# Life Insurance mortgage protection - best option?



## gg66 (21 Oct 2005)

I need to get life insurance for my first mortgage. I'm self employed and have a pension and I want the best option.

To me at the moment it seems that term insurance for the period of the mortgage seems like the best option. It seems like a necessity rather than a method of investment, I should use my pension to invest for the future. So I'm leaning towards getting the cheapest deal and going with that.

That'd be a nice quick decision but I have some questions which I hope you can give some impartial advice on.....

Should I consider a renewable term insurance so I can continue to add to the life insurance premium after the mortgae is paid or would I be better off investing in my pension?

Being self employed, should I include serious illness cover as part of my life insurance or is it better to insure against this separately?

Any pointers on best rates out there through brokers etc.


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## ClubMan (21 Oct 2005)

Have you read this thread and the many existing threads on mortgage protection and general life assurance?


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## Omega (21 Oct 2005)

Try Tesco or LAbrokers for online quotes.
Serious illness cover is very expensive and does not cover every eventuality.


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## RainyDay (21 Oct 2005)

gg66 said:
			
		

> So I'm leaning towards getting the cheapest deal and going with that.


Having hit some health issues in the 10 years since I took out my mortgage, I'm kind-of kicking myself that I didn't take convertible term cover in the beginning - Not saying it's the right thing for everybody, but don't assume that you'll always be healthy.


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## gg66 (25 Oct 2005)

> Have you read this thread and the many existing threads on mortgage protection and general life assurance?



thanks, I'd read a lot of them before I posted, this ones new though.



> Try Tesco or LAbrokers for online quotes.


thanks, will look them up, online quotes are useful for getting an idea of costs.

Rainyday, do you mind explaining how the convertible term would have benefited you if you had taken it out originally, still getting my head around the whole thing..


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## RainyDay (25 Oct 2005)

gg66 said:
			
		

> Rainyday, do you mind explaining how the convertible term would have benefited you if you had taken it out originally, still getting my head around the whole thing..


No problem - With convertible term, I'd have the security of knowing that I could extend the policy at the end of the current term at the same prices. Unfortunately now, I have to take out a new policy and go through various health checks (including report from my GP) to get a new policy at significantly higher rates.


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## gg66 (25 Oct 2005)

RainyDay said:
			
		

> No problem - With convertible term, I'd have the security of knowing that I could extend the policy at the end of the current term at the same prices. Unfortunately now, I have to take out a new policy and go through various health checks (including report from my GP) to get a new policy at significantly higher rates.



Does a convertible term cost more initially? and would one not be better off investing in a pension v life insurance?


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## RainyDay (25 Oct 2005)

gg66 said:
			
		

> Does a convertible term cost more initially?


Yes


			
				gg66 said:
			
		

> and would one not be better off investing in a pension v life insurance?


I don't think it's an either/or choice. A pension is to provide for you in retirement. Life insurance is to provide for your dependants if you die.


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## gg66 (26 Oct 2005)

RainyDay said:
			
		

> I don't think it's an either/or choice. A pension is to provide for you in retirement. Life insurance is to provide for your dependants if you die.



Seems so clear when you say it like that...

I guess I was thinking of a term life insurance for the lenght of the mortgage, and working on building a pension longer term. If I die before the mortgage is paid the Bank get their money, any dependents get whatever pension I've saved (does it work like that). If I live longer my pension looks after us.

You're probably right about the renewable term life insurance, it may be worth the extra premium to have the option in the future. 

Sometimes I wish I was the type of person who could make a quick decision on something like this without boggin myslef down in the options


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## RainyDay (27 Oct 2005)

gg66 said:
			
		

> I guess I was thinking of a term life insurance for the lenght of the mortgage, and working on building a pension longer term. If I die before the mortgage is paid the Bank get their money, any dependents get whatever pension I've saved (does it work like that). If I live longer my pension looks after us.


