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

amnblog

Justme18

I think there are some crossed wires here.

The premium you quote is miles too high for standard life cover in connection with a mortgage given your ages.

Two tips

1. If you are not confident in who you are dealing with, get a second opinion

2. Do not treat this as anything other than priority. When you witness someone trying to manage a whole mortgage on half the income as a widow you will understand.

ACG

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.

That does sound VERY expensive. I am guessing as DullGreyGuy says, it probably also includes critical illness (as well as probably terminal illness but terminal illness usually costs very little as it only speeds up a payout). 

I think first of all you probably need to understand what you have been quoted for. 

With any insurance, you need to understand the options and what you want. 
Life insurance - pays out if one of you dies. (lump sum)
Critical Illness - pays out if one of you hit the definition for things like cancer, heart attack etc. (lump sum)
Income Protection - pays out if you are unable to work due to ill health. (monthly amount)

JustMe18

DullGreyGuy said:

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?

it Does include Critical illness, is it something worth to take? it only says it covers £20 000.   It doesn't include injury though. It's decreasing, mortgage is for 28 years. 

tacpot12

You might be better off with a level term policy. Ask a local insurance broker for a quote.  

ACG

Did you give your broker a budget of £100 pm? 
I am assuming they have tried to give you as much cover as they can within your budget maybe? 

JustMe18

ACG said:

Did you give your broker a budget of £100 pm? 
I am assuming they have tried to give you as much cover as they can within your budget maybe? 

No, I didn't give them any budget at all....

ACG

JustMe18 said:

ACG said:

Did you give your broker a budget of £100 pm? 
I am assuming they have tried to give you as much cover as they can within your budget maybe? 

No, I didn't give them any budget at all....

OK... Im stumped. Im sure there are reasons and they would explain it to you. Its not a standard way to do it, but that does not mean it is wrong. 

chanz4

pennypincher64 said:

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. 

I pay £11 via aviva a month on 150k level one

dimbo61

So why not use a comparison website and put your details in.
Level term, joint life insurance policy for at least your outstanding mortgage amount and covering you both till retirement age.
Ask for a policy which does not increase every few years.
We used a broker Cavendish and paid them £50 some years ago to do this and pay £24 a month for £120,000 joint cover till retirement. 

pennypincher64

Thanks both, you have really strong points and I agree with you, thank you very much