New home/mortgage and life insurance

AlexiaH

Good morning everybody, and thanks for the help in advance.

We have just bought a new home, our first one. We can afford the mortgage but it is rather high, it is a good investment and we hope it gains value in the future. We have been told that it is very recommendable to have critical illness and life insurance. We have been told by our mortgage advisor (who has already applied for it) that, for the two of us, it would be between 50 and 75 pound a month. The company is legal&general.

It is a lot of money and we are already going to be thigh on it. My questions are: Is life/critical illness insurance usually that high?
We both have good pensions, shouldn't our pensions we enough in case we have problems?

I just feel that it is money we are going to through away every month and that in the case we have a claim the company will find a excuse not to pay us.

Many thanks again.

dunstonh

Is life/critical illness insurance usually that high?

Context is needed.

Its high for a £100k mortgage for someone in their 20s. Its low for someone in their 40s.

We both have good pensions, shouldn't our pensions we enough in case we have problems?

I had to smile when I read that. Very many times I have heard people say that but then when I ask them to tell me about the pension they know very little about it.

Pensions are built up over time. Either through years of service on a defined benefit scheme or the amount of money you pay into them over the years. If you die early then you will neither have the years of service built up or the desired amount paid into them.

I just feel that it is money we are going to through away every month and that in the case we have a claim the company will find a excuse not to pay us.

Hopefully, it will be money you pay every month without the need to claim on it. The alternative is one of you being dead. Why do you think the insurance company wouldnt pay out? (claims success rates are over 90% on these)

ACG

Its difficult to say on the cost as Dunston says.
If you feel it is high, do you have something you feel is reasonable? Some cover is better than none at all and can provide that breathing space between making a claim and hving to go back to work.

I cant think of 2 good examples:
My step brother had cancer at the age of 31, he has spent nearly 2 years out of work and is only now returning to light work. He was fit and healthy and never had a day off work in his life. He never had any cover but thankfully was in a position where family could help.
I used to work for a firm who had a client who was self employed, my old employer asked him many times to take out life and CI cover, the bloke kept putting it off. He then had a heart attack, he could not afford to take time off work as he was self employed. I know he was selling 2 BTL properties he had and was trying to cash in his pension (at 48). It would not surprise me if he had another due to the financial stresses he was under.

Brokers on this forum are not here to say you should or should not take it out. But insurance (any insurance) is there for a reason. If you/your partner had a heart attack tomorrow and had to take a year or 2 off work, would you cope? If not then you need to think what would happen and how much you are prepared to pay to preent it.