Life Insurance through Mortgage broker - Is it a rip off?

pennypincher64

Hey.everyone.

I've a feeling something isn't quite right with my life insurance.

It was set up through my mortgage broker (which felt like a positive experience to be honest in regards to buying the house but I'm just uncertain about life insurance through them(). 

The mortgage has 24 years remaining and £67k left.

 The life insurance finishes in 2035 which is obviously less than 11 years away, and covers £74k, which decreases over the minus 11 years left of the life insurance policy. (Supposedly we wou

The life insurance is £27.25 a month ( last year I asked if we could get a better deal and it actually went up £1 a month which didn't sit right with me). 

Clearly the timing doesn't match up, neither does the amount and the monthly price feels a bit steep? (Supposedly we would get a new deal at that stage - which to me feels a bit risky, especially if circumstances change?). 

Please let me know your thoughts I would appreciate it. 

Thank you very much. 

On-the-coast

You haven’t said how old you are or what your state of health is, which is crucial for establishing value. 

You say we - but is this a single life insured?

also do you “need” the insurance. Could your partner afford to pay the mortgage without a lump sum payout.  If that’s the case you might be better off putting that 27/month into a rainy day account. 

amnblog

The older you are when you apply the more life insurance costs.

If you took the insurance out a number of years ago (as it appears) you will not get a comparable rate now.

Even if it is say 10% too high, is a £356 saving going to rock your world?

pennypincher64

On-the-coast said:

You haven’t said how old you are or what your state of health is, which is crucial for establishing value. 

You say we - but is this a single life insured?

also do you “need” the insurance. Could your partner afford to pay the mortgage without a lump sum payout.  If that’s the case you might be better off putting that 27/month into a rainy day account. 

Good point 😄 I'm early 30s and in perfect health. I eat healthy, keep fit etc, don't smoke, drink or do drugs. Good point about the rainy day account.. I think I'd be fine it's more if I passed away so my spouse is sorted. It's a double life insured. 

pennypincher64

amnblog said:

The older you are when you apply the more life insurance costs.

If you took the insurance out a number of years ago (as it appears) you will not get a comparable rate now.

Even if it is say 10% too high, is a £356 saving going to rock your world?

That's what I worried about, so in 10 years time there'd still be a good £43k left to pay which isn't a big amount I get that but that doesn't seem right? Only took the insurance out in late 20s. 

The saving wouldn't rock my world no, I would say but good question too. 

ACG

It really depends. 
It sounds high considering your age and the amount of cover, but as others have said there can be more to it. 

The premium will go up as you get older. I took out an income protection policy 7 years ago when my daughter was born. I have just taken out another policy for the same amount (but a longer deferred period) as a top up to my existing policy and the premium is 50% higher. Im not ripping myself off there haha, im just getting closer to 40 and apparently thats when things start going wrong (you have "the clicks" to look forward to - stand up, click, sit down... click). 

Im fit and healthy, but covid wipes me out. I had a bit of a battle to get normal rates on income protection. Even though I do weights, go walking, play golf and do a bit of boxing they were still very close to declining cover. Had I applied 2 months ago, I would have probably been declined. So fit and healthy can mean different things, I know people with diabetes who are fit and healthy but getting cover for them would be tricky and/or expensive. 

Some brokers have what are called "loaded premiums" however, which basically means extra commission and higher premiums. This is allowed in the industry, if the commission was more than around £550 then you probably have loaded premiums. 

pennypincher64

Thank you ACG I really appreciate your response. Your situation sounds more reasonable to my own in my opinion. When I say healthy, no health concerns like diabetes, blood pressure and blood work is normal and always has been. Absolutely no health issues at all. .

Haha I've been conscious of the clicks from a young age so it's been a long term battle staving them off! 

Belated congratulations on the arrival of your daughter and I'm glad you got her sorted with insurance. Sounds like you have income protection rather than critical illness? Which I think makes more sense... I have the opposite. 

My thinking now is:

- I should cancel it with the mortgage broker 
-  Set up my own life insurance for less money
- Put the rest into savings
- Allow the policy to cover the entire term
- Get income protection and not critical illness 
- Accept the policy won't be quite as good but still good, better value and crucially longer term rather than it shooting way up half way through a mortgage term (we could move house etc and it would be even worse value I suppose)

I get nobody can advise me, but I'm thinking that sounds generally reasonable and probably a better value set up and more sensible than what I have now? 

My main reservation too is that it would maybe damage the relationship with the mortgage broker who has been great mortgage side of things (but maybe this is why...). But now I don't know if it's a relationship worth keeping considering the set up of my policy and I've recently heard a bit of over charging by him on the first time buyer side of things. 

ACG

Dont cancel anything until you have whatever it is you plan on putting in place, in place. If you cant get cover or something happens in the interim, you are not covered. 

Also, you might need to check if you are liable for any of the commission clawback - check what you signed with the broker. Some brokers (not all), will require you to repay the commission that they have taken back if/when you cancel a policy. 

