This might be worth a read: http://www.moneysavingexpert.com/insurance/level-term-insurance
new house - life cover
- Thread starter leigh_boy
- Start date
There is not requirement for life cover on a mortgage, however it is advisable to get some basic protection to pay off the mortgage in the event of death.
Critical Illness cover is more expensive but 5 times more likely to pay out during the term than the death part of it.
It's up to you but £43 a month is not unreasonable (dependant on your ages) for the level of cover quoted and term.
Plenty of comparison website around to get some quote of your own.
Also need to check whether the premium is fixed or reviewable.
I have around 450k of life cover & £150k CI cover. Clears the mortgage and also leaves a sum for my spouse to bring up the kids etc in the event of my death. She is the same.
Clearing the mortgage is fine when just the 2 of you but when you have kids, you need to consider the cost of the lost of 1 persons' income in the event of death.
Critical Illness cover is more expensive but 5 times more likely to pay out during the term than the death part of it.
It's up to you but £43 a month is not unreasonable (dependant on your ages) for the level of cover quoted and term.
Plenty of comparison website around to get some quote of your own.
Also need to check whether the premium is fixed or reviewable.
I have around 450k of life cover & £150k CI cover. Clears the mortgage and also leaves a sum for my spouse to bring up the kids etc in the event of my death. She is the same.
Clearing the mortgage is fine when just the 2 of you but when you have kids, you need to consider the cost of the lost of 1 persons' income in the event of death.
Soldato
We pay about £12/mo with Direct Line for joint cover up to £150k, which depreciates over the life of the mortgage in line with the repayment.
Soldato
Check if your employer offers it.
My mortgage T&Cs required cover to be in place and I got some very expensive quotes but in the end I managed to get critical illness cover through work for a very, very small amount (£6 a month from memory?) and it's paid through salary sacrifice.
My mortgage T&Cs required cover to be in place and I got some very expensive quotes but in the end I managed to get critical illness cover through work for a very, very small amount (£6 a month from memory?) and it's paid through salary sacrifice.
our ages are young me 25 the mrs 31, our work auto enrolled in to westfield health but the pay outs would not cover the mortgage. I found one for £12 a month and annual premium of £43. i think it would be wise to get the health cover as the mrs has been having issues with her heart recently and is inherited on her side of the familey.
Soldato
Pre existing conditions may be excluded on critical illness cover. Be sure to check all questions and answers correctly.
I have 4x salary life cover from work, but an independant one is worthwhile as well in case you lose your job.
I did have critical illness cover, but discontinued it. You only need to cover the loan value, not the house value.
I have 4x salary life cover from work, but an independant one is worthwhile as well in case you lose your job.
I did have critical illness cover, but discontinued it. You only need to cover the loan value, not the house value.
thats a fair point her condition has not been confirmed as of yet.
if it was the house value it would be more then 153k thats for sure
would add another 100k on top thank god thats not the case
if it was the house value it would be more then 153k thats for sure
would add another 100k on top thank god thats not the caseYou can get policies where you set a budget of what your happy paying and they will provide you life cover and anything extra goes towards critical illness.
As others have said you need the Life insurance part but the critical illness cover is not a requirement but if you consider it usefull and your happy paying then you can get it flexible to cover your needs.
Cover for me and the wife over 19 years on ~150k is £11 ish per month. I set a budget of £18 and the extra £7 goes towards critical illness. I get a much smaller critical illness payout but it costs me much less.
For full cover it of the total outstanding amount the critical illness cover would have been in the region of the £40 pm mark.
I got the cover through Santander but i believe they are serviced by Aviva and you can try getting it direct.
As others have said you need the Life insurance part but the critical illness cover is not a requirement but if you consider it usefull and your happy paying then you can get it flexible to cover your needs.
Cover for me and the wife over 19 years on ~150k is £11 ish per month. I set a budget of £18 and the extra £7 goes towards critical illness. I get a much smaller critical illness payout but it costs me much less.
For full cover it of the total outstanding amount the critical illness cover would have been in the region of the £40 pm mark.
