Life insurance/mortgage cover etc...

Aruffell

Aruffell

Aruffell

Soldato
Joined
29 Dec 2004
Posts
5,653
Location
Chatham, Kent
Hi all,

As some of you know, we are buying our first home and have just been accepted for the mortgage so now we're at that wonderful point of making sure that we and the mortgage are covered as well as the kids, but being honest, there are so many different types of policies and they all sound very similar so I'm hoping for some advice.

After talking to my IFA, she recommended that we take:

Joint decreasing term to cover £196995 for 30 years at £11.54 a month

On top of this, she recommended that we take:

2 x Single policies to cover £100,000 life cover or £100,000 critical illness for 40 years at £22.58 and £28.32 per month.

In your opinion, would this be the best way of doing things? Having two separate policies, one to cover the mortgage and one to cover us personally as well?

I've done some quotes myself for mortgage cover and have managed to get it at £8 per month on decreasing or £10 for level cover, which seems like the better option.

If I add critical illness to this, it jumps to £58 per month but would cover everything but for the small amount more, 2 policies would therefore pay out twice (one for each policy). Is my thinking right?

I'm guessing that there is no right way of doing this and it's just a matter of doing what you can afford etc...

For me, I can get 2 level mortgage covers for £3 more, which over 30 years is only £1080, but would mean 2 payouts of the full mortgage amount, so makes financial sense?

Any help is HUGELY appreciated :)

Thanks,

Andy
 
Wait, so you got advice from an IFA but you think OCUK GD will provide better advice?

:D:D:D:D:D:D:D:D:D:D:D:D:D:D:D
 
My IFA gave us a stack of policies she wanted us to take out there and then, that amounted to about £200 a month!

We said no, went home, did our own investigation and realised she was talking complete balls.

My first bit of advise is to see what your employer provides. We both discovered that ours provide decent short and long term sick packages already.
 
Skeeter said:
My IFA gave us a stack of policies she wanted us to take out there and then, that amounted to about £200 a month!

We said no, went home, did our own investigation and realised she was talking complete balls.

My first bit of advise is to see what your employer provides. We both discovered that ours provide decent short and long term sick packages already.
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Exactly :)

My employer is me :D I'm a company director, so also have the option of offering life cover through the business as a benefit to the employees etc...

Andy
 
Skeeter said:
My IFA gave us a stack of policies she wanted us to take out there and then, that amounted to about £200 a month!

We said no, went home, did our own investigation and realised she was talking complete balls.

My first bit of advise is to see what your employer provides. We both discovered that ours provide decent short and long term sick packages already.
Click to expand...

Close thread - this is the advice you need. Your employer will probably provide some short term cover. If you are that worried consider saving money rather than spending it on insurance. 200 quid a month would soon add up!
 
I would just get mortgage protection joint cover with critical illness added in. Me and the Mrs both realised that if one of us fell ill then the mortgage would be covered and we could both live off the other's salary.
Our IFA tried to get us to take both income protection and mortgage protection but it was going to amount to around £130 a month, I didn't think income protection was needed personally.
 
swillsy said:
Close thread - this is the advice you need. Your employer will probably provide some short term cover. If you are that worried consider saving money rather than spending it on insurance. 200 quid a month would soon add up!
Click to expand...

I run my own company so not as clear cut as you think.
 
Maccy said:
I would just get mortgage protection joint cover with critical illness added in. Me and the Mrs both realised that if one of us fell ill then the mortgage would be covered and we could both live off the other's salary.
Our IFA tried to get us to take both income protection and mortgage protection but it was going to amount to around £130 a month, I didn't think income protection was needed personally.
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He only problem I see with this is if I get a critical illness then obviously the mortgage is covered but we'd have no money to adapt the house to my new needs due to the illness. Make sense?
 
Similar boat, I had our mortgage to cover plus the lease (6 yrs) on where our business is located, plus pay offs of business debt. Added it all up and got life insurance (30 yr term) to cover everything plus leave my wife (and kid) a nice lump sum.
Think it's $2m or something silly, but only costs $50p/m. Added critical illness further down the line, which to be honest if anything happened to myself I'd just sell my business.....
Just get yourself covered for the debt you owe, invest elsewhere.
 
I would suggest life and critical illness cover are the starting point. If you have the right policy this should ensure your family gets enough to happily pay off your mortgage and debts together with some additional funds to support them for a good period. Critical illness should give you cover for a couple of years should you need to go into hospital and are unable to work for that period.
 
Apart from the mortgage, myself and the business are in no debt and the business makes a healthy profit.

What kind of figures have you guys been covered for? I was initially looking at one to cover level term on the mortgage and then another for life and critical illness that pay £100k for either over a 40 year term.

I guess I need to do some quotes to see if the business can cover me instead and have a level term for the mortgage personally but life and critical illness for the employees.
 
Skeeter said:
My IFA gave us a stack of policies she wanted us to take out there and then, that amounted to about £200 a month!

We said no, went home, did our own investigation and realised she was talking complete balls.

My first bit of advise is to see what your employer provides. We both discovered that ours provide decent short and long term sick packages already.
Click to expand...

this... although they've tried to regulate it improve it in recent years IFAs are still basically salespeople - if she was acting in your best interests she should have asked you what your employer provided

various places I've worked at have provided different levels of cover from paying out 4* salary should you die through to health, travel insurance, sickness etc..

that isn't to say don't bother with IFAs - they can obviously be useful... but I'd not sign up to their recommendations without shopping around yourself too
 
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We have a decreasing mortgage policy to cover the mortgage. Separate life insurance policies for something like 250k each and critical illness cover for 25k each. Most of it is through work so doesn't work out that much per month.

If one of us pops of clogs, the remaining person would probably want to cut back our working hours to spend more time with our son.

If the worst happened to both of us, we want to leave enough money/debt free property to help out our chosen family members to bring up our son.

Not that they would take any money, but at the same time we don't want them to struggle either.
 
So been looking into this even further and damn it's getting complicated.

Been recommended that I get relevant life cover which means my business can pay for it, but over the term of 40 years, It works out £10,000 more so I guess I need to work out if I'd save £10,000 over 40 years of lesser corporation tax and what not.

Confusing stuff.

Andy
 
I went with what you posted in the OP. Too much hassle to find other methods, pricing seemed to be the same throughout.
 
I know adding more complexity to the mix might just further confuse things, but I'd also consider looking at Income Protection insurance.

The point of getting cover is to ensure that the mortgage can be paid no matter what. The life insurance covers you in the event of death, which is fine. But critical illness etc. is a concern because they can be very fussy about what they'll pay out on - and if you have an illness that doesn't fit into their definitions, then even if you can't work again you won't get a penny. Income protection insurance on the other hand covers you in all instances where you can't work again, and will pay out your salary until retirement age. The only thing to note is that some schemes are short-term, i.e. 2 years, and they're a very different product - I'm talking about ones which will run until age 65-70 etc.

I'm no IFA, so definitely wouldn't say that it is suitable for yours / anyone else's circumstances, but it's an alternative to critical illness if you're not sold on it.
 
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