Mortgage Life Assurance Cost Cutting/MoneySavingExpert.com Discussion

mary_G_3

My 44yr old daughter and I are partners in a small hotel which we bought for cash 3 yrs ago We have a small morgage of £22,000 for improvments and wish to extend the domestic living area and so require to extend the morgage up to £70,000 I am 64 this year, will I be required to take out a bog assurnce or do it jointly

dunstonh

will I be required to take out a bog assurnce or do it jointly

bog assurance ?

You arent required to take out any life assurance. However, you are in business as a partnership so life assurance, with a partnership agreement is vital. Otherwise on death, the deceaseds share of the business could end up going anywhere potentially and that could result in you losing the business.

Whether you do this on decreasing term assurance or level term assurance would depend on how seriously you treat the business risks.

Raff13

This is my first post and I’d be grateful for some advice.

I am in the process of re-mortgaging to a lifetime tracker with the ability to overpay without penalty (from info gleaned from this website. Ta Martin). The term will be for 25 Years but I will be looking to bring this down by making regular over payments.

My question is this. Do I actually have to take out a life assurance policy? The quotes I received from the company setting up my mortgage (which I declined) were approx £92 per month for level term and £68 for decreasing term.

My Mortgage will be £135K my property is valued at £200K, I am single and have no dependants. My employers will pay out 4 x my gross salary for death in service, critical illness or permanent disability.

My thoughts were that it would be better for me to pay the extra money off the mortgage each month as the value of the property alone covers the outstanding debt, let alone the cover from my employers.

Is it likely that I would be refused a mortgage without life Assurance? Any help on this matter would be much appreciated.

dunstonh

My question is this. Do I actually have to take out a life assurance policy?

No. Although some lenders do insist on life cover where a financial need exists. Where no financial need exists (ie single, no dependents) then they cannot enforce it.

Raff13

Many thanks. Looks like I can put this money to good use elswhere.

rgkgr

I took out a Mortgage Protection Policy just over 4 yrs ago with Swiss Life. It covers Death and critical illness. It is a decreasing term policy, designed to cover the outstanding amount on my Mortgage. I have been able to pay off my Mortgage unexpectedly, and am wondering if I am wasting my money keeping this policy going. It has no cash surrender value, I am paying £29 per month for cover which started at £70,000 and has now reduced to about£49,000. Would i be better off taking out a nother product or should I just cancel the Policy and save the Premium? My company pension scheme has a death in service benefit, so am wondering if I need this type of policy now?
Any thoughts appreciated.
Rob

dunstonh

rgkgr, we dont know your personal circumstances and needs. You may have no financial need or you may have a much larger one than you are currently covering. So, we cannot answer your question based on what you have said so far, I'm afraid.

rossbenn

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?

Normally a linked policy only pays out if you either have a critical illness or die, but if you have two seperate policies and say you have a heart attack and the policy pays out you are still covered for death benefit with the other.
If after you claim on the C.I. policy and are not fit to work you may not have to pay the premiums on the life policy after six months if W.O.P. has been added as a bolt on benefit.
Some times better the devil you know than the devil you dont.
New C.I. plans tend not to give as good cover as ones taken out several years ago. Might be best to leave well alone unless the premium is silly money.

rossbenn

eilz wrote:

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)

If memory serves me right( no I did not work for A.C. ) it will tell you on page 22 or 23 of the policy document that the actuary reserves the right to increase your premiums at certain reviews normally ten years and every five years thereafter. You have to ask yourself, do you normally buy products without asking the price? The fact is the overall premium is an unknown qauntity. Cavendish is not always the cheapest when you check the ongoing fees.
The devil is in the detail.

rossbenn

mary_G wrote:

My 44yr old daughter and I are partners in a small hotel which we bought for cash 3 yrs ago We have a small morgage of £22,000 for improvments and wish to extend the domestic living area and so require to extend the morgage up to £70,000 I am 64 this year, will I be required to take out a bog assurnce or do it jointly

Seems to me you really need to put in place a financial plan.
You dont say if you are incorporated or are in fact a partnership.
Assuming you are a partnership and it is 50% 50% I would consider drawing up a partnership or double option agreement leaving each others half of the business to the other assuming that is your wishes. You dont say if you have partners but if you do and one of you dies then the other partner would have the right to take their partners place in the business or ask for the value of their share. I would imagine this would put a stain on the surviving partner
If you had to go into a home in future years and your assets were over the limit allowed, I think £18,000? the local authority could force you to sell your half of the business to pay for your keep, more problems.
Then our old friend C.G.T. raises its head. I dont mean to alarm you but you can see the type of problems you could face. Best to sit down with an I.F.A.
and your legal adviser and draw up a plan to avoid this.

Good Luck