Currently have life insurance but moving house and need more cover, cancel or have 2 policies?

Corbula

I've currently got life insurance with L&G for £200,000 with critical illness for £40,000 (as it covered our disabled daughter too). This is just in my name.

Since taking it out I've got married and now we're in the process of moving house so need more cover for the increase mortgage amount. The new mortgage will be £332,055.

From my understanding I wouldn't be able to increase the current policy to cover this amount and also need to make it a joint policy now too.

Do I just cancel the current one off and open a new joint policy to cover the higher amount? or take a new policy out for the difference or would that not work?

I was also told to think about income protection in case I can't work as my income is the main income for the household but don't know too much about it.

DullGreyGuy

Corbula said:

I've currently got life insurance with L&G for £200,000 with critical illness for £40,000 (as it covered our disabled daughter too). This is just in my name.

Since taking it out I've got married and now we're in the process of moving house so need more cover for the increase mortgage amount. The new mortgage will be £332,055.

From my understanding I wouldn't be able to increase the current policy to cover this amount and also need to make it a joint policy now too.

Do I just cancel the current one off and open a new joint policy to cover the higher amount? or take a new policy out for the difference or would that not work?

I was also told to think about income protection in case I can't work as my income is the main income for the household but don't know too much about it.

In some cases you can adjust the sum insured but they are a small minority and most you can't. 

Ultimately you need to get quotes and make your decision based on those. For us, as the sole income earner there is no need for joint insurance and so when we bought I just added a second policy because as the years had gone on the price for my insurance had increased so was cheaper to have a second medium sized policy than cancel the existing one and get one large policy as that would have simply cost more to no benefit. 

Is the mortgage really the only consideration? As the main income earner could your window(er) provide the same level of lifestyle for themselves and your daughter if you were to die based on their income alone but without mortgage repayments? Most people are significantly underinsured. 


Income Protection to me is a much more important product than Critical Illness but it's a marketing term applied to multiple different products. Full fat PHI will replace your income until you are due to retire if you are too ill to work, you can defer it coming into payment based on your sick pay/savings and reduce its premiums. The average claim is many years in length.

Unfortunately this marketing term is also used on ASU/PPI which is a much more basic product and typically pays out for a maximum of 12-24 months so those with serious illnesses are still typically ill when the payments stop whereas those with PHI would on average be looking at another 5-7 years of payments.