Monumentously expensive critical illness/life for mortgage (boring but pls help!)

[Walnutshell]

Chasing around for good mortgage deal for high loan to value... Finally got the one we really want, can hardly contain my excitement (no, really) then the adviser starts discussing life cover. The options he ran through ranged from £277 per month (WTF?) down to £102 per month - ohmigod! We are currently paying £31.50 so obviously these products are not like for like, but why such a vast difference? He's getting details to send to me but now I'm cynically wondering if that's how we got the deal we want - by shelling out massively on life cover. No way will we go for this level of cover, but I just want to make sense of it.....

Do you HAVE to take the life cover with it, cant you stay with you 31quid one?

I wonder how much commission he gets if you take out this policy . Just tell him that you are tied in with your current insurer so you can't change at the moment.

Not sure, but I will be checking! I'm just worried that agreement of the m/gage hinges on taking out expensive cover. Is that usual practice??

Yeah, I mean they are reputable - recommended by MNers no less! I just really want that m/g deal...

life cover has gone up dramatically over the past 5 years. its to do with the fact that so many more people are surviving illnesses like cancer. we moved in july so went through the same thing then.

our existing policy cost £14 a month and covers both of us, but only for the amount of our old mortgage. the new mortgage is much larger, so we've kept the old one but also taken out a new one which covers the short fall.

i thought that you had to take out life cover if you were using a mortgage, they usually ask for proof before completion. otherwise, if something happens to either of you and you loose your income, how does the debt get repaid?, the only way is to sell the house.

we double checked the figures our financial advisor came up with on moneysupermarket.com and came up with about the same, but it's still worth checking yourselves.

It is unusual nowadays for mortgages to be dependant on taking certain life cover. I spoke to an FA only recently and he said lenders really dont care that much anymore as they will simply sell your house if you die and dont have any life cover to repay it. Might be different if you are taking more than 100% mortgage but I would be suprised if they could dictate the life cover company to you.

Was your current life cover decreasing and the ones he are poprosing are level cover? Even so I think they amounts you have mentioned are way too high for that to be the reason.

Critical illness cover is the expensive bit, because so many people go thru' - and survive - serious illness. If it was just life cover, it should be significantly less expensive.

Yep. Pretty sure it's the critical illness component that's pushing up the price. Ask about a simple decreasing term life insuracne policy (if it is a repayment mortgage) and it should be much lower. Of course, you wouldn't have the critical illness cover then...

the OP didnt mention criticall illness though did she? Oh I see do you think he may have added that on but not explained it?

Thanks guys. Yes, the new figures I'm being quoted are definitely for critical illness and I presume for level cover. The cover we have at the moment is decreasing cover but I'm sure it's still crticial illness + life - am trawling for paperwork now! Hope we can just bump that one up to cover the increased m/g amount - from £106 to £137 or thereabouts.

crticial - Spanish for critical of course

I have just taken out new policies for life cover and critcall illness, I am slightly older than you and have a larger mortgage and my premiums arent close to yours. Good luck, hope you get it sorted.

Why do you have to take the life cover as a package with the mortgage? That nearly always makes bad financial sense.

Take the great mortgage deal, but arrange your own life cover - that's what most people do!

The adviser just wants to sell you both to get more commission.

Do your homework and only buy the life policy from him if it really is the best life policy on the market.

Usually the mortgage firm only insists on proof of life cover, not on you buying it from anyone in particular. And they don't ever insist on critical illness cover.

Is it interest only or repayment mortgage? Go to lifesearch and get a quote for decreasing term for a repayment mortgage (the amount covered decreases as the amount outstanding on the mortgage decreases)- it is cheaper than level term - which is what you will need for an interest mortgage, unless there is life cover built into your endowment policy/ other mortgage plan.

We paid £4.80 per month on a £15,000 repayment loan over 15 years via lifesearch.

Critical illness cover is more expensive than life cover - again, lifesearch can get you a quote.

Thanks and I'll go on lifesearch later. Getting a bit worried as the deal he claims to be able to get is one we'd like but didn't think we could have because the salary multiple didn't quite fit (another adviser tried and failed and I rang the company myself - Portman - and got the same answer). This new adviser bod was supposed to email stuff over to me asap, but nothing as of yet. When I have time later I will check our existing life/crit ill with Bright Grey and get back to him...

After doing some researching and seeing several brokes/advisers I'm pretty sure the deal is the best we can get on one salary (relocating and losing my wage)with high loan to value, ie 95% m/g (yikes)... It's 5.34% fixed for 2yrs.

Having said that, I could be wrong, these are murky mortgage waters I think.

Critical illness cover has had quite a bad press recently - the Sunday Times has written about it. The salesperson gets a very high commission (as much at 100%-plus of the premiums in the first year, according to the last article I read), plus, again, according to what I've read, the policies only pay out to one in four claimants. I'm not a financial expert by any means though. When our financial adviser quoted us for critical illness recently, I asked him to look at income protection policies instead. We might end up having life protection only in the end because income protection can still be expensive. Make sure that whatever policy you buy, you list every illness/visit to the doctor because the companies apparently wriggle out of paying up if they say you have a pre-existing condition which wasn't declared.

Thanks, that's very helpful. I'll do some more research. He is confirming that we can have this m/gage that we want but I am yet to speak to him in detail about life cover. He wasn't pushy about it, but I just want to know my facts! (He's a London & Country bod btw)

Can I ask if you smoke, because life with critical illness the premiums are going to be out the roof.

I don't smoke, and I think I'm going to stick with B/Grey and get additional cover for the extra m/gage amount. Now my problem is I've potentially got 2 brokers offering the same deal and I'm going to have to choose which one to go with. Oh dear, how does this happen to me?