I got the cover through Santander but i believe they are serviced by Aviva and you can try getting it direct.
Soldato
Pays off your mortgage if you die. Seems pretty sensible & standard for your lender to want you to have. We have life only for our mortgage through Aviva and it's £25 a month for both of us on approx £200k.
Broker will likely not be offering anything competitive. £43 'sounds high' to me but then I haven't looked into it for about 8 years and it will obviously vary depending on your personal circumstances in relation to the rating factors.
If you want to keep costs down look at doing the version that ticks down with the mortgage (can't remember the correct term), i.e. the payout is reduced the more time that passes until you are mortgage free.
Also look into whether both or only one of you needs to be covered. If there is a main bread-winner in the household then you may just want to insure them and not the other party.
If you want to keep costs down look at doing the version that ticks down with the mortgage (can't remember the correct term), i.e. the payout is reduced the more time that passes until you are mortgage free.
Also look into whether both or only one of you needs to be covered. If there is a main bread-winner in the household then you may just want to insure them and not the other party.
Soldato
A few basics.
Life insurance (also known as level term assurance - LTA): pays out a set amount if you die during the period you're insured for. Most will have guaranteed monthly premiums during the term and the amount of cover will be unlikely to alter during this time. Normally dirt cheap, especially if you're a non-smoker.
LTA is similar cover to that provided by an employer for death in service insurance. The latter is normally a multiple of your income (typically 2 to 8 times your salary), and is normally viewed as a cheap perk that we all hope we won't ever need. It is also generally considered to be inadequate to cover a mortgage debt, as a mortgage often lasts 25 years or so, and not many people stay at the same employer that long anymore...
Decreasing term assurance (DTA) is the same as life insurance but the amount you're insured for is designed to reduce as your mortgage debt reduces. That keeps the cost low, but check the small print on what the tolerances are to cater for interest rates rising.
Critical illness cover pays out when you live, normally a short period of time after being diagnosed with a specified illness (heart attack, some cancers etc). It is normally substantially more expensive than life cover, because the chance for a claim is more likely. Critical Illness cover pays out a lump sum, and is not...
.. Permanent Health Insurance (PHI), which is best thought of as something to pay out a regular amount each month if you're off sick for any reason. You'd normally insure yourself for payments to start once your employer sick pay stops or reduces. Horribly expensive for the self-employed and for those that need it to start paying out just a few days after not being able to work. It is called Permanent as the insurer cannot reduce or take your cover away following multiple claims.
As a bare minimum you should have life cover to protect your home and repay your mortgage debt. Do not rely on your employer's death in service benefit unless you have a guaranteed contract that matches your mortgage term.
Life insurance (also known as level term assurance - LTA): pays out a set amount if you die during the period you're insured for. Most will have guaranteed monthly premiums during the term and the amount of cover will be unlikely to alter during this time. Normally dirt cheap, especially if you're a non-smoker.
LTA is similar cover to that provided by an employer for death in service insurance. The latter is normally a multiple of your income (typically 2 to 8 times your salary), and is normally viewed as a cheap perk that we all hope we won't ever need. It is also generally considered to be inadequate to cover a mortgage debt, as a mortgage often lasts 25 years or so, and not many people stay at the same employer that long anymore...
Decreasing term assurance (DTA) is the same as life insurance but the amount you're insured for is designed to reduce as your mortgage debt reduces. That keeps the cost low, but check the small print on what the tolerances are to cater for interest rates rising.
Critical illness cover pays out when you live, normally a short period of time after being diagnosed with a specified illness (heart attack, some cancers etc). It is normally substantially more expensive than life cover, because the chance for a claim is more likely. Critical Illness cover pays out a lump sum, and is not...
.. Permanent Health Insurance (PHI), which is best thought of as something to pay out a regular amount each month if you're off sick for any reason. You'd normally insure yourself for payments to start once your employer sick pay stops or reduces. Horribly expensive for the self-employed and for those that need it to start paying out just a few days after not being able to work. It is called Permanent as the insurer cannot reduce or take your cover away following multiple claims.
