Life insurance + income protection advice

Chris94

I'm in the process of buying a house (moving from a flat) and I've been advised/recommended by my mortgage advisor to take out life insurance with critical illness cover and income protection which works out at about £20 month each, so £40 overall.

I believe the mortgage advisor may be limited to recommending policies from L/G and the illustration shows they will receive £600 commission or so for each policy if I took it out. So I'm not really sure whether to trust the recommendations or not.

I did a quite on Compare the market for life insurance and received a quote from L/G which was £5 cheaper month but had less cover (less conditions for covered). I feel the extra cover may be exclusive to brokers.

I.e. I've been advised to take out income protection till I'm 68 (retirement) for an extra £10 a month than if I took it out till 51 when the mortgage is payed off. But I'm thinking I'll be only in this house for up to 10 years at which point I'll most likely be taking a new policy out to replace it anyway - when I can set it for a longer term. Obviously the premiums will go up because I'm older, but surely they would regardless of whether or not my original policy was taken out to finish at 51 or 68?

Does anyone have any advice for taking out these types of insurance? Would it be worthwhile going to a dedicated insurance broker?

sal_III

I think it's standard for the insurers to offer better CI cover I had the same from my broker with Aviva. It's up to you to decide whether to opt for the better more expensive cover or not.

You don't have to take new life insurance, just because you moved house or re-mortgaged. If the amount covered is enough to payout the mortgage and provide for the rest of the family.

Weighty1

L&G do 2 different critical illness plans, their basic plan and Critical Illness Extra which is far more comprehensive - I'd almost always go for the Extra option.

Whilst I understand your logic in taking the IP out until age 51 to keep the premiums down, what happens if you develop a condition in the next few years. I, for example, was diagnosed with Type 1 diabetes at age 38. My options for taking out IP now are severely limited so if I'd only taken a plan with an early retirement I'd have been stuck with it. In addition to that, even once the mortgage is repaid there'll always be bills, you'll always need to eat.

That said, I would check if the mortgage broker is independent for insurance otherwise there's no way of knowing if it's the best option for you.

SonOf

I'm not sure the L&G sales reps have both versions of the plan. Many sales reps get a cut down version. Wven if they have all the versions/options, often have higher premiums than whole of market/IFAs for exactly the same.

The problem with seeing a sales rep of one insurer is that you are almost certainly not seeing the best options or the best prices.

There are generally two rules of thumb when it comes to getting mortgage/insurance advice when buying a house
1 - Never use the estate agent mortgage broker
2 - Never use a single tied sales rep for the insurance.
(often the two things above are the same person).

csgohan4

the MSE does a good article on life assurance who's brokers also do income protection which I got bot of mine from.