pls help re mortgage insurances

snow_queen

hi there, we have a 66k mortgage in joint names. currently with legal and general and paying £20 a month mortgage payment protection in joint names. Husband pays the mortgage and is the main earner, when searching for cheaper ones ie on insuresupermarket it does it in single application not joint, do i just need it in hubby's name??

2nd question - term assurance application - what is this??? is it where we get a lump sum when one of us dies??

3rd question - mortgage decreasing term assurance - is this the one that pays the mortgage off if we die??

Thanks so much x x

Ember999

snow_queen wrote:

hi there, we have a 66k mortgage in joint names. currently with legal and general and paying £20 a month mortgage payment protection in joint names. Husband pays the mortgage and is the main earner, when searching for cheaper ones ie on insuresupermarket it does it in single application not joint, do i just need it in hubby's name??

2nd question - term assurance application - what is this??? is it where we get a lump sum when one of us dies??

3rd question - mortgage decreasing term assurance - is this the one that pays the mortgage off if we die??

Thanks so much x x

Hi Hon,

What you need is Mortgage Decreasing Term Assurance. This pays out the amount outstanding at the time of death and the pay out decreases in line with your mortgage. This is the cheapest form of protecting your mortgage in the event of death.

I advise you to also get the policy in your husbands name only ie: single policy. There is no requirement for you to be on the policy unless you want to be assured the mortgage will be paid off in the event of your death. A single policy will be so much cheaper. It is not necessary (if you want to trim costs) to insure you as you don't work and if you died, the mortgage would still be payable as your husband is the breadwinner. Very important for him to be insured though as if he died you would be unable to pay the mortgage as you don't work.

I would also advise he buys some seperate term assurance to protect your standard of living in the event of his death. Term assurance is for a period of time you choose ie: 15 years etc. It's very affordable unless he has any serious health issues and as a rough guide you should insure him for at least £200,000 to last out your lifetime as a non-earner. Thus, with these two insurances you would get the mortgage paid off and £200,000 in your hand if he died. Also, and this is very important get both policies written in trust with you as the trustee. This means the money comes straight to you (avoiding probate) and also you don't have to pay inheritance tax if it's written in trust.

Ember xx

surprise_2

I too need to look into this at the moment, do you advice taking out critical illness as well?

Ember999

surprise wrote:

I too need to look into this at the moment, do you advice taking out critical illness as well?

Critical Illness cover is a matter of personal choice. My advise if you want it is don't bother. It's one of the most complicated insurances you can buy and there are so many 'get out' clauses all the insurance companies use, the chances of getting a claim actually paid out is slim. So, taking into account the fact that this insurance is very, very expensive and the chances are they will not pay out in the event of a claim, I wouldn't bother. I could write further regards to their underwriting procedures etc. but I would have to write pages and I don't want to be defamatory to any insurance companies etc.

Ember xx

whiteflag_3

What Ember says makes alot of sense,however before following the advice check a few things.

If you have Mortgage PAyment Protection this is something Legal & General sells to help make you monthy mortgage payments in the event of sickness or unemployment and usually have 12-24 month terms. I dont think life cover will be included?

Its been assumed you have a repayment mortgage, if you have interest only (unlikely but worth checking) you will need a level term insurance policy for the term of the loan.

Also you might be surprised how little difference the cost is between single and joint policies. Get quotes for both before making a decision.

Taking out additional cover and putting it in trust is a must to avoid probate , however there is no inheritance tax between spouses.

Hope this helps

Ember999

whiteflag wrote:

What Ember says makes alot of sense,however before following the advice check a few things.

If you have Mortgage PAyment Protection this is something Legal & General sells to help make you monthy mortgage payments in the event of sickness or unemployment and usually have 12-24 month terms. I dont think life cover will be included?

Its been assumed you have a repayment mortgage, if you have interest only (unlikely but worth checking) you will need a level term insurance policy for the term of the loan.

Also you might be surprised how little difference the cost is between single and joint policies. Get quotes for both before making a decision.

Taking out additional cover and putting it in trust is a must to avoid probate , however there is no inheritance tax between spouses.

Hope this helps

Sorry hon, but there is inheritance tax between spouses if the amount rises above a certain level. My hubby is insured with lots of seperate policies all written in trust for me and if he died the total amount payable would well exceed inheritance tax levels.

Ember xx

Ember999

Actually, I have a lot of knowledge on this subject and knowledge is never a bad thing

Ember999

TheManWithNoName seems to have deleted his post, I wonder why?

whiteflag_3

Sorry hon, but there is inheritance tax between spouses if the amount rises above a certain level. My hubby is insured with lots of seperate policies all written in trust for me and if he died the total amount payable would well exceed inheritance tax levels.

Ember xx

Love the hon bit

Dont want to go on, but there is no IHT between spouses.

Trust me...........im a doctor!

dunstonh

There is no IHT between husband and wife.

Just to clarify something else, advising on life assurance (and addons) comes under the regulation of the FSA. No-one here, including financial advisors or protection advisors, can give you advice here as it is in breach of board rules and in breach of FSA rules. So please do not consider anything on this thread as advice. Think of it as discussion points to allow you to investigate your options further.

Dont rule out CI because of someone elses views. I have had more clients paid out from CI this year than I have life assurance. I have also had a few that wish they had taken out CI as their mortgages would have been cleared but now they are having to struggle. It is a personal preference and an affordability thing. Often permanent health cover can prove to be a more cost efficient alternative.

Personally, I wouldnt both putting a mortgage life assurance in trust when its in joint names. It would automatically be paid to surviving partner. In cases of single life, if it matches the mortgage owner, it wouldnt needed there either if there is no-one else living in the house. If there is, then a trust would be quite important. (if the policy was paid into the single person's estate, it could end up being in there whilst everything is being sorted out and the lender may not be willing to wait. There would also be the potential for IHT in this case)

JasonG_2

Without being pedantic there is no IHT between spouses unless one is of foreign domicile then exemption is currently £55k only.

Would just say, that the life assurance element is very important and the trust very important also. I would have your need analyised and take advice. Also dont forget if your husband is the main breadwinner, that still does not mean he needs should have all the cover, ie if you died and had no cover he may have to stop working and loose his income for children etc. Sometimes the care costs can be a fortune alone. The trusts will allow payment of proceeds in a tmely fashion rather than waiting for potentially months for probate/ letters of administration, which also highlights the needs for wills etc.

Critical illness is a hugely valuable, and can be costly. Care should be taken on what it covers and the definitions ie do you have to be neally dead to claim, what is the definition of a heart attack etc. Look at the stats and make your choice. Out of the people (numbers) who answered this thread, atleast one of us is likely to get a critical illness for example before age 65.

Good luck. Jolly stuff huh. Seriosuly good that your thinking like this about it it my opinion.