Life cover advice please

vickk

My daughter and her partner have just bought a house together and are wondering the best way to make sure the mortgage is paid should either one of them die.

They both have company pensions that have life assurance attached but neither of those would cover the mortgage on there own. They are both mid 30's non smokers.

Are they better looking for a general life cover policy or one specifically designed to repay a mortgage?

Are they better looking for a single joint policy or 2 separate polices.

The whole thing seems a minefield to me

dunstonh

Are they better looking for a general life cover policy or one specifically designed to repay a mortgage?

There is no such thing as a general life cover policy. There are about 13 different types of life assurance in the UK although most are no longer mainstream. The two main ones are level term assurance and decreasing term assurance. The latter tends to be used for estate planning and capital and repayment mortgages.

So, if they have got a capital and repayment mortgage then a decreasing term assurance would be the product that fits.

Are they better looking for a single joint policy or 2 separate polices.

The debt only needs to be paid off once. So, no point having two.

They both have company pensions that have life assurance attached but neither of those would cover the mortgage on there own. They are both mid 30's non smokers.

Death in service is primarily there to replace immediate lost income and reduced pension provision for the surviving spouse/partner. Especially with unmarried couples who may not get the pension of the deceased.

So, if they earmark the death in service against the mortgage, then they are going to be short on covering lost income and reduced pension entitlement. It is nearly always best NOT to treat death in service as sufficient to cover a mortgage. Also, it may not go to the person intended with unmarried couples. The payout could go to the parents of the deceased and there is no guarantee the parents would gift the money to the surviving partner.