Life Assurance, Mortgage Protection or Income Protection? Please help?! e

matucana

Hi hive mind,
I am just about to get my first mortgage at the age of 48. I'm single and my kids have left home, and my salary is £24,000. I realise I need some form of protection should I die or become ill etc but am bewildered by all the options.

There is nothing in my employment contract with regard to illness or redundancy so I can't trust that I would be helped out there.
I've been quoted £124 a month for Income Protection but that doesn't cover redundancy.
At the moment I am thinking that is an extortionate amount and I would be better going for Mortgage Payment Protection so that the mortgage is always covered, and take my chances with Statutory Sick Pay/Benefits for the rest of it.
I've also been repeatedly told I should have Life Assurance but surely in the event of my death the Mortgage Company would sell off my house to repay any debt and my family would be left with anything remaining?

Sorry for the long post but any advice would be really welcome!

mumf

After an accident at work,and being told I would only get SSP some years ago,I looked into income protection.I rapidly concluded that it was not worth the paper it was written on!

Having children and a wife,I have always had life assurance and critical illness cover,to ,mainly, cover the mortgage and leave the family ok.Now the mortgage is paid and the kids gone,so my wife and I have term life assurance with terminal illness cover.That is to look after each other.

My neighbour however,is single with no kids.Up until his mortvage was paid,he had mortgage payment insurance.He did once tell me though,that the one time he claimed after redundancy,it took a couple of months to kick in.So you do have to look at the terms and conditions I guess.He now does not even have life insurance of any kind,as when he dies ,the house will go to his brother and sister.

That was/is my situation,yours is no doubt different.I hope the above helps in some way.

tacpot12

The quote of £124 for income protection is outrageous. I would suggest you ask LifeSearch for a quote for comparison.

The key with income protection insurance to have a very long deferred period before the insurance pays out. 26 weeks is usually a good idea.

tacpot12

Have you obtained a quote for life insurance? If you are healthy, it might be possible to get term insurance for just a few pounds a month that would pay off your mortgage and leave a sum to bury you with. This might make a significant different to your children's or grandchildren's lives. I'm paying £23/month for £310,000 of cover and I'm 55, although the policy was taken out when I was 43.

Cscott139

£124 p/m does seem like quite a hefty premium and I would recommend you only take out cover that you are comfortable paying for.


If you die, what is the impact on the family you leave behind? If there is a financial impact and you want to negate that then some life cover may be a good idea and is generally pretty cheap.


What are the financial implications of you falling ill? If it is that you wont be able to work and earn a living then income protection would probably be a good idea.

SonOf

After an accident at work,and being told I would only get SSP some years ago,I looked into income protection.I rapidly concluded that it was not worth the paper it was written on!

Income protection is highly valuable and most people should have it. However, income protection is not all equal. You can effectively classify income protection into three types. Budget, Standard and comprehensive. There is also payment protection, which is usually rubbish but some of the providers call their version income proection when it isn't really. That version is the type you usually find on comparison sites. Whereas the proper types of income protection are usually found via IFAs or whole of market protection advisers.

Are you sure you were looking at proper income protection? I could get your point of view if you looked at payment protection or budget versions but not the comprehensive ones.

I've been quoted £124 a month for Income Protection but that doesn't cover redundancy.

Income protection is more expensive than say life assurance. At £124 it would suggest one of the following:
1 - age (you are in your 30s or higher - you say 48 so that would be a big influence.
2 - your occupation is higher risk and not clerical
3 - you are not using an IFA or whole of market adviser but a tied sales rep (their premiums can be 50-60% higher than IFAs/whole of market advisers - dont mistake whole of market mortgage advisers as also being whole of market for insurance. Many are not. Especially estate agent advisers)
4 - Your health is not optimal
5 - the quote is bundling other types of cover.

've also been repeatedly told I should have Life Assurance but surely in the event of my death the Mortgage Company would sell off my house to repay any debt and my family would be left with anything remaining?

You dont need life assurance unless somebody if financially worse off in the event of your death. It doesnt sound like you have a need and if you are being told this by an adviser, then I would suggest you are being potentially missold. On the other hand, if it included critical illness cover then the cost of including life assurance onto that is usually pennies and then it can make sense.

Weighty1

mumf wrote: »

After an accident at work,and being told I would only get SSP some years ago,I looked into income protection.I rapidly concluded that it was not worth the paper it was written on!

There seems to be a massive contradiction here. So you realised that life is difficult if only on SSP and that a plan providing an income would be useful. Most "proper" income protection providers pay out on 90%+ of all claims, some exceeding 95% of all claims so how can you conclude that this type of plan isn't worth the paper it's written on?

csgohan4

mumf wrote: »

After an accident at work,and being told I would only get SSP some years ago,I looked into income protection.I rapidly concluded that it was not worth the paper it was written on!

Where did you go to get your income protection, ? DIY, You get what you pay for. If you want to pay pennies that's what you get,

Perhaps it was't worth it for you because you already have pre existing conditions which they won't cover for

OP your better off going with a broker to explore your options

Generally they pay 60% of your gross income max. The more you want the more expensive it gets, if you defer the claiming period say 6 months to 1 year from you being sick it also gets cheaper.

Really depends on your situation.

matucana

Thankyou for all your replies which I didn't get notifications for at the time!
I used the links through MSE to independent brokers: perhaps my age and occupation as gardener count against me, hence the high premium..