Conversion option on mortgage protection-any value?

B

Bolter

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I'm looking to switch our mortgage protection policy- joint life.
It costs 850 per annum.
Mortgage covered is 230k with 17 years left .
Death benefit only
Decreasing benefit .
The only thing it has that cheaper mortgage protection policies don't is a conversion option.
But since we can't lengthen mortgage term anyway (we're 50s) I guess that's useless?
Price wise cheapest option I can see is 600 approx per annum-Royal London with no conversion option.
There are a few other small differences like accidental death cover -150K with current policy.
But we have life insurance anyway so I'm thinking of switching.
Am I missing anything?
 
Thanks.
I'm just trying to see is there any advantages to having a conversion option.
I can't see any given that our mortgage term can't be extended.
I presume one can't change this type of policy to a serious illness policy using the conversion option- I.e. no medical?
 
I meant to change this mortgage protection when switching but didnt. It's only now I'm looking at it.
 
Bolter said:
The only thing it has that cheaper mortgage protection policies don't is a conversion option.
But since we can't lengthen mortgage term anyway (we're 50s) I guess that's useless?
Click to expand...

Not really.

Think of the mortgage and the mortgage protection policy as separate things.

You may not be able to extend the mortgage term, but that does not prevent you from extending the mortgage protection policy. It is still a valuable life insurance product.

Put it another way. If you inherited money and cleared your mortgage tomorrow, you could still maintain the life insurance policy.

What conversion is allowed? Can you increase the sum assured? I understand how a level amount could be extended, but I don't know how a decreasing benefit one is extended.

If either of you has developed an illness since taking out the policy then it could be very valuable.

Did you buy it through a broker? Then ask the broker.

Brendan
 
Thank you Brendan.
We didn't buy through a broker.
It appears (from docs I have just faqs) we could convert to a level term policy, switch to a dual life policy.
It also says we could switch to a new protection policy without having to do the necessary medical.
I'll ask if there are any restrictions.
We cannot extend the term so that benefit is of no use to us.
I don't think we can go interest only (Avant) so that is of no use to us.
I'll check out cost of switching to level term policy.
 
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