Insurance: what payment protection, life, critical illness insurance etc do we actually need?

[tellnoone]

We have a mortgage and all our policies are up for renewal. I want to shop around but which do we actually need and are some duplicating others? Hoping someone can help give me an idea of what I need to be looking for.

Do we need all these different policies - what is the normal that people have?

Does payment protection duplicate life and critical illness/injury policies? e.g. if you are critically ill and can't pay the mortgage which one pays out or both? Not sure we need 2 policies to pay out. All the paperwork is too complicated to understand.

Plus when we got the mortgage we were not married but now are - does this change anything to do with the mortgage or any of the policies?

Do you have access to an Independent Financial Advisor? Might be your best bet; can't really advise without knowing the T&Cs on your existing policies.

It depends on how much you can afford. Generally the more protection you have the better you are covered. How much you have does depend on your affordability.
Payment protection usually is just to help cover the cost of the mortgage in the event of short term illness. (less than a year say)
Critical Illness is usually a serious illness or long term protection to cover the mortgage or provide family protection.
Life Cover again would usually just cover the mortgage or provide more cover to help the surviving partner in the event of death.
Married or not makes no difference to the policies or the mortgager although the life should be in trust so to help ensure who the policies should pay out to.
You should speak to a few IFA's to get an idea, try unbiasedifa.com.

Many thanks for the good advice. I will check out some IFAs.

Even the most unbiased IFA is going to try to persuade you to be insured up to the hilt.

My opinion is that you need to cover the outstanding balance of your mortgage in the event of death so that the people left behind don't have to sell their home to pay the mortgage off. (Most mortgage companies insist on this one anyway) And anything beyond that falls into the category of 'nice to have' if you can afford it.

Payment protection plans have to be read very closely. You don't qualify for help until you've been unemployed quite a few months, by which time you're either sunk or you've found some alternative employment anyway. I think they are poor value for money

And critical illness policies are notorious for being reluctant payers. "You didn't declare that you had asthma so we're not paying out for the stroke" etc.

If you take the money you would spend on payment protection and CI cover and bank it you'd quickly have a nice rainy day nest-egg. Good luck

consier income protection rather than payment protection.

Actually Chil a good IFA would lay the options out for the client and explain how everything works and let the client make their own choices.
For the record none of the mortgage companies insist on life assurance, they used to but not anymore.
As an IFA I have had clients die and have critical illnesses and made successful claims. Yes it is a gamble whether you take the cover or not but sometimes the consequences do not bear thinking about.
It astounds me how people will insure their cars their homes but not their life or lifestyle.
Like I said work out what you can afford and take it from there and get a good financial adviser.

LOL BigGitDad.... you say in one breath that you let the client make their own choices but two sentences later you are 'astounded' that we don't protect our lifestyles with insurance. You can't help as an IFA but pass that 'astonishment' on to your clients. so you are - whether you think so or not - influencing their decision to take out more insurance.

That's what I mean. Every IFA I've ever spoken to spends a lot of time explaining why all these different policies are such a great idea. The sell is 'which of these many policies would you prefer?' rather than 'you don't need any of these policies really'. An IFA may not be manacled to recommending a particular company but, if remunerated based on commission, they do not give a 100% impartial view.

We are in the process of moving and sorting out the mortgage. For the first time ever (this is our 4th house move, and we remortgaged to a different company twice in between) we have been asked to provide evidence of our life insurance. They won't give us the mortgage without.

All for the purpose I've tried to take some out via confused.com and had to fill in 20 questions (never had to do that before either) and it's been referred to the underwriters. Used to just ask for it and get it with no further info than DOB.

Elvis can you tell me what mortgage company that is? Just out of curiosity.
Chil if you knew how I worked then you would have an idea how I present to my clients. Yes I lay out the options of what cover is available and what the cover provides. It is then the clients choice what they do next. If they say they do not want any cover then that is fine, no skin off my nose. What's the issue?

C&G

Thannks Elvis as I have used C&G lots of times and have never had to prove life assurance for any of my clients. Have you had a mortgage offer yet? It would say on there whether life assurance for the mortgage is compulsory? It seems to me the sales staff are pulling a fast one in the hope of selling you life assurance. (Although I do believe you should have life assurance in these cicumstances anyway)

It says it isn't compulsory but she isn't putting the application through until she's got the proof of insurance (either theirs or with someone else).

If it holding up the mortgage application and so the house purchase you might have grounds for a complaint. The daft thing is you could cancel the life assurance at any time after you have the mortgage so why would they insist?

That's what I can't understand. I'm going to call tomorrow to see what is happening. If need be we'll say we'll take their insurance then cancel it once we've got the money.