Life assurance...help please!

hols_glittergirl

Hi there,
Was wondering if anyone can offer some advice.
My hubby and I currently have Life policies with HSBC (with our mortgage). We have level term cover and income protection for around £68 a month.
This seems expernsive to me.
Had alook on MSE website and Cavendish online.
I think I/we needLife assurance (for mortgage for 140k over 27 years), can we get this jointly? and is this best as we own the house jointly?
I think we also need income protection. My hubby is self employed - will this make it harder/more expensive to get a policy? HOw much should we gwt cover for?
Do you think this would be adequate?
Thanks
H

margaretclare

If you shop around you can usually - nearly always - get cover much less expensively than with your mortgage provider.

Others with more knowledge will be around to answer your other questions.

Good luck!

homer_j_3

If you bought through HSBC then it is likely to be expensive. Depending how long ago you bought it may have some bearing now though as cover can cost considerable amounts more as you get older.

Level term would presume that you have an interest only mortgage?

Income protection, is this a Permanent Healt Insurance policy or is it a Mortgage Payment Protection Policy? If you are unsure, look at the paperwork and see how long the benefits will be paid for and when you can claim. If it states anything upto 12 or 24 months then its more likely to be the MPPI policy rather than PHI policy.

MPPI is not good for Self Employed and HSBC are well known for flogging this incorrectly.

The safest thing you can do is go to an IFA or a mortgage broker who has a good selection of insurance providers to review your paperwork and give you advice on what you should do.

Just to add, if it is PHI then it may be expensive still depending on what class your jobs fall into - scaffolder more expensive than admin worker for example. That said, it should still be cheaper as its relative.

dunstonh

Being self employed, also take this time to look at his pension as well. Remember that the self employed do not qualify for the full state pensions and only qualify for the basic state pension which is just over £4700 year.

Too many self employed do not realise this and get a big shock when they find out they are getting nearly half what an employed person would have got.

hols_glittergirl

homer_j wrote: »

If you bought through HSBC then it is likely to be expensive. Depending how long ago you bought it may have some bearing now though as cover can cost considerable amounts more as you get older. We are only 24 and 25 and took it out when our mortgage started two and half years ago, so I doubt there'll be much change?

Level term would presume that you have an interest only mortgage?
No we have interest and capital (fixed until Nov this year)

Income protection, is this a Permanent Healt Insurance policy or is it a Mortgage Payment Protection Policy? If you are unsure, look at the paperwork and see how long the benefits will be paid for and when you can claim. If it states anything upto 12 or 24 months then its more likely to be the MPPI policy rather than PHI policy.
I think it MPPI (but i'll double check) would PHI be better, does it just cover for health reasons or for redundancy etc too?

MPPI is not good for Self Employed and HSBC are well known for flogging this incorrectly.

The safest thing you can do is go to an IFA or a mortgage broker who has a good selection of insurance providers to review your paperwork and give you advice on what you should do.

Just to add, if it is PHI then it may be expensive still depending on what class your jobs fall into - scaffolder more expensive than admin worker for example. That said, it should still be cheaper as its relative.

I am an accountant and my hubby is a self employed electrician (we have 3k in an ISA, to cover some sickness pay for him if ever needed)

Does anyone have any further advise based on the extra info given?

Thanks
xxx

homer_j_3

Ok, you are young which will probably mean that you will not see much increase.

If you are looking to match your needs as close as possible then you would be better off with a decreasing term insurance to protect your life as the cover would reduce in line with your mortgage debt.

If its MPPI then it will cover you for sickness, accident and unemployment where as PHI does not cover you for redundancy cover. Where one of the parties are self employed, it is very difficult if not almost impossible to be made redundant so its never worth paying for this unless you are certain of how this would be done.

You also have to realise that MPPI will only pay out for a maximum of 12-24 months so if you get really ill and are off longer than this then your payments stop.

Were you asked about pre existing medical conditions when you were sold the policy? If not, you may not qualify for benefit if they see that you have had issues before for a similar illness so once again you have to be careful.

With MPPI, you should be able to get the accident and sickness cover alone without the redundancy part for your OH and this may be cheaper than PHI but you pay for what you get.

PHI policies will be underwritten up front so there is less chance of a claim being declined due to not disclosing a material fact. They also pay out until you return to work so whether it be 12 months or 12 years, the policy will continue to pay whilst you are fit to return to work.

Another good thing about PHI is that you can tailor it to your sick pay so if you get 3 months sick pay from your employer, you can make the benefit start after this point which can make it cheaper. It also has other interesting bits built in like, topping up an income if you are unable to carry out the same job following an illness.

I am sure you will appreciate that there is a lot more complexity to the cover and it is more comprehensive than MPPI.

I would be very keen to see what £68 would get you with an IFA or broker compared to what HSBC gave you.

hols_glittergirl

Right let me get this straight...

- We should have decreasing term life cover (to cover mortgage if one of us dies).

- And we both should have PHI (better for Hubby as self emplyed, and I can defer payment in line with employers sick pay).

- MPPI is not advised? (think this is what we have now)

Is this correct?

I dont think either of us would bother with unemployment/redundacy cover as we have both said that we'd do any job we could get if needs be!

Thanks

xxx

dunstonh

MPPI doesn't offer as strong unemployment cover for the self employed. So, in effect you an accident and sickness plan. In that case, you may as well have the far superior PHI plan instead of the lower quality MPPI plan.

hols_glittergirl

dunstonh wrote: »

MPPI doesn't offer as strong unemployment cover for the self employed. So, in effect you an accident and sickness plan. In that case, you may as well have the far superior PHI plan instead of the lower quality MPPI plan.

Thanks, I think that makes sense.

Would it be better for me to have an MPPI (as I am the higher earner), and hubby to have PHI (as he's self employed)?

However as a qualified acountant I doubt I'l ever struggle to find work? Is it worth paying for the umployment bit of MPPI over PHI for me?

xxx

dunstonh

MPPI is rubbish. Its oversold and the claims refusal rate for payment protections (which is the classification it comes under) is over 80%.

You should have a PHI policy rather than an MPPI. Match the deferment to your employer's sick pay end date and as accountants are a low risk you should find the cost of a comprehensive PHI is very cheap.

Most accountants have a relationship with an IFA due to the number of times we overlap in areas. Whether its an in-house set-up or a local arrangement. You should find the IFA you are linked to will do you a good deal on the pricing.

hols_glittergirl

OK, think I'm happy with that.

Now, what about critical illness cover?

- To what extent would the PHI cover this?

- If it doesn't then do I need critical illness cover for both mortgage and other monthly out goings?

Thanks
xxx