life insurance and death!

LillyJ

chappers wrote: »

Now it all depends what policies you take out for how much cover and to whom the beneficieries will be.
The common link through your thread is to keep your assets seperate, so in the event of your death your NOK inherits your half of the house rather than your partner.
So as I see it you both probably need to be covered for enough to do two things.

In the event of the death of one of you you would probably want to pay off the mortgage completely so that needs to be covered, also you probably want to consider how each of you might buy out each others next of kin and cover for that, with an increasing term policy(also as well as the right to reside you may want to put in a right to buy clause as well).
The other alternative is you just cover your own liabilities as you suggested at the start and then leave each other to their own devices, in the event of one of you dieing
If you want to leave to your next of kin then a will is strictly not needed but would clarify things in the event of either of your deaths.

What is increasing term? We thought we needed decreasing term?

If we got a joint policy, it would be to cover the whole loan, ie both halfs of the house.

LillyJ

I will check with the broker but we find it hard to contact him. Is it possible to go with a broker just for life insurance and not the mortgage (ie get a different broker).

HelpWhereIcan

LillyJ wrote: »

Death is service is a different payout and he would get that as well, which I will get him to change to my name. He is unlikely to change employers as he is a policeman.

As long as you are making your decision aware that I was not just talking about a change of job... the most important thing in my anecdote was the change in health and need to provide for kids.

LillyJ

HelpWhereIcan wrote: »

Whether you rely on the OH's death in service or not I think the way your life cover is set up is very important.

The issue that the others are alluding to is who will own the share of the property and who the life cover needs to be made payable to.

If you own it as tenants in common the share of the property does not pass over to the remaining partner, but to whoever is named in the will or NOK if there is no will.

This means that the surviving partner owns half of the house they live in with an unrelated party owning the other half. This puts them in the position of potentially being forced out of the house against their will as the other party could sell their share and because no-one will buy part of a house, the whole house will need to be put on the market.

As for paying a rent on a share to an deceased partner's family... how many pitfalls? What if a new partner moves in? What if the relationship was on the way out before the death?

Having the proceeds of the DIS or policy pay out to the surviving partner means that they either have the money to pay off part of the mortgage and buy the NOK out or sell up and move on without losing out.

The NOK have the funds to get their contribution back etc etc

Using nomination of beneficiary forms on DIS, trusts or a policy set up as life of another are ways to achieve this (I would choose life of another over a policy in trust).

The point is that you should look to take the advice your broker is giving you on board. Not everyone is trying to rip you off!!! By all means check the advice with an IFA to get a second opinion but it will remain the same.

We would want to be tennants in common, but with a will to state the one of us could buy the house on the death of the other and the life insurance payout to go to each other so we can do this.

LillyJ

HelpWhereIcan wrote: »

As long as you are making your decision aware that I was not just talking about a change of job... the most important thing in my anecdote was the change in health and need to provide for kids.

yes I do understand. I do think that the joint insurance would be the best thing, but he has this already, it is not his death in service we would be relying on, he actually has a life insurance policy.

HelpWhereIcan

LillyJ wrote: »

I will check with the broker but we find it hard to contact him. Is it possible to go with a broker just for life insurance and not the mortgage (ie get a different broker).

You can use whoever you like to do the protection (life and critical illness etc). You could even use the likes of Cavendish etc to get some in place but this would probably be advisable only if you know exactly what you are doing in setting the policy up.

Your situation would indicate a need for advice which you will not get from the discount brokers.

LillyJ wrote: »

What is increasing term? We thought we needed decreasing term?

If we got a joint policy, it would be to cover the whole loan, ie both halfs of the house.

You have to remember that there is the potential for the house (and therefore your shares) to increase in value.

e.g If you buy at £100k now you have £50k shares each.

If the house is worth £120k in 5 years' time you have shares of £60k each. If the mortgage is £80k, a life cover policy of £50k will pay off a £40k mortgage share, but would the NOK be willing to accept a total of £50k for something they know to be worth £60k? Will they consider that they were being repaid for the deposit they put in?

You may be surprised by the way people carry on in these situations in real life and it would not surprise me to see cases where the NOK still forced the sale of the property to get the 'full value' of their share realised.

LillyJ wrote: »

We would want to be tennants in common, but with a will to state the one of us could buy the house on the death of the other and the life insurance payout to go to each other so we can do this.

Which is sensible, but as you may be starting to realise, there is more to it than that alone.

HelpWhereIcan

LillyJ wrote: »

yes I do understand. I do think that the joint insurance would be the best thing, but he has this already, it is not his death in service we would be relying on, he actually has a life insurance policy.

Then depending on exactly what policy he has already, who it is with, what it covers and what it costs; a broker may be able to save you money overall by getting you a policy suited to both your needs for the same or less per month.

However, do not cancel and replace a policy based on cost alone - especially if it has been in force for a while and includes critical illness and/or income protection. You could be getting far inferior cover for the critical illness as policy definitions have tightened up over the last few years.

I would say it, but talk to an IFA or a Mortgage Broker who has experience of dealing with protection.

The temptation is to favour an IFA for this type of thing, but I have to add balance by letting you know that some, but not all, Mortgage Brokers come from an IFA background and will be used to approaching protection from an advised basis rather than sales (if that makes sense).

Not all Mortgage brokers are good protection advisers and you may therefore be safer opting to use an IFA for this type of advice (but then again not all IFAs are either).

Cue Conrad .... :rotfl:

neverdespairgirl

LillyJ wrote: »

I have also just come off the phone to a lawyer friend who said joint cover would be adequate, and that the money would go to each of us as it is a joint policy. Therefore this seems like the perfect solution, as our parents wouldn't give us the money for deposit if we were buying as joint tennants.

thanks

OH and I have a "winner takes all" life insurance policy for half a million. The policy pays out and finishes if one of us dies, and if we die together, only pays out on the first death.

When you take out such a policy, you can set up a trust to determine who gets it.

Do you and OH both have a will?

LillyJ

neverdespairgirl wrote: »

OH and I have a "winner takes all" life insurance policy for half a million. The policy pays out and finishes if one of us dies, and if we die together, only pays out on the first death.

When you take out such a policy, you can set up a trust to determine who gets it.

Do you and OH both have a will?

That sounds like the kind of thing we want actually, to pay off each other's parents, then keep the house.

We do not currently have a will as we only have our clothes and very old cars to our names! Our savings were not really worth getting a will for and anyway we have used those now for deposit, stamp duty etc.

However we will get a will before we complete on the house.

I got some quotes yesterday and they seemed to be what you are talking about neverdespairgirl, ie if one of us dies, they pay out the full amount, or if both at the same time, they pay that amount as well.

neverdespairgirl

A joint policy isn't expensive, and is well worth having.