Worth keeping decreasing mortgage life insurance?

modelreject

Hi,. This may sound silly. Just trying to make best use of money. May be debatable on what is best but this is the situation due to the nature of it. It will be opinion based rather than a hard truth but here goes...

I have a family. I know I will have enough money to pay off mortgage should anything happen. Relatively little left on mortgage £35000. Currently paying £30 for decreasing mortgage life insurance. Should I stop paying it and reinvest the £360 p/y?

Thanks

modelreject

I will add to this that although I may have the mortgage covered, we may move in few years. If we were to take out a larger mortgage for a more expensive house would it cost more for life insurance since I had cancelled policy? ie it would be completely new.

DullGreyGuy

Is it just life insurance or Critical Illness and Life?

It can only be answered in the round when considering your other insurances, debts, lifestyle, incomes etc. What would your position be if one of you died tomorrow? Able to maintain the same lifestyle with the reduced income and pensions? If it includes CI, then how about if you were just too ill to work ever again and need to adapt the house for your illness? Have enough other cover to pay the bills and do the building works?

Mark_d

If you don't need and won't benefit from this extra insurance then why continue paying for it?  That's my position.

I'm married with no kids.  I've never paid for life insurance because the death-in-service benefit and pension fund would easily pay for my half of our property and ensure my partner is comfortable if I was to die.

Almost exactly two years go I realised I didn't need the income replacement policy I'd held for the previous 15 years.  So I just cancelled it :-)

modelreject

DullGreyGuy said:

Is it just life insurance or Critical Illness and Life?

It can only be answered in the round when considering your other insurances, debts, lifestyle, incomes etc. What would your position be if one of you died tomorrow? Able to maintain the same lifestyle with the reduced income and pensions? If it includes CI, then how about if you were just too ill to work ever again and need to adapt the house for your illness? Have enough other cover to pay the bills and do the building works?

Exactly why I posted this. Some things I hadn't thought about. Thanks DullGreyGuy. Great help

Brie

Just in response to one part of your query - if you move in a couple of years will the insurance at that point be sufficient to cover whatever needs covering on the mortgage or on the CI issues that DullGrey mentions?  

I stopped paying our insurance when we were about a year from the end of the policy time.  There was very little left to be paid, there was ££ in the bank and it was just mortgage protection so even though it was "only" £30ish a month it was money better in our pockets.  Any payout would have been minimal at that point so not much to lose out on.  

So have a look too at what it's paying out and whether the policy will end before you intend to move.  Maybe taking out a new policy for some other purpose would be a better option.  Like just CI instead of mortgage protection.  My parents had life insurance for years but then realised when they were fairly well off and my siblings and I were all working adults there was no need for them to insure their lives.  What they did instead was take out CI for all "kids" in case we ran into problems.  Made much more sense.