Do you still have life insurance after paying of your mortgage?

[Icequeen01]

DH and I are in our late 50’s and starting to think about semi retiring when we are 60. We are looking at our outgoings and we are still paying life insurance which was to cover the mortgage if either one of us died. Our mortgage was paid off last year, which was 6 years earlier than expected due to an inheritance.

We have one DS who is currently in his first year at Uni but have a critical illness policy for both of us which covers us until he is 23 to ensure we can still help him through Uni if one of us becomes unfit to work.

We have moderate savings in stocks and shares and although DH works full time he is also drawing his pension from his previous job which is quite generous. If he died I would still receive half his pension. I have a very small pension which we won’t touch until we need to.

Is there any reason we shouldn’t cancel the current life insurance policy. We thought about perhaps getting a cheaper policy just to cover funeral costs.

I would be interested in other’s views on this and happy to be told we are mad!

Funeral plans are expensive for what they are. How much is your current life cover premium? Have you asked your insurer if you can reduce the level of cover for the remaining term and what the corresponding premium would be?

We seem to be in more or less the same position but further on ifswim .
We cancelled life insurance when the mortgage was paid off ( coincidently the same month as youngest finished university!)

We had left the company insurance scheme when DH was made redundant and were able to set up a private pension fund so if he dies before me I still have the same income through the capital .

We don’t have a funeral plan as I think they are expensive for what they are and are thinking of direct to crematorium anyway .

If you don’t actually need the income from the life insurance then it’s a case of doing the sums to see if it is worth while keeping .
It might be different if it is a diminishing life insurance and have very little benefit left in it .

Thank you for the replies! Ours is a diminishing life insurance policy but because we paid off the mortgage early I think it runs until we are 64. My DH spoke to the insurance company when we paid off the mortgage but they advised us to keep it until it’s natural end as it was just extra cover - but they would say that wouldn’t they!

The life assurance payout after my husband's death paid off my mortgage. I still have life assurance for about 100k incase I die- my DCs are still school age. It's to contribute to their care should they be orphaned...

I am mortgage free and have some savings due to a tragedy. This was the advice i was given.
If my dependents would be ok financially if i was knocked down by a bus in the near future, then i am better putting the premium in a savings acct.. That way you are guaranteed that money is there for later life... Funeral whatever but Your life insurance will come to an end with no payout if you remain fit and healthy beyond the term.

If however your loved ones would struggle in the short term you should have life insurance

We each have policies that pay out on death
so that if we are gone the kids get a lump sum as well as the proceeds of the house.
The policies only cost around £40 a month each and are a nice safety net.
Kids are now both at Uni.
We have other savings.
Have never had any sort of critical illness policy
would never pay for a funeral plan.

Thanks so much for all the replies which have been really helpful. I think the comment by frasersmummy was helpful about whether our DS would struggle in the short term. We do have savings which would certainly give our DS a cushion for a year or so but this money would take a while to come through as shares would have to be sold etc. I like the idea of just putting the premium amount away in an account (perhaps in DS’s name or would that be classed as deprivation of assets?) so he has money available immediately.

Anyway, lots to think about.

How much are you paying out now and how much would you gain?

Re funeral plan, just put the money into premium bonds in your son's name (you'll have to tell him) - don't get a funeral plan.

Depends how much the premium is. Life insurance taken out 20 years ago will be much cheaper than a smaller amount of cover taken out now because you're older!

I actually regret not taking our life insurance out for a longer term all those years ago when we were fit and healthy. We've got no mortgage left but our ds has some disabilities (ASD) meaning he's unlikely to be self-supporting yet (he's 18). The life insurance runs out when he's 23 but I wish it ran until he was 30 instead...

Do you get 'death in service cover' with your jobs? That is usually x3/x4 your annual salary so could be significant.

We're a few years off paying the mortgage and have a decreasing life/critical illness policy that finishes at the same time.

I cancelled ours OP when we paid off the mortgage. We have employment death in service benefits so to me it was a waste of money.

Yes we both have death in service cover with our jobs which is one of the reasons I was questioning whether we still need the life insurance. Obviously this will change if we both leave our jobs to go part time in a couple of years. I think we would be better to cancel the life cover and just save the £50 a month premium.