Level Term Assurance For Interest Only Mortgage?

nik-nik_2

Hi all

After reading through Martins helpful articles, I'm left wondering which type of assurance/s my partner and I need. We bought our first house in May and now my partner has left the army and has moved in (and got a not as risky job) I now want to get our life assurances sorted.

We have an interest only mortgage at present which we intend to swap to repayment when we remortgage in a few years. But in the meantime, is it best to get level term assurance as our mortgage value is obviously not decreasing.

We are also looking at starting a family at the moment and I notice we should take into consideration providing for the family if the main bread-winner died. It's all started to confuse me, is there a basic formula I should apply to figure the fixed term value for assurance or should it just be the mortgage value, plus a bit?!?!

I'm so sorry if these are novice questions!

Cheers

Nikki

dunstonh

is it best to get level term assurance as our mortgage value is obviously not decreasing.

At this very moment in time, yet it is (just wording it like that in case someone else looks at this thead in a few months time after pension term assurance comes back as the best option).

It's all started to confuse me, is there a basic formula I should apply to figure the fixed term value for assurance or should it just be the mortgage value, plus a bit?!?!

The aim is to not be financially worse of in the event of death. There can be various ways of doing this. Some will take income x 10 as an example. I prefer to provide a lump sum and assume 5% return on that lump sum to provide the income. i.e. if £10k a year is needed then £200k of life cover is required. Remember it's net income you are looking at. You could also knock off expenditure that the life assured may account for.