What various insurances do we need?

katrininengland

Hi, I'm getting a bid overwhelmed with all the different life covers, mortgage protections and god knows what else out there!!

We have just started a mortgage for 180K plus an unsecured part of 30K. I guess i need something to pay this off if one of us dies? Will simply life cover do this or do i need to take out something else?

We both work professional jobs so i dont see any need for any unemployment cover.

Thanks for any help!

homer_j_3

No job is permanent in todays world.

If there is just the 2 of you then you would probably need:

Life cover
PHI cover
Critical Illness Cover
Redundancy cover

You need to protect 4 main areas as a basic cover

- What happens if you die
- What happens if you dont quite die - get a critical illness
- What happens if you lose your income
- What happens if you losy your job through no fault of your own.

Clearly, you could say I would sell the house or do this or that to satisfy yourself but you really need to think of the implications. You can offset some of these risks with savings and with employer benefits but from the limited information provided, you need to consider these areas.

lisyloo

As homer says you need to consider the consequences.
They can be very different for different circumstances.
For example you might be able to manage on 1 income in which case loss of 1 job is not a huge crises.
On the other hand if you have children then you need to consider child care requirements post death or illness.

Consider the consequences of each scenario.
Selling the house is indeed an option but house are not always that liquid (like at the moment) and of course you need to consider your equity i.e. how much you will have left after paying off the mortgage, especially in a market where prices are falling (like at the moment).

Also remember that on death before retirement you would have a lump sum or pension from any private pension funds you have.
Depending on your age and how well you've funded them this may or may not be significant.

Ideally you need to take out a whole range of policies, but don't feel you HAVE to.
It really does depend on circumstances and the risks you are prepared to take.
We have 2 incomes and no kids so (for example) I'm prepared to take the risk of living on one income but of course you need to work out whether you can afford that.

Consider each scenario - death, sickness, redundancy and consider the consequences.
If you have different incomes it may be that you need to insure one of you and not the other e.g. insure the larger income.

Don't forget about any employer benefits or any that comes with your employers pension.