Life insurance - what amount should I cover?

Hello everyone,

We’ve only just bought a house together with my partner and looking for a life insurance or mortgage protection insurance covering both of us in case of our death. We’re interested in decreasing term life insurance. Should we cover the amount we borrowed or the amount we owe to the bank at present? Is it better to apply for life insurance separately or do you think a joint application works better financially?

Replies

  • dunstonhdunstonh Forumite
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    Should we cover the amount we borrowed or the amount we owe to the bank at present?

    If you have only just bought it, does it make a lot of difference?   

    At the end of the day, it is to clear the debt.  So, go by that figure.

    Is it better to apply for life insurance separately or do you think a joint application works better financially?

    You only need to clear the mortgage once if one of you dies.  Not twice.   So, joint life is suitable.

    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • AbsensCarensAbsensCarens Forumite
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    If you have only just bought it, does it make a lot of difference?
    Not really. I just wanted to point out that we're fresh when it comes to buying a house.
    dunstonh said:
    At the end of the day, it is to clear the debt.  So, go by that figure.
    That's what I thought. I know some people around me, who bought life insurances covering the amount they borrowed, but not what they actually owe. It seems ridiculous.

    Thanks for your reply.
  • theoreticatheoretica Forumite
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    That's what I thought. I know some people around me, who bought life insurances covering the amount they borrowed, but not what they actually owe. It seems ridiculous.
    Not really - depends how much it costs as some extra money can be very appreciated when bereaved. 

    But a banker, engaged at enormous expense,
    Had the whole of their cash in his care.
    Lewis Carroll
  • dunstonhdunstonh Forumite
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    That's what I thought. I know some people around me, who bought life insurances covering the amount they borrowed, but not what they actually owe. It seems ridiculous.
    Not really - depends how much it costs as some extra money can be very appreciated when bereaved. 

    If people want an additional amount for family protection or salary replacement, then they should do it as an additional segment or separate plan and likely to be best on level term assurance for that chunk.  Mainly as the other financial needs that exist are unlikely to have the same timescale as the mortgage.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
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