Unsure if we need decreasing life assurance for mortgage

Sneezydumpling

Hello,

I would appreciate some advice. Me and my husband have just exchanged on our first house and part of the mortgage offer is to have insurance in place.
 However we both have life insurance in place already. 
Our mortgage value is £244k over 26 yrs and we are both early 40s.
 I currently have LI for £200k over 20yrs ending in 2031 and pay 11pcm. H has LI for 200k over 20yrs ending in 2037 and pays 25pcm. 
I still have children under 18 and would like any insurance to pay for funeral costs. We intend to overpay and use remortgage to decrease the term over time. 
Would we be better to try and
1.Each top our current policies up to 250k then get individual decreasing assurance for the rest of the mortgage term when they run out. 
2. Keep these policies and get a  decreasing assurance on top (£££) 
3. Cancel both policies and get a life assurance decreasing policy for the mortgage term. 

Any advice would be greatfully recieved. 
Thank you 

Sandtree

You die in 2032... does your husband's income cover all living costs, mortgage etc? The fact you are worried about the c£4,000 for a funeral suggests not.

Your husband dies tomorrow and you get £200k... does your income cover everything? Can you still work full time with the kids?

Life insurance is all about scenario planning and you should probably also recall why you felt you needed £200k cash without a mortgage 10 years ago and why that need drops away in 10 years time.

dunstonh

and part of the mortgage offer is to have insurance in place.

That is unusual nowadays but does occur ocassionally.

I still have children under 18 and would like any insurance to pay for funeral costs. We intend to overpay and use remortgage to decrease the term over time. 

So, you have £200k for to replace lost income in the event of you or your husbands death (or provide for childcare).   That isn't a lot but its better than nothing.

Would we be better to try and
1.Each top our current policies up to 250k then get individual decreasing assurance for the rest of the mortgage term when they run out. 
2. Keep these policies and get a  decreasing assurance on top (£££) 
3. Cancel both policies and get a life assurance decreasing policy for the mortgage term. 

1 - if you "top up" your existing life assurance plans to match your mortgage then that is going to leave you very short for family protection.   It will also fail to meet the whole term of the mortgage.

2 - That is the logical option

3 - That would match the mortgage but leave you no family protection.

Option 2 is the common sense one.

Sneezydumpling

My original life insurance was taken out when my children's father died and it was all i could afford at the time and was to cover the guardians cost to house 3 children if i died.
Obviously my circumstances have changed. By the time my life insurance runs out all will be over 18 (youngest currently 12)
My husbands wage would cover everything. Mine wouldnt but i work full time and have been poorer before so would manage.
Whilst i agree plan b is possible the most sensible it is a huge amount to pay pcm on top of current ones for something that may never happen.

kingstreet

A huge amount to pay? What quotes have you obtained?

Weighty1

Sneezydumpling said:

My husbands wage would cover everything. Mine wouldnt but i work full time and have been poorer before so would manage.

Is that acceptable to you?  Me personally, I'd rather be a few £'s poorer now by paying for the insurance than a hell of a lot poorer if the worst happened and the right cover wasn't in place.

What happens to your children if you die?  Do they stay with your husband or still go to a guardian?  If the latter then it'd really screw them over having the life insurance go to your husband to pay the mortgage.

dunstonh

Obviously my circumstances have changed. By the time my life insurance runs out all will be over 18 (youngest currently 12)

Most children remain financially dependent on their parents until their mid 20s.  So typically, you would set the life assurance to expire in their 20s.

Whilst i agree plan b is possible the most sensible it is a huge amount to pay pcm on top of current ones for something that may never happen.

Life assurance is cheap to buy.  So, if you are seeing huge increases then something is wrong.

Sneezydumpling

Children would stay with my husband. Quotes we are getting are approx 45pcm which on top of others makes around 80pcm.

When mine runs out children would be 22, 26 and 27.

Thanks for all the input.

I suspect I'm just being tight. 

Weighty1

Sneezydumpling said:

Children would stay with my husband. Quotes we are getting are approx 45pcm which on top of others makes around 80pcm.

When mine runs out children would be 22, 26 and 27.

Thanks for all the input.

I suspect I'm just being tight. 

It sounds like it! 

dunstonh

Children would stay with my husband. Quotes we are getting are approx 45pcm which on top of others makes around 80pcm.

So, your husband would give up work to look after the children?    Where will he get his income from?

I suspect I'm just being tight.  

Just think how tight it will be if either of you suffer a claimable event.

Sneezydumpling

dunstonh said:

Children would stay with my husband. Quotes we are getting are approx 45pcm which on top of others makes around 80pcm.

So, your husband would give up work to look after the children?    Where will he get his income from?

I suspect I'm just being tight.  

Just think how tight it will be if either of you suffer a claimable event.

They are too old for childcare and he wfh permanently but it definitely would have been an issue when they were at primary.

Thanks for all the advice. We are going to get it all and grumble about the cost until one of us dies

Cheers all