Offers been accepted :-) now what insurance do I need.

driver_rider

Hi all,

long term lurker and decided to finally join the forum!

My offer has been formally accepted on a property! I really felt I had done all my homework as a first time buyer. The broker from L&C started talking to me about insurance etc and I got confused.

Please could someone point me in the right direction. I work full-time in the NHS. I'm 33 non smoker and no health problems or past issues. All I am after is cover that will cover me in the event that I could not work anymore or was sick for a period of time. What type of cover would I be after? I also have no dependents currently.

I may be wrong but the prices I was getting from the broker seemed very high. Do I want mortgage cover, life insurance etc.

Any help would be massively appreciated.

spadoosh

There lots of insurances.

Typically you have:

life insurance: pays out on death, usually covers the outstanding mortgage.

critical insurance: pays out on critical illness, usually covers monthly mortgage payments

House (buildings) insurance: Insurance on your house to cover damage/libilities. Used for things like leaks (ts and cs apply), house fires, subsidence or your neighbour sueing you for not repairing your drain.

Contents insurance: Used if you damage your tv or sofas etc.

Payment Protection Insurance (PPI): used for sickness or job loss. So say you break your leg and SSP isnt coving your bills, you could claim from this. Or if you where sacked you can claim on this to cover your eseential bills.

Theyll all have their own t's and c's that might or might not cover all eventualities. SO check them out.

The main one in terms of mortagegs is House (buildings) insurance. Its normally a requirement of your mortgage for it to be suitable insured. It will depend on the value of your house and rebuild costs etc but its not a huge expense, i paid less than £100 this year.

Life insurance is mainly for if you have kids or want to leave someone something, so the policy pays off themortgage and someone inherits the mortgage free property so to speak. Bear in mind if your buying as a partnership youll probably be wanting to make sure your side of the mortgage liabilities (doestn work like that technically but you get the idea) are covered.

Contents if your clumsy or broke in to a lot.

PPI if you flit between jobs a lot or are sick a lot.


They can be lumped in together so its not uncommon to see life and critical illness bundled together. And home and contents are quite often bundled together.


Its a bit more complicated and detailed when you look in to them all but should give you the gist.



ps i can only apologise regarding my grammar and spelling, i didnt proof read and its too much effort to go back and change them all now.

Insurances are generally a reassurance product. Something that means you dont have to worry about certain problems occurring or more specifically the financial consequences of them. The issue with insurances is getting value for money. If you claim a lot youll certainly get value for money initially, but then youll become more and more difficult to insure (high premiums) if you never claim, youre paying proportionately a lot of money for what is no physical return. In essence just paying for piece of mind, which is a lot more difficult to judge value than claims.


So for me, ive been in my job 15 years and unlikely to change. Im 31 years old and rarely ill. PPI doesnt make sense for me just yet. It could if i did nothing financially sensible but then i keep a pot of savings for rainy days which essentially works out as my PPI policy. If that makes sense.

kingstreet

Sadly, spadoosh has missed probably the most undersold and most valuable product, income protection.

It is designed to replace some of your income if you are unable to work due to accident or illness.

It is paid tax-free and can run for a fixed term, until the end of your mortgage, or when you retire.

Choose the "own occupation" definition and you can claim when you are unable to follow the main duties involved in your own job and you aren't expected to do something else, just to save the insurer money.

You can pick a "waiting period" which suits your circumstances before claim payments start and the longer you can go, the cheaper the premiums.

spadoosh

kingstreet wrote: »

Sadly, spadoosh has missed probably the most undersold and most valuable product, income protection.

It is designed to replace some of your income if you are unable to work due to accident or illness.

It is paid tax-free and can run for a fixed term, until the end of your mortgage, or when you retire.

Choose the "own occupation" definition and you can claim when you are unable to follow the main duties involved in your own job and you aren't expected to do something else, just to save the insurer money.

You can pick a "waiting period" which suits your circumstances before claim payments start and the longer you can go, the cheaper the premiums.

