Mortgage/Life Insurance

Katapolt

I'm hoping you lovely lot will be able to clear up what google has confused me with.

Back in December my Fiance and i bought our first home, and we've dragged out feet getting an insurance policy to cover the mortgage should something happen to one of us.

I read somewhere that these policies should really be written "in trust" to ensure the person isnt taxed on it, thus potentially not having a high enough value to actually pay off the mortgage.

I have also read that if its a joint policy, this isnt needed as when the money is transferred to a spouse it bypasses inheritance tax anyway.

I have contacted a broker, but he isnt the best at replying quickly, and i figure if the latter is the case its something i can do on my own via the internet!

Any tips are greatly appreciated

dunstonh

I read somewhere that these policies should really be written "in trust" to ensure the person isnt taxed on it, thus potentially not having a high enough value to actually pay off the mortgage.

There is usually no reason to place a joint life, joint owner, first death policy in trust when its for a mortgage.

Katapolt

ok brilliant thank you.

As currently childless unmarrieds, are we better off getting just a mortgage policy do you think, or should we pay more now, and get a fixed life, so when/if we do have kids they will have something at the end of it all too?

The price of an individual fixed life policy each VS a joint mortgage only is literally 50%

dunstonh

are we better off getting just a mortgage policy do you think

You should get what matches your needs. You measure this by seeing if anyone would be worse off in the event of your death. If they are, then you take out life assurance to cover it.

Mortgage is fairly easy as your partner would be left with the debt if you died. Depending on how the house was bought and your Will, they may need to buy your half off the estate.

There are other considerations too. For example, can the partner (either way) survive financially with the loss of one income? Are they reliant on the future pension of the other?