What Policy Do I Need - Life Assurance Query

49clare

Please can anyone help me?I am looking for insurance to cover the cost of my outstanding mortgage £55,000 incase me or my hubby dies.My current policy is a mortgage assurance - decreasing with critical illness which i am paying far too much for.Can I buy level term mortgage insurance or can i buy life assurance of £55,000???? Evewn though its for mortgage only.I am currently making regular overpayments so i dont think decreasing term is right for us as its decreasing at a different rate now.What are the pros and cons of life assurance/mortgage insurance.Would I pay inheritance tax on the life assurance route???Any help would be greatly appreciated.

dunstonh

Can I buy level term mortgage insurance or can i buy life assurance of £55,000????

Why would you want to buy a level term assurance to cover a decreading need?

Evewn though its for mortgage only.I am currently making regular overpayments so i dont think decreasing term is right for us as its decreasing at a different rate now

Its the closest match you have.

What are the pros and cons of life assurance/mortgage insurance.

If you dont have it and you die then your financial dependents will be worse off. Negative is that you have to pay for the benefit.

Would I pay inheritance tax on the life assurance route???

Only if you are unmarried and your estate is above thresholds (or life cover takes you above) and you havent written the policy in trust or on life of another. Typically with a debt you wouldnt use a trust although there still can be occassion you do.

49clare

I am still so very confused.I assumed i might be better off with level term assurance as we have two dependents, so any money that is left over after paying the mortgage (in that eventuality) would go towards them.The above reply does not really help me in deciding what i need. Anyone else help me please???

dunstonh

I am still so very confused.I assumed i might be better off with level term assurance as we have two dependents

A level term assurance or family income benefit plan (or both) is more suited for family protection but not a decreasing liability like a mortgage.

You are trying to combine the needs into one policy but that isnt the best way to do it. You do one for the mortgage matching the mortgage term and one (or two) for family protection matching that need (which almost certainly has a different term to the mortgage).

homer_j_3

just to add that you have critical illness with the current cover which may offer good benefits for your children should they have the misfortune to ever be diagnosed with something like bacterial menegitis (sp?)

Good protection does cost and cheaper premiums in the realm of properly protecting you and your family is false economy and may avoid the real money saving that you would have to do should a claimable event happen and you not have it.

Good protection advice is often not received because of the watchdog and martin lewis syndrome.

dunstonh

Good protection advice is often not received because of the watchdog and martin lewis syndrome.

Good point. Watchdog have such a poor reputation and even the FOS had to come out and clarify that Watchdog misrepresented their views and comments. ML's general DIY approach can end up with some saving pennies in the monthly payments but losing thousands in the event of a claim.