Sorry i did, i lump it in with PPI, i know its not the same.

Im a closet prepper so my income protection comes in the form of savings and an apocalypse pantry which i think is the most valuable and most undersold insurance policy.


Ultimately though as with all insurances its about risk management. Insurance companies are very good with it as it is how they make their money so they have to be. On the face of it, you get what you pay for. So the more you pay for insurances, the more likely they are to pay out, pay full amounts and offer greater peace of mind. BUt there will be bad deals with in that to so dont just chuck money at it.

ACG

If you were unable to work due to accident or ill health - what would you do? Would state benefits be enough? Would you be eligible? Working for the NHS you will probably have 6 months full pay, 6 months half pay but what do you have beyond that?

If you were to die - what would happen? Would someone else be living in the property be getting evicted because there is no money to clear the mortgage?

Aside from buildings insurance there is no requirement for any of them. You say you are in good health which is exactly when you should be taking out insurance. If you were to be diagnosed with cancer next week (touch wood that does not happen) then you would be uninsurable and you would have left it too late.

The broker should be able to explain them to you. Yes there is probably an incentive for the broker to sell them, but that does not mean you do not need them.

From a personal perspective, the only one I have is Income Protection as Kingstreet mentions. But I should really look at the others, I just struggle to get round to it so doing it whilst buying a house is the ideal time as it is done then.

kingstreet

The average length of an IP claim is about six years and in that time you would have been repossessed (or if using the state scheme) would have eaten up most of your equity in the "benefit" which is now a loan, SMI.

People who are single with no dependents buy life cover. Others buy critical illness cover in the hope of the "lottery win" of getting one of the permitted illnesses badly enough to be able to make a claim to get the lump sum.

For IP, all you have to do it be sick enough to be able to do your job and you can claim.

In my world, it would be mandatory for everyone buying a property with a mortgage.

kingstreet

ACG wrote: »

From a personal perspective, the only one I have is Income Protection as Kingstreet mentions. But I should really look at the others, I just struggle to get round to it so doing it whilst buying a house is the ideal time as it is done then.

The only one I DON'T have is IP.

In 2012 I had a TIA. Not good enough for a critical illness claim so I had no alternative but to carry on working even with the increased risk of stroke and now I have no hope of being able to get cover because of the conditions which caused it, high blood pressure, atrial fibrillation etc.

There was a point I actually wished to be more severely ill so I could look after my family better.

I wouldn't ever want anyone to have that feeling but for a few quid a month when you're younger and fitter...

spadoosh

I liken it to going in to a casino. You know some might win that night you know some will lose one thing you can always be sure of though is the house (insurance companies) always win.

For any insurance product to be viable the insurance company has to make more money on it than it pays out. If youre one of the fit and healthy, youre more likely to be on of the people losing out (paying in more than receiving)

kingstreet

So you just hope to God you're not one of the "unlucky" ones and you have enough time to save up all the premiums you don't pay to get enough together to cover 10, 20, 30 years mortgage payments, Sky subs, energy bills and so on?

If you can do that, great. Then you'll be fit & healthy and have loads of extra money when you retire.

All the things I thought when I was 25 and then 35 and then 36 when I unexpectedly became a father...

... then 46 when I was taken ill!

ACG

I took cover out because I wanted Best Doctors (long story my little girl was in and out of hospital not long after being born). I only took out a £500 a month policy which will cover our Mortgage. It costs me £15 a month.

I do need to increase cover (which I will do at the same time as life insurance), but if the house wins, it has cost me £15 a month or £180 a year for 30 years = £5,400. For me to win (assuming you see it as winning) all that needs to happen is for it to pay out for 1 year in the next 30.

Nobody says you need to fully cover yourself. You just need an amount that would take away the pressure at a time when you are most vulnerable.

cjv

My mortgage broker gave me a quote for life and critical illness cover, but I explained that I would not need it in my situation. He did not mention income protection as an option, is this something that can be arranged myself? or is it best to go through an adviser.