There is no harm in reviewing your policies or getting a second opinion. 
My daughter is 7 so only slightly belated haha. Funnily enough (or maybe not) I actually took my policy out after she was born. She was in and out of hospital and the policy I took out gave me something called best Drs. I could get a second opinion on the diagnosis and best form of treatment for her. Sometimes it is worth looking at the added extras. 

My policy also includes a type of NHS 111, I could not get through on 111 but I used the version I had with my policy and got through in 1 ring. The added extras I have used a few times over he years with my daughter. 

I would not be put off using a broker as a knowledgeable one can help with all the extra bits and if you ever make a claim you might have someone you know on hand to help make the claim. Although in fairness, from what I hear the claims departments are generally quite good and sympathetic.

pennypincher64

Thank you very much for this. With everyone's input I think I have a better idea now and I will put a plan in place, making sure I can get a new policy before cancelling the one I have. Thank you so much everyone I appreciate this greatly. 

JustMe18

ACG said:

It really depends. 
It sounds high considering your age and the amount of cover, but as others have said there can be more to it. 

The premium will go up as you get older. I took out an income protection policy 7 years ago when my daughter was born. I have just taken out another policy for the same amount (but a longer deferred period) as a top up to my existing policy and the premium is 50% higher. Im not ripping myself off there haha, im just getting closer to 40 and apparently thats when things start going wrong (you have "the clicks" to look forward to - stand up, click, sit down... click). 

Im fit and healthy, but covid wipes me out. I had a bit of a battle to get normal rates on income protection. Even though I do weights, go walking, play golf and do a bit of boxing they were still very close to declining cover. Had I applied 2 months ago, I would have probably been declined. So fit and healthy can mean different things, I know people with diabetes who are fit and healthy but getting cover for them would be tricky and/or expensive. 

Some brokers have what are called "loaded premiums" however, which basically means extra commission and higher premiums. This is allowed in the industry, if the commission was more than around £550 then you probably have loaded premiums. 

Can i ask you some advice ( sorry to jump on the post), we are also buying a house and mortgage will be around £210k. We are 39 & 40, also perfect health, we both play sports though, my husband is professional ice hockey player ( not sure if it does affect the cost?) and he is planning still to play for another couple of years. I play volleyball, so not that dangerous lol . We never smoked in our lives, we drink occasionally a glass of wine of beer.  No medical history at all , but his father died from heart attack at the age of 53. We have been quoted around £100 a month with Aviva through our broker, i think it does include terminal illness cover. Is it a good price? we haven't completed yet, they are really pushy, keep calling me all the time. We also get 3 x salary from our works in case of our death ( our combined salaries are around £80k). Do I take it through them or do I do my own research ? This will be a first life insurance in our lives.

DullGreyGuy

JustMe18 said:

ACG said:

It really depends. 
It sounds high considering your age and the amount of cover, but as others have said there can be more to it. 

The premium will go up as you get older. I took out an income protection policy 7 years ago when my daughter was born. I have just taken out another policy for the same amount (but a longer deferred period) as a top up to my existing policy and the premium is 50% higher. Im not ripping myself off there haha, im just getting closer to 40 and apparently thats when things start going wrong (you have "the clicks" to look forward to - stand up, click, sit down... click). 

Im fit and healthy, but covid wipes me out. I had a bit of a battle to get normal rates on income protection. Even though I do weights, go walking, play golf and do a bit of boxing they were still very close to declining cover. Had I applied 2 months ago, I would have probably been declined. So fit and healthy can mean different things, I know people with diabetes who are fit and healthy but getting cover for them would be tricky and/or expensive. 

Some brokers have what are called "loaded premiums" however, which basically means extra commission and higher premiums. This is allowed in the industry, if the commission was more than around £550 then you probably have loaded premiums. 

Can i ask you some advice ( sorry to jump on the post), we are also buying a house and mortgage will be around £210k. We are 39 & 40, also perfect health, we both play sports though, my husband is professional ice hockey player ( not sure if it does affect the cost?) and he is planning still to play for another couple of years. I play volleyball, so not that dangerous lol . We never smoked in our lives, we drink occasionally a glass of wine of beer.  No medical history at all , but his father died from heart attack at the age of 53. We have been quoted around £100 a month with Aviva through our broker, i think it does include terminal illness cover. Is it a good price? we haven't completed yet, they are really pushy, keep calling me all the time. We also get 3 x salary from our works in case of our death ( our combined salaries are around £80k). Do I take it through them or do I do my own research ? This will be a first life insurance in our lives.

Are you sure it doesn't include Critical Illness?

So joint life paying on the first death?

Level or decreasing? Guessing the later given you mention mortgage. 25 year term or something else?

Others here will be much closer to current pricing than I, if it is just life insurance and not also critical illness then it sounds high to me but cannot say what the impact of being a professional sports person is nor how risky ice hockey is seen given we are potentially just talking death/life and not CI. 

Why not approach a whole of market Protection Broker and get comparable quotes from them?