Life insurance or mortgage protection

sam222

Hi there,
I am 45 years, just bought a flat, don't know much about life insurance or mortgage insurance or protection, also there is chance that I move to another European country, to be close to my son, which would be better option for me, many thanks for your advice, thanks 

Sandtree

To speak to a protection insurance broker who can assess what you have, discuss your plans and advise you on the best course of action.

tacpot12

Definitely compare the cost of the two. I ended up taking out level term insurance as I wanted life insurance not just to cover the mortgage but also to provide as much financial support to my children as possible. 

dunstonh

on't know much about life insurance or mortgage insurance or protection

Mortgage insurance/protection is not a specific product type.   It is a term used to cover any type of insurance that could be used to protect you with a mortgage.   It could be a decreasing term assurance or an income protection or PPI.

Do you have anybody who would be financially worse off in the event of your death?

sam222

dunstonh said:

on't know much about life insurance or mortgage insurance or protection

Mortgage insurance/protection is not a specific product type.   It is a term used to cover any type of insurance that could be used to protect you with a mortgage.   It could be a decreasing term assurance or an income protection or PPI.

Do you have anybody who would be financially worse off in the event of your death?

Thanks dunstone. 
Yes I have my son , but living in Germany. 

Weighty1

sam222 said:

dunstonh said:

on't know much about life insurance or mortgage insurance or protection

Mortgage insurance/protection is not a specific product type.   It is a term used to cover any type of insurance that could be used to protect you with a mortgage.   It could be a decreasing term assurance or an income protection or PPI.

Do you have anybody who would be financially worse off in the event of your death?

Thanks dunstone. 
Yes I have my son , but living in Germany. 

you have your son but if he lives in Germany I'm guessing he is not financially dependent on you?  If not then you could argue that there is no requirement for life cover (although you may want to leave him the property as an inheritance).
It's worth noting that many UK insurers would not be comfortable providing you with cover if you are planning to move overseas, especially so if that move could be a permanent one.

Sandtree

sam222 said:

dunstonh said:

on't know much about life insurance or mortgage insurance or protection

Mortgage insurance/protection is not a specific product type.   It is a term used to cover any type of insurance that could be used to protect you with a mortgage.   It could be a decreasing term assurance or an income protection or PPI.

Do you have anybody who would be financially worse off in the event of your death?

Thanks dunstone. 
Yes I have my son , but living in Germany. 

Is he financially dependent on you? Do you send him money every month? How long to you plan continuing to do this?

Insurance companies are in it to make a profit and so odds are if you are simply wanting to leave him some money then save the premiums yourself on average will be worth more. The "on average" doesnt really count though if your kid is 10, in private school and you are the main breadwinner that pays for his home, schooling etc.

Weighty1

Sandtree said:

sam222 said:

dunstonh said:

on't know much about life insurance or mortgage insurance or protection

Mortgage insurance/protection is not a specific product type.   It is a term used to cover any type of insurance that could be used to protect you with a mortgage.   It could be a decreasing term assurance or an income protection or PPI.

Do you have anybody who would be financially worse off in the event of your death?

Thanks dunstone. 
Yes I have my son , but living in Germany. 

Insurance companies are in it to make a profit and so odds are if you are simply wanting to leave him some money then save the premiums yourself on average will be worth more. 

I'd disagree with that.  If you look at premium rates on whole of life policies (medically underwritten ones) you would never save as much as would be paid out in the event of a claim.  I had a client a few years ago and he took a £4m WOL plan.  If he'd have lived to be 90 (he was about 52 at the time) then he'd have paid about £1.3m in premiums.

If you can afford the premiums in retirement a whole of life plan is very much a way of gifting an inheritance.

Sandtree

Weighty1 said:

Sandtree said:

sam222 said:

dunstonh said:

on't know much about life insurance or mortgage insurance or protection

Mortgage insurance/protection is not a specific product type.   It is a term used to cover any type of insurance that could be used to protect you with a mortgage.   It could be a decreasing term assurance or an income protection or PPI.

Do you have anybody who would be financially worse off in the event of your death?

Thanks dunstone. 
Yes I have my son , but living in Germany. 

Insurance companies are in it to make a profit and so odds are if you are simply wanting to leave him some money then save the premiums yourself on average will be worth more. 

I'd disagree with that.  If you look at premium rates on whole of life policies (medically underwritten ones) you would never save as much as would be paid out in the event of a claim.  I had a client a few years ago and he took a £4m WOL plan.  If he'd have lived to be 90 (he was about 52 at the time) then he'd have paid about £1.3m in premiums.

If you can afford the premiums in retirement a whole of life plan is very much a way of gifting an inheritance.

You are missing the 38 years of compound interest/investment return on the numbers plus the risk that he hits a hard spot and cannot afford the premiums for a while and the policy is cancelled for non-payment giving a nil return. Only needs 5% return on investment to exceed the value and if you are talking a long term investment you should be able to achieve a higher rate of return.

Weighty1

Sandtree said:

Weighty1 said:

Sandtree said:

sam222 said:

dunstonh said:

on't know much about life insurance or mortgage insurance or protection

Mortgage insurance/protection is not a specific product type.   It is a term used to cover any type of insurance that could be used to protect you with a mortgage.   It could be a decreasing term assurance or an income protection or PPI.

Do you have anybody who would be financially worse off in the event of your death?

Thanks dunstone. 
Yes I have my son , but living in Germany. 

Insurance companies are in it to make a profit and so odds are if you are simply wanting to leave him some money then save the premiums yourself on average will be worth more. 

I'd disagree with that.  If you look at premium rates on whole of life policies (medically underwritten ones) you would never save as much as would be paid out in the event of a claim.  I had a client a few years ago and he took a £4m WOL plan.  If he'd have lived to be 90 (he was about 52 at the time) then he'd have paid about £1.3m in premiums.

If you can afford the premiums in retirement a whole of life plan is very much a way of gifting an inheritance.

You are missing the 38 years of compound interest/investment return on the numbers plus the risk that he hits a hard spot and cannot afford the premiums for a while and the policy is cancelled for non-payment giving a nil return. Only needs 5% return on investment to exceed the value and if you are talking a long term investment you should be able to achieve a higher rate of return.

There is no risk of him hitting a hard spot, hence him needing a WOL plan to cover £4m (it was for IHT planning).  I'm not sure where you get the 5% growth from as he wasn't investing an initial amount which would grow.  Based on Aviva investment returns calc he'd have need to save each month £4,050 for 38-years to attain £4m and that's based on 4.5% returns.  That monthly amount is not far from double what he is paying for his premium and his family get the £4m even if he only lives a year.  OK, he could live to 100 but even then he'd need to save ~20% more than he was paying in premiums to get to the same £4m.

Think we've gone totally off track here.

Sandtree

I went for a slightly cruder calculation on the basis you said 38 years of premiums were £1.3m so £34k per year and calculated annually with 1 initial premium as the seed and the same premium each year but think I accidentally effectively did 39 years by error. 

Using the Pru tool with 2,850 as monthly premium, to tie in with your £1,3m number, and their 5.7% EGR on a monthly saver gives £4.6m in 38 years time. There obviously can be other considerations potentially around tax etc which havent been factored in.