 - £21 per month.

Nothing to stop you doing a level term for the whole lot, but in advice terms, you should be recommended decreasing term for the reducing mortgage need.

Are you being advised by a tied agent? Cover can be lower quality and more expensive so the agent gets more commission. Banks are the worst for this.

Bhupendra_Solanki

Hi,

I've just bought shared ownership flat for £90,000.00.
I am single with no dependent s.

Do I need to buy life insurance / assurance?
Section 2 of the life insurance page states:

"If you have no dependants and are single, then you'd be right to question why you would bother to get this policy. This is all about paying out when you're gone, so if you've no one you want the money to go to, don't bother."

lizziesharples

You don't necessarily need life cover but there are other covers to consider, like income protection. You haven't mentioned your age but at £90,000 and presuming you are fairly young I would expect a massive premium for this.