Is life insurance compulsory?

bossymoo

Definitely shop around, my friend has a tiny lloyds mortgage and was told life assurance was compulsory, she's been paying £40 a month, completely over the odds for the amounts. We paid less than £10 for 3 times as much cover and with a history of cancer.

Not compulsory but definitely glad we got it.

amnblog

Again, a differential of £10 to £40 between providers for the same terms on a similar product is not representative.

For standard rates the range is typically 10% between providers.

Where standard terms are not offered is where the large differences come.

Niv

I chose not to get life insurance. If I die in service my wife gets a pay out and although that is not enough to fully pay off the mortgage we also have a reasonable savings pot that could pay approx. 30% of the mortgage off (which obviously will become a bigger percentage as each month goes by).


Also, the chances that my wife would want to stay in the house alone is remote as it would be too much for her to cope with so would likely move in any case - this has been discussed and that's what she said.

amnblog

Niv wrote: »

I chose not to get life insurance. If I die in service my wife gets a pay out and although that is not enough to fully pay off the mortgage we also have a reasonable savings pot that could pay approx. 30% of the mortgage off (which obviously will become a bigger percentage as each month goes by).


Also, the chances that my wife would want to stay in the house alone is remote as it would be too much for her to cope with so would likely move in any case - this has been discussed and that's what she said.

Its not just about the mortgage. Does your wife not eat?

David_White

Just because I've seen it mentioned by a couple of people....

Life insurance through a job is great, but you should view that as a bonus.

There's no such thing as a job for life and when your employment ceases so will any work benefit.

Your situation with health will naturally be different as you get older so you don't want to be in a position where you've lost an employers cover and either can't get new cover or it's at a big premium.

Food for thought.

getmore4less

Everyone focuses on life cover, many don't need it or have other options and will manage.

Thing is it is relatively cheap and can be an easy sell as most people can understand as the concept is simple.

Incapacity will be far more devastating to life and finances.

Get your head round the low/non earner becoming incapacitated and the higher earner need to give up work.

Get a broker to explain how you cover that risk.

dimbo61

To all the people out there looking at taking out the biggest debt you will ever have a mortgage,
PLEASE PLEASE sign up for LEVEL TERM LIFE ASSURANCE.
Everyone and I mean everyone is going to die !
If you sign up to Life assurance when you are young and getting a first/second or third mortgage you can get cheap cover if you shop around.
A few years ago Martin wrote an article about taking out LEVEL term assurance via a discount broker ( Cavendish online )
We got a quote for £120,000 joint assurance until retirement for £24 a month.
How much do you spend on sweets, Coffee, gym membership ? Each month.
Do not leave your partner or parents with little choice but having to sell the family home because they can't afford to pay the mortgage.
You may well have Life cover from work and some of the good one's officer 2/3 times annual pay.

Niv

amnblog wrote: »

Its not just about the mortgage. Does your wife not eat?

My death would not affect her ability to keep her job...


If I were to die now, today, approx. 60% of the mortgage could be paid off. As I said, she would not want to stay in the place alone - its too much. She could then easily downsize to a still very decent sized property.


Reducing term life insurance IS simply about the mortgage so I don't quite get your assertion.


I much prefer overpaying the mortgage. My opinion may change one day, I am open minded on this as I am with many things, but I have not been convinced yet.

David_White

Niv wrote: »

Reducing term life insurance IS simply about the mortgage so I don't quite get your assertion.

Strictly speaking yes however it's not as straight forward as that due to the knock on effect of losing an income.

I specialise in helping clients with bad credit get mortgages. Sadly a large number of the clients I speak to have credit issues due to being left in the lurch after a partners income was lost.

toc25

We have been accepted for a mortgage with Natwest. They briefly mentioned it at the application stage. When they issued the offer they stated they strongly recommend we should take out life insurance but it was not a requirement.

So it's totally up to you. Mortgage brokers so usually try and sell it to you but you can say no.