Life insurance and mortgage protection?

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Hi,

I am expecting our first baby soon (very soon) The mortgage is currently in my name but we are changing that along with some additional borrowing for building work. I'm going to be on SMP unfortunately, so household income is being decimated (I earn about 58, DH about 48)
My DH gets life insurance through his work (5x salary, so would pay off mortgage plus leave us with a lump sum of about 150k), I currently have nothing, so am sorting it now.
I have got quotes for a family income protection which will give DH £36k pa if i die, or have a terminal illness, but not critical illness (made it too expensive, our outgoings are pretty high) which I think we will def take out(approx 33pm) . However-do I also need the mortgage protection insurance we have got quotes for? It would pay off the mortgage (approx 110k) if I die or have a critical illness. Obv if we have both it is much easier for DH. but the mortgage protection is £29 pm so together we are looking at £60 odd quid. Is it worth it to have both?

I am aware that I am not in such a good position if DH dies, or he loses his job, but the additional cash for a private policy at the moment is not really available, once I go back to work, and we haven't lost £50k for a year it will be easier!

I am a Mortgage broker so I do this kind of thing all day long.
Critical Illness is expensive, but it is more likely to pay out. I know this is a bit grim, but if you were to have a critical illness and not pass away, you still cost money. At least if you die, you stop needing to be fed.

There are 3 main policies:
Life insurance - can be taken out to clear the Mortgage, but the reality is that money can be used for anything. Holidays, gambling - whatever you like.
Critical illness - quite similar really. But the money can be used for private treatment, changes to the home (wheel chair ramps for example) or to provide some money whilst unable to work. If your husband has 5x DIS then I am guessing his sick pay is probably quite good as DIS is usually no more than 3-4x income.
Income Protection - Imagine having an illness that is not covered by critical illness (bad back for example), it provides a monthly amount to pay the bills. Your partner probably does have good sick pay, but after that he will be on ESA which is around £100 a week.

Plenty to think about. Realistically, nobody can afford all 3 of them, it is just a case of having a budget and getting some cover in place. Personally, I only have income protection. I keep meaning to take out life insurance but I never get round to doing it...no excuse really considering my job.

Speak to your broker about a budget and what is important to cover. That is what I tend to do.

This has probably given you more questions than answers, but hopefully it has helped a little.

Critical Illness is expensive, but it is more likely to pay out

PP is right, this was my experience. We got a finance adviser who checked out all the permutations and costs for life, critical illness, mortgage insurance, etc. and we settled for a combination we were comfortable paying.

DH and I both work full time but I earn four times more than him. We opted for critical illness insurance for both of us to cover the balance of mortgage on the house and £15k a year to support private school, as we identified these to be the most important things that needed to keep going if DS or I were unable to earn.

At 44, I was diagnosed with cancer and the insurance paid out, so now our £635k house is fully paid and we will get £15k every year for 10 years. Luckily the cancer was caught very early and I'm still able to work full time.

I was 40 when we took out the insurance, and had no family history of cancer or anything alarming; we thought the premiums were high and didn't want to think about a future where one of us would be critically ill, but I suppose statistically working-age people are more likely to have a critical illness than to die. It's a huge relief not to have to worry about the mortgage now, and I'm grateful we got professional advice.

Sorry I meant the first sentence to be a quote: "Critical Illness is expensive, but it is more likely to pay out"

Yeah, the critical illness part of the family income benefit was prohibitively expensive, so I haven't gone for that, but am planning on getting it for the mortgage protection.
I also have income protection insurance (which unfortunately is not really adequate for current salary but would give £13k pa tax free so would cover the bills) and DH gets income protection through his work also.
It was really whether just having the family income benefit would be ok, but I think having the mortgage paid off in case of critical illness would be good, so will get both I think.

It is not a case of all or nothing. You could look at doing say £50k. It might not clear the mortgage but it would make a decent dent in to it.

It is all about putting in place a budget and working to that. You will never be able to afford everything.