Taking out assurance when you get a mortgage

[DonnyG]

Sorry, if this has been covered in another thread, but needed to ask direct so I can get my head around it.
Ok, is it really advisable to take out assurance when we get our house? We (me and the OH) have spoken to quite a few people half say yes, take it our you need the protect in case one of us falls ill, or dies. The other say no, and that it is a waste of money.
We got a quote through our mortgage brooker for £100 a month, which just seems ridiculous. I had a quick look through a few comparison websites and the cheapest quote was £30 for a decreasing mortgage?? with critical illness.
So, can someone advise on what we need and what the cheapest option is??
Thanks, ever so.

[gizmo111]

I'm not an insurance exert but would advise the cheapest term assurance you can afford that will pay off the mortgage. Take into account any insurance that you may have as part of a work pension scheme, and insure for the amount to pay the mortgage off in the event of death to cover the other partner.

[bally35]

I got ripped off with that wholem thing too.I now have level term instead of decreasing terem as per the mortgage companies (which pays out the total amount , even towards the end of mortgage which would leave kids with nest egg).
Saved myself £51.00 per month and the lovely bank do not get any commission on this.
Hip hip Hooray.
Critical illness is something that you should think about, but will depend on your own circumstances.

[DonnyG]

Originally Posted by bally35

I got ripped off with that wholem thing too.I now have level term instead of decreasing terem as per the mortgage companies (which pays out the total amount , even towards the end of mortgage which would leave kids with nest egg).
Saved myself £51.00 per month and the lovely bank do not get any commission on this.
Hip hip Hooray.
Critical illness is something that you should think about, but will depend on your own circumstances.

Who did you go with??
AND
What is the difference between level term and decreasing term???
Thanks

[bally35]

Friends Provident were cheapest.(comparison sites)

[gizmo111]

Originally Posted by DonnyG

Who did you go with??
AND
What is the difference between level term and decreasing term???
Thanks

Level term cover stays the same for life of policy
Reducing term cover decreases year on year (supposed to be in line with mortgage balance)

[bally35]

Sorry, didnt see the second part of the question.
Deceasing Term
Basically if you snuff it 24 years into your mortgage (don't forget that you will be older and perhaps more likely to be ill, the company will ony pay out the remaining balance on your mortgage).
Level Term
If say, the mortgage at present is £100,000 , the company will always pay £100,000. should you be 1 year or 24 years into it.
So, in 24 years time I will be in my 50s and should I die , my kiddies will get the £100, 000 minus the remaining balnce on the mortgage

[girlynutnut]

I'd definitely get some life assurance to cover the amount of your mortgage. However, it sounds like you're talking about Payment Protection insurance too (aka Accident, Sickness and Unemployment insurance). Whether you get this depends upon your attitude to risk. As somebody who's worked in the PP claims dept, I don't think it's worth the paper it's written on. Yes, it'll cover you if something terrible happens but you'll be paying the premium every month for 25 years, for something that's probably quite unlikely. You need to think about how you'd cope e.g. if you got made redundant, wouldn't you just get another job!? These policies often have restrictions e.g. don't pay out for first 3 months that you're off work or are very specific e.g. certain types of medical conditions but not others. You have to weigh up your personal circumstances e.g. do you have savings or famioly to fall back on against the total premium you'd be paying and the chances of you getting ill.

[bed32]

I think the matter of whether to take out insurance is rather too complicated to be covered in a couple of sentences.

If you ask the question "how much insurance do I need if my OH dies?" the answer is highly unlikely to be "exactly enough to cover the mortgage". I would really recommend giving a bit more thought to what you would need in case one or other of you dies, and taking out the necessary cover.

[bally35]

Yes but this is mortgage connected, and mortgage companies insist that you take out adequate life assurance to cover the debt, if you or your partner falls ill.
Therfore for this oarticular scenario, the advice here has been based on covering the mortgage not one individual circumstances.

[bed32]

Do mortgage companies still require you to have life assurance? I thought that was less common these days (mine certainly doesn't).

I was encouraging the OP to look at the issue in the wider context of financial planning.

[nannamoon1]

Originally Posted by bed32

Do mortgage companies still require you to have life assurance? I thought that was less common these days (mine certainly doesn't).

We are in the process of selling and buying and have been told by our Solicitor that you do no have to have life cover it is optional...

however we will be getting life cover, as I would hate to think I left hubby with the mortgage to pay.

I personally think that you used to have to have life insurance but it appears it is optional now.

[mooreda]

I HAVE MY DECREASING TERM ASSURANCE WITH LEGAL AND GENERAL - JOINT POLICY WITH MY WIFE AND WE PAY A FIXED PREMIUM OF £10.50 PER MONTH FOR £50K WORTH OF COVER (MORTGAGE ONLY £49k). THE POLICY IS LIFE INSURANCE WITH TERMINAL ILLNESS COVER

[DeejayP999]

Originally Posted by girlynutnut

I'd definitely get some life assurance to cover the amount of your mortgage. However, it sounds like you're talking about Payment Protection insurance too (aka Accident, Sickness and Unemployment insurance). Whether you get this depends upon your attitude to risk. As somebody who's worked in the PP claims dept, I don't think it's worth the paper it's written on. Yes, it'll cover you if something terrible happens but you'll be paying the premium every month for 25 years, for something that's probably quite unlikely. You need to think about how you'd cope e.g. if you got made redundant, wouldn't you just get another job!? These policies often have restrictions e.g. don't pay out for first 3 months that you're off work or are very specific e.g. certain types of medical conditions but not others. You have to weigh up your personal circumstances e.g. do you have savings or famioly to fall back on against the total premium you'd be paying and the chances of you getting ill.

Based on experience, I'd agree with this 100%.

Life insurance is a must, but payment protection - forget it.

Incidentally, I have Level Term life cover through work - it pays out £100,000 should one of us die, for £10 pm.

[weegirl]

Insurance is something that can be tailored to personal circumstances.
The payments may seem like a waste at the time, the thing is, you don't realise how important it is until you need to claim.

You need to add up your savings, other insurances, etc. You may have enough to pay your mortgage if you take temporarily ill, or you may have your home re-possessed. The banks normally are more expensive than independents, but as already stated, bargin bucket insurances may not be good value either. Talk to a reputable company.

I personally have my home insured to the eyeballs, critical illness included as I couldn't afford the payments if I took ill.

The credit cards can take a running jump though.

[DonnyG]

Thanks for the answer of descreasing and level assurance.

[rogerk]

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