Life Insurance....A dilemma

dukesy_2

So, Long story short

We currently have a Life Policy including CI for 70K (DTA) with 11 years to run, costing about £27 per month

We have a new mortgage, which has increased from 70K to 140K, leaving a 70K shortfall on life cover. Also, it is over 19 years (previously only had 11 yrs to run)

Also to bear in mind is that I gave up somking 4 months ago. (Still off !)

So

Options as I see them are :

1) Run a NEW 70K DTA with CI cover alongside : cost approx £72/mth ! (BUT exist DTA runs out 8 yrs too early)
2) Cancel Existing and take new 140K cover : Cost approx £85 per month

Question 2

Do I take out the cheapest possible for 12 months, then review them as i will be offically a NON smoker then ????

Any experts out there have any advice ?

shaunrc

Hi dukesy

Firstly I am an ifa who deals in this area a lot but please do not take this as advice as it has a specific meaning under FSA rules.

There are several areas to consider.

1. Your old policy is likely to have wider ranging CI definitions than a new one.To be sure I would need to know how long ago you took it out. So this issue might tempt you to keep the existing cover.

2.Can you afford to fully cover your mortgage for life cover and CI and how important is it to you? If you have a family and it is important to you that leads towards covering it all which frankly is almost impossible to do whilst keeping the policy above. Sorry not all answers are simple!

3. Newer policies are tending to be more comprehensive in their cover again as more conditions are added and it is definitely not true that all policies are the same. So you may need to think beyond just the cheapest cover. Or at least realise that not all policies are the same.

4.Non-disclosure is a big issue around 20% of claims are turned down on this.Did you declare everything when you took out the first policy? This is where my job comes in as an ifa's job in my view is to cover this sort of area.

5.Have you put your existing cover in trust?


As for the smoking issue simply declare it when you have stopped for 12 months and ask for a review based on non-smokers rates.

In general my view is that CI cover is not the same as life cover and is an area where advice is needed.Lets face it paying on death is simple and firms in my experience pay out but CI is more complex. I guess you would expect that answer from an IFA but it is true for the reasons shown above and also for help should you ever claim.

Hope this helps.