Life insurance

[purpleme12]

Getting a mortgage
Does everyone get life insurance at the same time?
does everyone here have it who has a mortgage?
how much is it?

How much is too specific a question as it depends so much on your age, health etc.
Some mortgages require it. My husband's didn't, and I had to sell the house almost immediately when he passed away.

You don't have to have life insurance but if you have kids I would. Most people review it when they take out a new mortgage but don't just think about how much the mortgage is but how much your partner/kids would need if you were to die. Some sample costs here moneytothemasses.com/quick-savings/insurance-2/life-insurance/much-100000-life-insurance-cost

Absolutely. And critical illness and income protection, no point asking for prices it's so unique to the person depending on age and health etc, go through a broker, and I would find someone that has a good amount of experience with life insurance, don't just go to your mortgage broker.

But if you're literally getting a decreasing life cover for mortgage to purely only cover the mortgage that isn't usually too expensive (health depending) def get that in the minimum, but if you've got kids I'd go for more than just mortgage cover, bare in mind how one parent would cope with loss of income etc.

It's compulsory to have it with a mortgage, it can be through your employer or privately. The cheaper option is normally a term policy - make sure it exceeds your mortgage term, the cheapest ones decrease over time to reflect lesser mortgage outstanding but mine was the same for the whole term. I've sold that property now but kept the policy as it expires when my kids are late 20's after which they can stand on their own feet

Yes we have decreasing life insurance to cover the mortgage and some critical illness cover included. It's not very expensive, less than our car insurance premium if we paid that monthly.

@Midlifephoenix a decreasing life cover policy is a perfectly reasonable policy particularly if working to a budget, why pay for a policy for the whole mortgage amount when it will get smaller over time. We have separate flat policies to cover our loss of earnings etc, when we moved we just purchased an additional decreasing policy for the additional mortgage and continue to have a our flat policies which we took out when very young so cheap so don't want to amend.

It’s not compulsory in the UK - we don’t have our own life insurance and the lender never asked for it. We do have separate death in service cover from work which will cover it but they don’t know that.

oh god this is so confusing
i've no idea about any of this
it's just a minefield

@purpleme12 that's why you need to talk to an insurance broker. They can look at your finances, budget, risk factors and talk you through it. I urge everyone to do this and not to just buy online, it's too important. They don't often charge as they take payment from the providers.

oh right i didn't know there was insurance brokers for this kind of thing
this is so hard by yourself

Martin Lewis on money saving expert has the best guide as usual.

www.moneysavingexpert.com/insurance/cheap-life-insurance/

You have to consider who would be affected by your death. If you're single and have enough savings to pay your funeral and expenses, then save your money and allow your house to be sold. The equity can be distributed according to your will. If you live with a partner or children this would be a disaster most probably so you will need life insurance. Even as a SAHM I have a policy - my husband can pay the mortgage on his own but he wouldn't be able to pay a cook, cleaner and nanny as well!
Insurance from your employer isn't sufficient as you might change job and if you've developed any health conditions in future you could find it difficult or expensive to get cover.
We have for 10x the income of the highest earner on both of us - if one of us dies, we don't want to be forced into choices like moving, quitting or starting work, selling assets. We believe it would be awful enough to lose a partner/parent especially for our kids. We have level term insurance for 25 years because we would want to support them into their twenties (through an aunt and uncle if we both died) and would want them to have access to help with house deposits, uni fees and inheritance etc especially if we weren't there to parent them for any reason. In our case that kind of cover cost £25/month, using a broker recommended off the MSE website, to give you an indication.

Be really careful OP

I've just found out the life insurance we took out with the mortgage doesn't, in fact, cover the outstanding mortgage

It also doesn't pay out at all in most circumstances that you would possibly need it

They really are designed not to pay out IMO

Thank goodness I haven't needed it, because nothing is actually covered!

I complained to the FCA who agreed the wording in the policy was "confusing", but they decided we had been informed verbally about the restrictions and limitations of the policy
No, no we hadn't

They weren't able to explain why anyone would pay for life insurance that offered such poor cover

Good luck in getting a policy that covers you for what you think it does!

Well I tried. Pretty much Uninsurable. 45 with BMI over 40 and a history of cancer in the family.

Oh right gosh are there medical conditions that mean you can't have it then?
i mean i have a history of cancer in my family i never thought about this in relation to this.....
you say there are brokers recommended on that money saving forum?

i am single with a child.

I had insurance through LV which were kind and paid out within 2 weeks when DH died. Recommend.

I guess i was just thinking i wanted the mortgage to be paid off for my daughter if anything happened so she'd have a house (and so security)

it's not true you can't get a policy if you have had cancer. The policy might (will) be more expensive and it is likely to exclude cover for the cancer but should cover you for everything else.

OP I would speak to a (free) broker and see what they recommend.

@Africa2go yes my mum's policy very randomly won't cover her for ovarian cancer...I can't remember why now, she used to be at risk of breast cancer (a certain type that happens before 50, genetic) but she's over 50 and on routine mammograms now, I believe she's covered for breast but not ovarian?! Everything else was fine.

We have a decreasing policy to cover the mortgage.
We also have a policy for £100k that we took out years ago, DH also gets death in service benefit from his employer and I think I do too. Any money received from these policies would be towards helping the remaining parent (or guardians if we both died) cope with the costs of raising the children.

Yes if you have a mortgage and yes if you have children. We have ours in place until the kids are 18 and 15. We will reassess then and renew if we want. With our policy we are medically underwritten for life even after the 10'years is up. Ours also covers the funeral costs if (god forbid) our children died.

@Svrider that policy sounds quite odd? Why did it not cover the mortgage? Was it not enough?? I know some illnesses aren't covered but that usually all comes in writing.

I'm in the process of arranging this, I'm doing some searches and our mortgage broker is also doing insurance searches for us so we're going to talk it through with him and make decisions in the next week or so.

A good broker should be able to help with difficult situations like health conditions, though it is harder and more expensive. We were told about my spouse that while term life insurance was fine, with his medical needs critical illness would just be ridiculously expensive so it may be better to just save for that rather than using an insurance product.

The calculation we've been given for life insurance is roughly: Mortgage (and any other debts) + (income * 5-10) + ~5k for funeral for our area which is on the cheaper end of things.

Would high blood pressure count against you for this life insurance then?
(which i obviously take tablets for)
hadn't occured to me all of this

Yes they will do a health questionnaire and all conditions and medications will be factored into costings and insurability etc. Another reason why it's important to do with a broker, they can clarify what the questions mean.

Scuba dub
No, not odd. From my experience insurance is specifically designed NOT to pay out.

We genuinely thought we were covered for a minimum amount. The documents specifically state "minimum amount insured £xxx"
This is not in fact the minimum amount insured.

The amount insured is a random, decreasing amount. It currently wouldn't even cover half the mortgage, not to mention funeral costs etc.

But then the minimum insured is probably immaterial because looking at the full list of exclusions (rather than the summary given at the time of purchase) I honestly would struggle to envisage a situation where you can actually make a claim, let alone it be paid out.

I do hope OP manages to get suitable insurance, but really I think you need to be an expert to understand what is on offer. Insurance companies seem to make their business by baffling their customers, and the FCA isn't the protection you may think