Mortgage life assurance discussion

dunstonh

and before you all go mad and tell me I’m crazy for letting this happen, I know that NOW! So that’s why I’m taking it into my own hands!

Why crazy? An independent financial advisor or whole of market protection advisor doing it is fine. Its when you let tied or multi-tied advisors do it that its crazy.

My fiancé has had 2 doctors come out now to give him a medical based on the information we gave our mortgage advisor and the initial company – BUPA has came back with a 70% added cover thing (I can’t remember exactly what it was called).

Are you saying they have rated (increased) the premium by 70%?

He stopped smoking 9 months ago, is over weight and his Dad was diagnosed with Diabetes at 51. We figure it’s one or all of these factors that are affecting us getting cover?

Quite possibly those and possibly other things based on what the doctors wrote back to the insurers.

Even without the 70% increase our joint cover was nearly £50 pm which seems scandalous compared to some of the offers I’ve seen on this thread.

Ignore what you see on this thread. You cannot compare life assurance quotes like that. One person could be 22 and another 52. One term may be 25 years, another 40 years. One could be getting 40% tax relief on their life cover and another getting none. One could be class 1 occupation, the other could be class 4. Then you have smoker/non smoker rates as well as health issues.

P.S. I don’t know if it makes a difference but we live in Northern Ireland. Can I still try Cavendish that you all rave about?

Cavendish will offer you no advice. Which providers are you going to pick that will underwrite your circumstances favourably? You can totally ignore their quote system as that assumes clean health and unless you have access to the underwriting teams, you wont know which provider to use.

P.P.S Also, million dollar question should I, or should I not get critical illness cover?

You will be pleased you had it in the event of a claim. Just ask the many people that have had pay outs. Around 1 in 6 will suffer a critical illness event before the age of 65. It means 5/6 wont but the choice is yours. Personally, I am finding myself dealing with more CI claims than life claims over the last year or two.

P.P.P.S When applying online for some it just asks smoker/non smoker - As he gave up smoking 9 months ago can I say non???

Not unless you want to invalidate the policy. He is classed as smoker as 9 months is insufficient.

FINAL P.S. I promise – If I apply other places will they ask me if I have applied other places and should I declare what has happened so far???

Yes they will and you should declare it and the outcome otherwise it would invalidate the policy in the event of a claim.

Please help!!! Our move in date is less than 1 week away and I don’t want anything to go wrong!

You need to see an independent financial advisor or whole of market protection advisor and get this resolved. A website or quote portal is not going to be any use to you.

judimcc

Thanks Dunstonh!

I think i'll just have a little more faith in my financial advisor!!

zoeo

Hello,
Really need some advice! My partner and I are FTB's and are in the process of buying a shared ownership property. Our mortgage is going to be £78,000.
Our FA has advised us to get separate fixed life insurance and critical illness rather than a joint policy. The quotes we have are coming in at £30 each per month. After speaking to friends about what policies they have - they all seem to be much cheaper than this and now I am worried.
Has anyone used Tesco for their life insurance? This seems to be popular amoungst people we have spoken to and is significantly cheaper.
I'm not sure what to do, does anyone have any advice?
Thanks
Zoe

dunstonh

Life assurance is priced on age, length of cover, occupation, health status and taxation (if pension decreasing term assurance). You also have different addons, such as terminal illness cover, waiver of premium and critical illness. You also have a two levels of cover with guaranteed premiums and reviewable.

So, comparing premiums with friends without knowing if you are doing a like for like comparison is pretty pointless.

Has anyone used Tesco for their life insurance? This seems to be popular amoungst people we have spoken to and is significantly cheaper.

AFAIA, they do not do pension decreasing term assurance so they wouldnt be cheap on single life basis and IIRC, their critical illness cover is on reviewable basis and not guaranteed since they stopped using Norwich Union for underwriting some months back.

If the financial advisor is tied or multi-tied, then you shouldnt be using them. If they are independent, then ask them why they feel single life policies are more appropriate. Unless its pricing (which can happen), there is no reason for a decreasing term assurance to be on single life basis and they would have a hard job justifying it in the event of a complaint.

theboylard

Evening all,

ok, remortgaged eventually ok, now need to straighten up life cover for the mortgage.
IFA had recommended NU, seemed ok, filled out all the forms.
They then wanted doctors reports - fine nothing major (actually to do with wife's brother who died at 45).
Then, because of delay in them requesting info via IFA who sat on it, we had to fill out another form stating nothing had changed...yada yada!
Then they said they hadn't received anything?!
So they sent out more forms.
We duly completed them and sent them off direct to NU.
Then they said they needed more details on me!
I then sent off the same form that I had filled out previously (twice) and thought that would be the end of it.
But no! Today the IFA's office contacted my wife (I think they're scared of me now!) as NU had contacted them to say that they were waiting on paperwork from me?!