This makes sense, though just make sure you check the small print on the pensions policy to see who benefits if you die. Make sure you don't over-insure, i.e. if you don't have dependents, do you really need life insurance?


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## gg66 (28 Oct 2005)

RainyDay said:
			
		

> This makes sense, though just make sure you check the small print on the pensions policy to see who benefits if you die. Make sure you don't over-insure, i.e. if you don't have dependents, do you really need life insurance?



Been doing some more reading up, I'm going to get a life term insurance to cover the repayment period of the mortgage and concentrate on bumping up my pension. Must run off and check the fine print as you suggested. thanks for the tips.

BTW, if I pay off the mortgage early, I assume i can stop making insurance payments?

Eugene


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## RainyDay (28 Oct 2005)

gg66 said:
			
		

> BTW, if I pay off the mortgage early, I assume i can stop making insurance payments?


Yes, or provided that it's term assurance (which pays any excess over the outstanding mortgage balance to your estate), you might choose to keep up the payments to continue the insurance cover.


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## sun_sparks (23 Nov 2005)

LA Brokers and Prima Finance offered us our cheapest quotes on reducing cover mortgage protection. LA Brokers offered us half price in the first year on top of the second cheapest quote.

(Not affiliated to either mind!)


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## Kitty Kat (23 Nov 2005)

RainyDay said:
			
		

> No problem - With convertible term, I'd have the security of knowing that I could extend the policy at the end of the current term at the same prices. Unfortunately now, I have to take out a new policy and go through various health checks (including report from my GP) to get a new policy at significantly higher rates.


 

Just a quick note on this one for you all, Convertible Term Assurance does not allow you to continue at the end of the term at the same price.  The price you pay is the price at the date of conversion based on your age and sum assured at that time.  What the conversion option does is allows you to continue without providing medical evidence.


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## gg66 (24 Nov 2005)

> What the conversion option does is allows you to continue without providing medical evidence.


So I guese you only really benefit if you have some seriou illness that would otherwise bump up your insurance costs.

I'm seriously considering just getting mortgage protection cover now until I look into this in more detail. Is it possible to get this and then cancel it and change to a level term cover?

Also, with mortgage protection, if I have a 30 year mortgage and I pay off lump sums during hte mortgage period and end up paying it off after 2o years for instance, how is the amount I pay monthly calculated. Is it constantly fixed?


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## RainyDay (24 Nov 2005)

gg66 said:
			
		

> So I guese you only really benefit if you have some seriou illness that would otherwise bump up your insurance costs.


Depends what you consider 'serious' - Even elevated blood pressure (which is very common) will impact your insurance costs.


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## Kitty Kat (24 Nov 2005)

gg66 - you are right, the only benefit of Conversion Option is the guarantee of continued cover with no medical evidence so if you had some form medical complaint that would give rise to a loading on the premium, this cannot be applied if the policy was origianlly accepted at oridinary rates.  Any new policy is subject to terms applied to the original.  

Mortgage protection is bascially Decreasing Term Assurance whereby the sum assured goes down generally in line with your loan however your premiums remain the same throughout.  The contract cannot be altered in any way which is the same as Level Term (apart from the sum assured being level).  The only contract that you can alter sum assured is Whole of Life.  I believe that you should only take out what is needed bascially get the DTA for your mortgage (assuming that you have a repayment loan) and if you need any extra cover take this out separately.


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## gg66 (24 Nov 2005)

Thanks Kitty Kat, 

Thats what I'm gonna do....I can always get separate cover as you mention.


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## Jane2 (22 Feb 2006)

This is my first time to use this site and I have a query about Mortgage Protection Insurance.   I am taking out a new mortgage and want to get the best deal on MP Insurance.   I heard Eddie Hobbs say that some companies will refund the first years' premiums if you take out insurance on-line.   Any idea what company he was talking about and who gives the best deal overall??


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## sun_sparks (22 Feb 2006)

I went with LA Brokers. Apart from being the cheapest quote, they also offer a refund of half the payment for the first year.

Great service as well.


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