Mortgage & Life Insurance

moz414

As it's a new year (and me being over 50 now) my wife and I have decided it's time to re-evaluate our insurance needs and sort out wills etc.

We've had out mortgage for 8 years now and we still have the insurance when we took the mortgage out. It's a decreasing one with critical illness and payment protection cover included. The payments are £89 PM for myself and £59 PM for my wife. A couple of years ago we saw an IFA about whether or not we should shop around for another insurance policy and perhaps save some money but he advised us against it stating that we wouldn't get cover for the same illnesses for critical cover in a new policy that we have in our current one.

Is this the case or should we shop around for another policy? I've been thinking about going for a level life insurance policy with critical cover for a level amount of say £150,000 as this would pay off the mortgage (currently £110,000) and also leave the other with something to help them get by. Also not sure whether it would be best to get a joint or single one.

I'm afraid I'm not very good when it comes to insurance so any help greatly appreciated.

dunstonh

but he advised us against it stating that we wouldn't get cover for the same illnesses for critical cover in a new policy that we have in our current one.

There were some changes to CIC and the introduction of an ABI standard. A decent old scheme can often cover certain illnesses that do not appear in modern plans. Although modern plans have improved in recent times. So, unless there is a big premium difference, often it can be worth sticking with older plans.

csgohan4

the older you get, the more expensive your life insurance gets. The older plan you have maybe more cost effective.

Chris_Pollard

Ask your adviser is he used CI Expert as this software will compare your existing policies with newer ones.

The main differences in specific illness coverage related to prostate cancer where a severity measure now applies, however, broadly speaking most of the core illnesses remain the same but insurers have continued to add specific illnesses. Your previous adviser was (as the vast majority do) looking out for your best interests, and it might be worth revisiting as he advised you to remain with your current coverage. Why not ask him or her again? They might charge you a fee and again reconfirm that what you have now is best for you - but that is worth something surely.

In terms of "single v joint" - clearly 2 x single life policies will potentially pay out twice whereas a joint policy will pay out once. It would be worth bearing this in mind when looking at cost.

It is also worth looking at the premium basis for your existing cover - are they guaranteed or could the insurer review them?Current premiums for your age will probably be high.

You say you're "not very good at insurance" - I disagree - you have it and that makes you very good in my book! I only wish more people took out cover - particularly to protect themselves against illness or serious illness.

ThinkingOutLoud_2

moz414 wrote: »

I've been thinking about going for a level life insurance policy with critical cover for a level amount of say £150,000 as this would pay off the mortgage (currently £110,000) and also leave the other with something to help them get by. Also not sure whether it would be best to get a joint or single one.

As the other's have said - it is likely that your original policy may cover you for some things a new one may not and that as you are now older any new policy could cost more.

I think you had a second aim which was to perhaps top up your life cover in case the worst should happen. If you are keeping the other policy - then you need to decide what each if you (or any dependants) would need if one or both died.

You can also set a new life policy to run as long as that need would exist - not tie it to your mortgage unless there is real reason to do so..

You mention level term cover which may be right for you. But, if your other half's need would go down slowly (e.g. are they lower if you were to live another 15 years) - then a decreasing term is worth considering and obviously cheaper for the same cover today.