Life Insurane

Molichops1008

Had a quote for decreasing assurance attached to a £60,000 mortgage... then another for level term £75,000 assurance unattached, the 2nd quote was @£19 pm cheaper. So which should i choose & does one have to have the assurance attached to the mortgage to get the mortgage in the first place ?
Also whats the difference between Level Term and Whole Life?
Am so confused....

lisyloo

Hello,

decreasing means it descreases in line with your mortgage (as you pay down your mortgage gradually).
this means there would be nothing left after paying off the mortgage.

The £75K level term one pays £75K whatever so if your mortgage is £50K in some years from now then there would be £25K left for your beneficiaries.

Which one is best depends on your circumstances and what you need.
If you have children then you may need other money beyond the mortgage to cover their child care, so it really does depend on your circumstances.

You don't need to have life insurance to get the mortgage (not usually) although for people with dependents it's highly recommended.
Usually those that come with the mortgage are more expensive than shopping round on the net (I'm certain Martin will have an article with advice).

Term assurance pays for a certain period e.g. for the term of the mortgage or until you are 60. With this there is a chance that you may get nothing (because you live).

Whole life will cover you until you die which means you will get a payout.
For this reason it will be more expensive.

Am so confused....

Start by trying to work out what you need both to pay debts and for on-going maintenance of dependents.

Then checkout what you have. Check out whether your employer has free "death-in-service" benefits. Will your pensions pay out if you die before retirement.

Once you know the shortfall between what you need and what you have then read Martins article about the cheapest way to get cover, which is almost certainly by shopping round on the net.

Molichops1008

Thanks Isyloo, that has helped. Though still bit confused why it was £19 cheaper for a term of 20yrs on £75k, than a decreasing on 20yrs for 60k. Went through a recomended link to get the quotes.
Molichops