Advised to take Life Assurance 4-6 weeks before completion.

looknohands

I'm looking at Life Assurance and we don't even have a completion date yet, I've been advised by a broker that we should sort it out 4-6 weeks before completion. Why is this? Is it just the broker trying to push the sale?
Or would this benefit us? say if I died now and had the cover in place would my girlfriend be able to make a claim and pay off the mortgage even though we haven't completed.

HappyMJ

looknohands wrote: »

I'm looking at Life Assurance and we don't even have a completion date yet, I've been advised by a broker that we should sort it out 4-6 weeks before completion. Why is this? Is it just the broker trying to push the sale?
Or would this benefit us? say if I died now and had the cover in place would my girlfriend be able to make a claim and pay off the mortgage even though we haven't completed.

Do you have a will leaving all of your assets to your girlfriend?

Personally I'd just go for normal level term life insurance over 10 years. The premiums would be much lower than life assurance.

In 10 years when it finishes take out a much smaller policy which will cover all of your outstanding debts at that time. Make sure there's a bit of cash left over after the debts have been paid. The premiums should be about the same.

I wouldn't get that product through a broker. I'd just do internet searches to find the cheapest.

kingstreet

HappyMJ wrote: »

Do you have a will leaving all of your assets to your girlfriend?

Personally I'd just go for normal level term life insurance over 10 years. The premiums would be much lower than life assurance.

In 10 years when it finishes take out a much smaller policy which will cover all of your outstanding debts at that time. Make sure there's a bit of cash left over after the debts have been paid. The premiums should be about the same.

I wouldn't get that product through a broker. I'd just do internet searches to find the cheapest.

Level term cheaper than "life assurance?"

So what's your definition of life assurance?

The OP has mentioned nothing about the product, just the timing!

looknohands

We are on a joint mortgage. i assumed if you had a joint life assurance policy the joint policy holder would take your life assurance without a will?

So normal term life insurance for 10 years for full mortgage cost is cheaper than life assurance?
I've been told income protection is good too.

Why do i need it in place 4-6 weeks before?

kingstreet

looknohands wrote: »

I'm looking at Life Assurance and we don't even have a completion date yet, I've been advised by a broker that we should sort it out 4-6 weeks before completion. Why is this? Is it just the broker trying to push the sale?
Or would this benefit us? say if I died now and had the cover in place would my girlfriend be able to make a claim and pay off the mortgage even though we haven't completed.

As you will become legally obliged to purchase the property from the point you exchange contracts, life and buildings insurance should start at that point.

In the case of joint life cover, it will give the survivor the funds needed to honour the purchase contract even if one of the purchasers has died before completion takes place.

Once exchange of contracts has taken place, the contract must be honoured even if;-

the property is a smoking heap of embers
one of the purchasers has died.

Life Assurance

Level term assurance
Decreasing term assurance
Whole life assurance.

Until you tell us which is being recommended, we're not really in any position to pick holes in it.

looknohands

Decreasing term assurance,
Critical Illness 50% of property value x 2 seperate policies
Income protection £1500 a month for me only.

kingstreet

So, the advisor has used decreasing cover, which is the cheapest form of life assurance.

They've also used 50% of the mortgage amount each to reduce the cost of your critical illness cover, used single cover so there's a chance of two payouts if something happens to both/each of you and included income protection for you; presumably you are the main earner to ensure an ongoing income in the event of an accident or disability not severe enough to make a critical illness claim possible?

If you are not writing the life cover in trust, each of you should make a will as you are not writing joint life cover which would automatically pay to the survivor.

I'd love to see a comparison site put together a package like that. Just make sure you are using someone independent/whole market and not a tied agent, bank employee or national estate agency chain.

magpiecottage

kingstreet wrote: »

If you are not writing the life cover in trust, each of you should make a will as you are not writing joint life cover which would automatically pay to the survivor.

You should make wills anyway. The cost of not doing so until it is too late can be very high With no will, marriage or civil partnership, the surviving partner gets none of the deceased's sole assets.

Putting the death in trust also makes sense. It can help avoid Inheritance Tax but more importantly, enables the insurance company to pay out immediately. This means the loan can be cleared more or less straight away - without waiting for probate.

Whilst it would obviously be an awful time, this would make it a little easier.

ACG

Dont do life insurance for 10 years.
If you were to say get some illness in those 10 years, it could prevent or massively increase the premiums for when you want to renew your policy.

Protect what you need/can afford now. If those needs change then review it, but its not a good idea to cut corners to save a few quid now as you could find your screwed when it comes to renewing.

looknohands

kingstreet wrote: »

So, the advisor has used decreasing cover, which is the cheapest form of life assurance.

If you are not writing the life cover in trust, each of you should make a will as you are not writing joint life cover which would automatically pay to the survivor.

I'd love to see a comparison site put together a package like that. Just make sure you are using someone independent/whole market and not a tied agent, bank employee or national estate agency chain.

I don't really understand what 'in trust' means here, can you explain she didnt mention this?
The life assurance is a joint policy as well I should mention. So if either of us dies the other one gets the full mortgage amount remaining so we can afford to pay it off, decreasing term, does it need to be in trust then?

Crit illness was exactly what you mentioned so we can both get ill. Income protection you're right as I am main earner, it covers for up to 60 scenarios apparently. But it has 3 months excess (so I can't claim it for three months). I'm self employed so keep around 6 months basic income saved as a fallback.

The quote we received was £53 a month for all of this. I used compare the market and then someone called me, my mortgage broker couldn't match this deal.

kingstreet

Your broker may not have been able to match the price, but what about the quality of the cover?

Did you check the DEFAQTO star ratings for the CI & IP?

Insurance is no good if it's so cheap there are fewer times you'll be able to claim.

Be careful!

Writing in trust provides a separate legal framework which;-

takes the benefits out of your estate for inheritance tax purposes
removes the need for probate, so a claim can be settled faster
allows different beneficiary classes in future, so your children could benefit once they have been born.