As a bare minimum you should have life cover to protect your home and repay your mortgage debt. Do not rely on your employer's death in service benefit unless you have a guaranteed contract that matches your mortgage term.
True, but not many people stay with the same mortgage that long anymore either. Since buying my first house I've remortgaged (changing both equity and term length) as many times as I've changed employer.
If people are concerned about losing their DIS cover in the future when changing employer, it is worth bearing in mind that should that be on the cards then in theory there shouldn't be anything to stop them taking out life insurance.
Anyway have a good dig into the T&Cs as it could be that you require only life cover and not critical illness as well, even if the broker is pushing that.
We got our life cover through a broker- that I found on pistonheads.
We have challenges due to my wife's health meaning some people simply wouldn't provide cover, so we got some 'tiered' cover. We still pay only £60 PCM for level term cover of over £600k
We have challenges due to my wife's health meaning some people simply wouldn't provide cover, so we got some 'tiered' cover. We still pay only £60 PCM for level term cover of over £600k
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Looking through this thread has made me realise how much I'm being stung with my current insurance.
Soldato
I get your point but I think you're missing the point I was making. I appreciate that not many stay with the same mortgage, but they will stay with the same debt - perhaps more, perhaps less - but a debt nevertheless.
Life insurance gets more expensive as you get older, and if your health has deteriorated it can get very expensive. Buying insurance 'early' when younger means that you only need to top up the shortfall in cover later on if you need more.
Soldato
Also people generally move jobs and have similar benefit packages (not always obviously) so quite often they'll still have DIS cover.
However I wouldn't bank of this to pay the mortgage, you still need life cover imo. You can get it so cheap you'd be stupid not to.
However I wouldn't bank of this to pay the mortgage, you still need life cover imo. You can get it so cheap you'd be stupid not to.
On the flipside, people should have a smaller outstanding mortgage balance as they get older (unless they've increased borrowing, in which case depending on what they took out originally may need to top up their insurance as you've pointed out anyway). Also considering the fact that you'll have saved on premiums for X period of time up to that point by not paying for cover, the fact the cover has got more expensive may not matter much (I haven't done any sums but what I'm getting at is that say 10 years of not paying premiums will offset the increase in age at least to some extent assuming you haven't developed a serious health condition in the meantime). It's a fair point for people that need/want the cover, I just don't think people should necessarily dismiss DIS benefits because they might one day change to a different job that doesn't provide it.
Depends on circumstances IMO... some people may be in a position to handle a death better than others e.g. partner is capable of covering the mortgage anyway, savings/inherited pension pot may cover some or all of the outstanding balance, single person not that fussed about leaving stuff behind for relatives etc
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Soldato
This is a very interesting read, considering I'm in the house hunting process at the moment (as a first time buyer).
The broker at the Estate Agents went through the costs with me of moving and said it was necessary that I got some sort of life cover, before the mortgage is accepted but as a non smoker, hopefully I'll find a good deal.
The broker at the Estate Agents went through the costs with me of moving and said it was necessary that I got some sort of life cover, before the mortgage is accepted but as a non smoker, hopefully I'll find a good deal.
Soldato
I just think that relying on DIS benefit for mortgage repayment is a unnecessary risk to take. Benefits do vary from company to company, especially if you don't work for a large national where the standard is three or four times DIS. What if you're between jobs when you die? What other financial provision have you made for your family - is protecting a debt more important that protecting the loss of you and your income?
I think you're right that DIS shouldn't be dismissed as mortgage life cover, but IMO it is basic and should be entry level only for those on an extreme budget. When better, more secure life cover can be purchased for the same or less than general household insurance, it seems an odd area to look to cut from the monthly outgoings.
I think you're right that DIS shouldn't be dismissed as mortgage life cover, but IMO it is basic and should be entry level only for those on an extreme budget. When better, more secure life cover can be purchased for the same or less than general household insurance, it seems an odd area to look to cut from the monthly outgoings.