First Time Buyers - Life Insurance: Where do I start???

dimbo61

When you do take out Life assurance wether it be a joint policy or 2 single polices please take out a Level term cover and not decreasing cover.
The extra cost is literally pennies extra each month.
Try and ensure that it is the same payment each month for the whole term.
Good luck in the new home
Please make sure you have both buildings and contents insurance in place when you exchange !

kingstreet

dimbo61 wrote: »

When you do take out Life assurance wether it be a joint policy or 2 single polices please take out a Level term cover and not decreasing cover

Please don't come to a broker for that.

The FOS will uphold a complaint for such an advised sale as level cover for a decreasing need is viewed as bad advice.

Skibunny40

Kingstreet - is that because the OP is not married?

My husband and I both have level life insurance in trust to each other and we don't even have a mortgage any more! We're happy with it and no desire to complain but curious as to why there's potential for a complaint at all.

kingstreet

Right.

if you have a repayment mortgage, any life cover need should be for decreasing cover.

if you have an interest-only mortgage, any life cover need should be for level cover.

If you have no mortgage and have a simple family protection/income replacement need, level cover or family income benefit could be used.

The FOS expects to see a recommendation of cover which fits the need at the time and it won't accept "what ifs" as part of the reasoning.

For example, "I've done two singles so that if one of them dies the other won't lose their cover" won't fly because of the "if" being employed.

Similarly, "I'm recommending level cover so that if you die the survivor will have more money than they would need to repay the mortgage the further into the mortgage term it takes place."

As I said, long thread on Cherry the broker's forum on what might make sense but what the FOS views as the right advice for the circumstances.

kingstreet

Skibunny40 wrote: »

Kingstreet - is that because the OP is not married?

My husband and I both have level life insurance in trust to each other and we don't even have a mortgage any more! We're happy with it and no desire to complain but curious as to why there's potential for a complaint at all.

Your need is for family protection cover, so my example doesn't relate to you.

Skibunny40

Fascinating - thanks Kingstreet. Although it strikes me as ironic that the whole point of insurance is in case of "if"! But I think I understand why it's an issue in the context you give.

Skibunny40

Sorry Kingstreet, missed your other post. When you say our requirement is for family protection cover - is that back to my initial query about being married rather than just partners, or are you assuming we have children?

kingstreet

No. That makes no difference.

If you live together you might want to replace the income of a deceased partner to enable the survivor to continue their standard of living.

If unmarried, you would so two singles in trust as there may be no insurable interest.

If married, you could do joint cover as the survivor would receive the benefit in the event of death anyway. Two singles means double the cover in the event of both deaths, but if there are no kids, who are the contingent beneficiaries?

kingstreet

Skibunny40 wrote: »

Fascinating - thanks Kingstreet. Although it strikes me as ironic that the whole point of insurance is in case of "if"! But I think I understand why it's an issue in the context you give.

Perhaps I should have referred to them as 'possible future events which might not happen' that aren't acceptable as reasons for a recommendation.

As you say the whole industry is one big "what if" and the FOS attitude is wrong, IMHO. It discourages good/sensible practice which may result in better long-term outcomes in favour of a short-term cheapest is best approach. There's too much of a protection gap in the country as it is. Penalising those trying to do something about it is not very helpful.