mortgage life assurance - no moving date...

chubbina

I have a query regarding mortgage life insurance. Sorry for the rambling but this house move is making my brain mushy!

We are buying a house but have not yet been given a completion date (as the house is pending probate). I saw my solicitor yesterday to go through some paperwork and he asked if we had life insurance set up and ready to go. We don't, I have only looked at quotes online. Our mortgage provider offered us life insurance but we declined it as we could find a cheaper quote online. I have found Legal & General to be quite reasonable and would like to purchase their decreasing term mortgage life insurance via Quidco (for the £80 cashback!). The only problem is as we do not have a completion date I don't know what I should put for the start date online. I have also discovered that if it is referred and L&G need further medical history this can take several weeks. Eek!

I don't really want to be out of pocket and set this up now as we don't know if we will be moving in 2 weeks time or even at all! Should I just set it up now and put a start date for say, the end of next week, and then just cancel it if it looks like we're not moving??

Hope someone can advise me.

** Just rang L&G to ask for advice on entering a start date but they said I should ask Quidco for the info as they are essentially acting as a broker. I can't imagine Quidco will be able to give me any advice will they? **

lisyloo

Do either of you have "death in service" benefits from your employer?
Do either of you have private pension funds built up which will pay out in the event of your death?

What I'm asking is do you really need it?

If you decide you do need it then would you rather be in the posistion of
a) Paying a little too much and having plenty of money if one of you dies
b) Not getting it sorted out in time and potentially being in a really bad situation if one of you dies.

Given the money we are talking I'd choose a).

Also note that you are committed partially from exchange not completion.
At the point of exchange you would lose your deposit and potentially have to pay the costs for the other side(s) and have nothing to show for it, so make sure you understand your liabilities with respoect to the dates you want insurance for.

Life insurance is generally not too expensive so if you pay for 2 weeks extra it isn't going to be the end of the world (less than a fiver for me).

chubbina

Thanks for the reply.

Unfortunately we have to have it as it's a condition of us taking out the mortgage with Nationwide.

I will try and arrange it now as I'd rather pay a little extra than I need to than be hugely out of pocket if something terrible happens!!

lisyloo wrote: »

Life insurance is generally not too expensive so if you pay for 2 weeks extra it isn't going to be the end of the world (less than a fiver for me).

Sorry if I'm being nosey but can I ask who your life insurance is with as that's a great price! L&G have quoted £22.75 for both of us which I guess isn't too bad. It's decreasing term for a £185,000 mortgage. Although last time I searched (only a couple of months ago) I found it for £15 with the AA but we have both had a birthday since then.

lisyloo

Unfortunately we have to have it as it's a condition of us taking out the mortgage with Nationwide.

Are you certain it's a condition of the mortgage?
If so then fine, but sometimes a salesman keen on his commission might be happy to imply or let you think that when it's not the case.
If you are bothered then ask whether it's a "condition of the mortage". Don't ask questions like "Do I have to have it?" because a clever sales person can say that you "need" it and you may infer that it's a condition of the mortgage when it isn't.
Don't let them force you into taking it if you don't want/need it.
Of course if you want it then there's no problem.

Sorry if I'm being nosey but can I ask who your life insurance is with as that's a great price!

I don't think it will help because the loophole I took advantage of is no longer available.
My life assurance is part of a pension policy (but there is no pension).
That might sound weird but the advantage of doing this is that I get 40% tax relief on my premiums because officially it's a pension policy.
I pay £7.55 per month NET and I'm 39 (non-smoker and female).
I took it out nearly 9 years ago and the loophole is definitely now closed (for new applications).
You cannot now buy life assurance in a pension policy without having a pension.

Those prices don't sound too bad but I'm sure there will be an article on this site advising you how to shop around.
Worse case is £11.50 for 2 weeks for both of you which is hardly a fortune for peace of mind in the scheme of moving house.

TEDDYRUKSPIN

lisyloo, do you actually know how death in service works? Do you understand, although some companies provide 2 times your salary that you will not actually receive a lump sum?

Secondly, pensions.. Can you actually rely on this? Depending on age, in your early 30's your very unlikely to built up a pot which will provide you more than 300 per month.

I see too much of this happening.

Chubbina, the main question is why do you want life cover? If one died, what back up do you have? As your mortgage is relying solely on income, what is most important to you?

Advisors are trained to educate on the importance of protecting your debts. Good advisors are not there to rip you off.

Other factors which apply to life assurance is the company. There is actually a software (2 really) which advisors use to check the best companies. Customer service, pay out rates and many more. This is very important.

I can easily go on the net and find a cover for £10. But the question is, if you were to pass away, how easily would it be to make a claim? Did they carry out a thorough underwriting check?

Nowadays, search engine sites like moneysupermarket / fool, do not specify enough medical questions. Basically they are not thorough enough. My major concerns is that if you come to make a claim, they could come back and say you did not disclose all information. The classic thing that occurred in 'Watch dog' was L&G. One customer tried to make a claim for testicular cancer on his critical illness cover and the company came back saying he did not disclose his kidney infection when he was a teenager. Another classic story, was when a customer has a massive tumour or fibrosis which was a size of an orange. L&G would not pay out as this tumour was not big enough.

My classic phrase is, 'You pay for what you get!'.

Other companies are more expensive for one reason! They can overturn a pay out. For example, One customer developed cancer but the person quit smoking only 8 months ago. The customer declared that they did not smoke. When they made a claim the company would not pay out. But luckily as the purchased the assurance from a high street lender, the advisor backed this up and the life cover paid out.

Hope this helps.

I see too many people trying to save on cover and when the 'sh hits the fan' they fall into trouble and the house gets repossessed.

Now the other answer. You are right! Underwriting can take weeks. Some companies provide free life cover during this period of underwriting and do not take any money. Some don't.

I would apply now. They will not take any money until it is accepted.

dunstonh

When applying for life assurance you do not have to give a start date.

lisyloo

lisyloo, do you actually know how death in service works? Do you understand, although some companies provide 2 times your salary that you will not actually receive a lump sum?

I'm pretty sure the ones I've had in the past have been a lump sum.
But to be on the safe side can you explain what you mean?
Do you mean they will pay an on-going income instead of a lump sum?
I agree with you that people need to understand what they are getting.

Secondly, pensions.. Can you actually rely on this? Depending on age, in your early 30's your very unlikely to built up a pot which will provide you more than 300 per month.

Well clearly you'd need to assess how much you both have and take a view on the capital risk if it's invested in equities.
I agree that it depends a lot on age and how much you have contributed, but I don't see why you shouldn't be able to rely on it, if you assses it properly and take into the various factors (capital risks, annuity rates etc.).

I am in total agreement with you about making sure you have suitable cover.

The first step as you say is to determine the needs/wants of the survivor and then to compare the needs with existing policies (death-in-service and pension schemes).

Unfortunately I think many building society advisors would jsut look at a policy to cover the mortgage (perhaps that's their remit to cover the lenders risk) and not necessarily the needs of the customer.
I'm not saying they are bad advisors (although there are always some bad exmaples in any group) but that there remit (especially now in the credit crunch) may be to limit the lenders risk and not the customers overall needs may not be their top priority.