Mortgage Life Assurance Cost Cutting/MoneySavingExpert.com Discussion

MSE_Jenny

This thread relates to the Mortgage Decreasing Life Assurance Cost Cutting article.

Click reply to discuss.

bigburd

I was sold a term assurance policy and a separate critical illness cover policy. Does anyone know if this was just to get more money out of me, as the term assurance policy could have included critical illness cover but doesn't. I got a quote online just now for both together - cheaper than current critical illness one alone!! Does anyone know if it would be unwise to merge?

dunstonh

bigburd wrote:

I was sold a term assurance policy and a separate critical illness cover policy. Does anyone know if this was just to get more money out of me, as the term assurance policy could have included critical illness cover but doesn't. I got a quote online just now for both together - cheaper than current critical illness one alone!! Does anyone know if it would be unwise to merge?

If it was a tied agent, maybe they only had standalone versions and not combined versions.

Having separate CI and life is actually the better way of doing it to ensure maximum cover. Not so much for mortgage protection as you only need a payout once. However, for family protection it is certainly more desirable to have them apart from each other.

Would it be unwise to merge? Possible. CI terms have reduced in recent years whereas older CI policies sold on a guaranteed basis will maintain the better cover options. If the old plan is guaranteed but the new plan is reviewable, then you certainly shouldnt change as reviewable plans allow the insurer to alter premiums at given points and remove cover in certain areas if a rush of claims appears in that area.

b17lboro

When I purchased my property I was told I had to have life cover (repayment mortgage over 25 yrs). I did not go with my mortgage provider for this but with Royal London who at the time also offered an endowment savings/life cover which included mortgage protection. I thought this sounded better at the time as I would get some returns so signed up for it. Paying £30 a month for 25 yrs (duration of mortgage). As I have reduced the length of my mortgage (down to 16yrs - only 4 left) I will be left paying for something I don't need in order to get the max benefit from the endowment policy.

any ideas to what I ought to do??

dom

Having read Martin's article I went back to check what cover I bought with my mortgage. In light of what he wrote I'm surprised to see my policy (with Norwich Union) is Mortgage Life Insurance rather than assurance. Does this make a significant difference or is it just semantics?

Also having looked at the cost comparisons at the foot of the article, I think that paying £59 pm for 25 yrs for cover for myself and the wife (33yr old and 30 yr old non smokers respectively) seems something of a huge rip off. So I'm off to look for some quotes - any recommenations anyone?

ps - Many thanks to Martin for the article in the first place.

andy-parkin

After reading the article on Life Assurance I decided to see if I was paying over the odds and surprise surprise it looks like I am.
It seems the reason I'm paying too much is because we let a financial advisor find the policy for us and his commission bumps up our premiums.

I've now found that the cheapest deal I can get is actually with the same company I'm already with (but obviously without the financial advisors commission).

Would it be possible for me to cancel my current policy and then open up a new policy with the same company for cheaper?

That way I could by-pass the financial advisor's cut!

Can anyone see any problems in doing this?

dunstonh

After reading the article on Life Assurance I decided to see if I was paying over the odds and surprise surprise it looks like I am.
It seems the reason I'm paying too much is because we let a financial advisor find the policy for us and his commission bumps up our premiums.

So the fact that premiums have fallen significantly over the last 5 years has nothing to do with it?

I've now found that the cheapest deal I can get is actually with the same company I'm already with (but obviously without the financial advisors commission).

Most IFAs can beat the direct product from the provider. All the provider is doing is taking off a small percentage and keep the rest for themselves. This is why your discount IFAs are the cheapest you can get.

Would it be possible for me to cancel my current policy and then open up a new policy with the same company for cheaper?

Yes.

Can anyone see any problems in doing this?

Yes potentially. If you are not comparing like for like then there is the potential for problems. a few examples that may apply:

1 - If you have guaranteed premiums/cover at present but purchase reviewable (cheaper but provider can increase premiums and add exclusions). Exclusions may be more restrictive than the old guaranteed plan.
2 - If switching from pension term assurance to level term assurance you will reduce your working/childrens tax credit, if applicable.
3 - Trust arrangements will need to be altered, where applicable.
4 - if you cancel the old policy first, what if you become ill or die before the new one is in force?

I would be interested in knowing what company is offering their product direct, cheaper than what an IFA or independent protection advisor can offer it. Can you name them so I can take a peek? Although IFAs/IPAs can be beaten through some distributions channels, the providers own direct route rarely appear to be one of them.

payless

DD

I think you know that a-p is likely not talking about going direct, rather using a particular execution only site .

dunstonh

payless wrote:

DD

I think you know that a-p is likely not talking about going direct, rather using a particular execution only site .

I wondered that, in which case he is dealing with an IFA/whole of market company.

payless

Its all about cost of the service provided ( which may or may not also include advice)

the site I assume is being looked at says
"We are the UK's only fee based broker of life assurance. "
which of course is totally rubbish, as many IFAs and protection advisers offer a fee based service ( by nature of being IFAs , recent regulations mean they must offer a fee based service for certain services anyway)

The site in question does this on a no advice basis , others may offer fee based (or possibly reduced terms) on advised cases also (albeit fee structure may differ to meet the service levels provided / firms costs ) -

On a number of test cases I have been able ( and I am sure also DD, and the other professionals who post here,) to actually undercut even this firm's rates - if I was acting on a fee based service -

but whether I would offer their type of service (low cost execution only) is open to question (* perhaps I might!), , as each case processed comes with certain fixed and variable costs plus not sure whether wholescale "no advice" is a good thing in this particular market ( more so when you start to consider the more complex area of different critical illness criteria or suitability of trusts)

Some people are able to make there own decisions and research and therefore " no advice " may be a suitable route for them ( although IMHO less common in the more complex areas mentioned above) but problem I see , is that if people are needing to ask questions here, then that clearly shows a need for advice.

Quote from the FSA consumer pages

When you receive advice you have a right to expect the adviser to recommend only products that are suitable for you. When you buy without advice, the person selling you the product will not consider its suitability for your circumstances.

eilz

My basic question is this. If I am paying £62 a month for life assurance (whole life) then if I cancel it, and go for a cheaper option say Cavendish, isnt it worth my while. I have had the policy for approx 6 yrs. I think there is some cashback feature on this policy but its only dependent upon how well the company invest. (Zurich Allied Dunbar insurance)