It now turns out that NU had been sending the wrong forms for me from the word go and they now want more info, and the cover they have been providing will cease as of the 11th May (it's taken 6 months to get this far)!!

I am now looking at not using the IFA at all (I can't see what he's done to earn his slice) so am looking for guidance for which are the better companies who possibly have a clue, unlike NU!!

Our details are:
Male 40 N/S Warehouse Manager
Female 43 N/S Office Sales
I want level term for 20 years £165k
Joint life 1st death, with CIC, guaranteed cover.
Healthwise we're fine, no long lasting illnesses.

Ta in advance for your thoughts...

hapless

fatheralice

Any thoughts on our situation...(Joint Mortgage Holders. Wife and I are both n/smokers aged 32 and pharmacists, with 2 girls 6 / 4 yrs)

Currently £65k endowment mortgage with 16 years left - we have overpaid so the current loan amount is £56K. We have HSBC life cover to cover the endowment and life/Critical illness. - (taken 9 years ago, so favourable inclusion criteria)

The endowment has a 4% projected return of £37200 as of 1/06, and the current fund value is £10500 as of 3/06

We are going to extend the property, and will remortgage to a £140K repayment over 25 years (4.79% fixed for 5 years C & G), but are unsure what to do with life cover.

Should we make the endowment paid up / surrender / sell it, or continue, as it has good life cover - we could use the £37K to pay a lump sum in 16 years, or the £100 p/month premium as an overpayment on the new mortgage over 25 years.

Any thoughts on the merits of critical illness cover these days - Friends Prov seem to do a quote of about £44 for comprehensive cover with fixed rates (vs. £10 for death only) - or is it better to retain the existing life cover as it has good terms, and just cover the remaining sum with a new policy.

I am unsure how paid up works - would the life cover remain in place, but the premiums come out of the current fund value? also what sort of final fund could I expect if it was paid up now, and is there any benefit in waiting until 1/07 when it reaches its 10th year?

Any thoughts on HSBC life's bonus payouts - are they often big at the end?, and is there much demand for resold policies with them.

Loads of questions - any opinions welcome!!

thanks, Ali

dunstonh

$17mma wrote:

Can someone tell me where Martins original article is on this, I have clicked the link on the OP but it says page missing!?

I wouldnt be surprised if its getting a re-write. The old one was out of date. It had no reference to pension term assurance.

markBJ

I recently bought my first house back in March and have been going through the long and arduous process of getting life assurance to cover the mortgage should the worst happen. I have applied for decreasing term cover, beginning at £346000 and reducing over a 25 year period. My intention was to write this policy in trust to avoid inheritance tax on the lump sum which would clear the mortgage.

However Gordon Brown's budget changes concerning trusts have got me worried. If I die and my policy pays out will my partner get the full value of the mortgage covered? I've heard about a 6% tax that has been introduced on some trusts and don't know whether it applies to mortgage life assurance. Does anyone here know about this?

It would be great if Martin could add a section on this to the Life Assurance article because anyone with an outstanding mortgage greater than the inheritance tax threshold might be interested to know the implications.

In my case my partner and I own the house as 'tenants in common' and hold unequal shares, I own two-thirds, she owns one-third. Does the fact that I am insuring myself for the whole of the mortgage have any additional implications?

This is my first post on the forums so I hope this is the right place to post rather than the tax forums...

Thanks

Mark

dunstonh

However Gordon Brown's budget changes concerning trusts have got me worried. If I die and my policy pays out will my partner get the full value of the mortgage covered? I've heard about a 6% tax that has been introduced on some trusts and don't know whether it applies to mortgage life assurance. Does anyone here know about this

Doesnt affect life assurance.

It would be great if Martin could add a section on this to the Life Assurance article because anyone with an outstanding mortgage greater than the inheritance tax threshold might be interested to know the implications.

It may be possible but given the variety of trusts available along with some provider specific examples it would be quite an extensive article.

Does the fact that I am insuring myself for the whole of the mortgage have any additional implications?

No.

Only other comments are why are you not considering a pension decreasing term assurance?

markBJ

I should have mentioned that the policy includes life assurance and critical illness cover. This means that it cannot be administered under pension rules as a pension term assurance policy.

I called the provider and asked them what sort of trust would be suitable and whether they have made changes since the budget. They said there had been no changes and they would advise a Split Trust where the life assurance benefit is separate from critical illness benefit. Even so, given the dubious advice that insurance companies have been known to give out in the past, an independent clarification would be good - preferably not from an IFA.

So, I still think that an article on the more common trust arrangements available would be helpful. Alternatively an overview with links to external sites going into more detail would be good.