Life insurance for mortgage...

Hi all

I know this is a very subjective question, but hopefully you may be able to shed some light on these for me...

I have a mortgage approved, house is in contract stage and i have been told i need life insurance & mortgage protection to finalize the mortgage. Ive read a few threads on this board about life insurance and am confused as to the options , and what happens on each...forgive me my stupidity on these matters, my skills lie elsewhere...

• life insurance vs life assurance? are these the same?
• mortgage protection , can this be combined with life insurance, or do they have to be separate?
• My wife has been talking to the mortgage company and i feel wary of them being very pushy and trying to scare us into cover/additional cover we may not need.. income protection, serious illness etc...i know these thing can happen and its a gamble, but one i may not be able to afford, we have 4 children and things are tight as it is...
• whats with the widowers allowance?
• is it best to lock into a fixed % for 20-30 years or is it better to pay more now and get things reduced towards the completion of the policy (kids move on, earnings increase etc...) what are the options here..?

Im on high 40k, and my wifes a stay at home mum, our mortgage is around 150k, both smokers, but active, and relatively healthy,
I definitely want to get us both covered, and have some sort of backup up for our family in case, but dont want to be paying a lot of money that is badly needed now! for something that may not happen in the future.


any advice/direction greatly appreciated..!
many thanks

Hi

In relation to your questions, please see below;

- Life insurance and life assurance are the same thing.
- Life assurance is normally referred to as level term assurance (sum assured stays the same). Mortgage protection cover is also referred to as decreasing term assurance (sum assured decreases in line with mortgage). It is possible to combine both but bear in mind that most lenders will require assignment of the policy to them so that in the event of death, they have first claim to the proceeds of the policy. If you were considering specified illness cover, it is better to keep this separate in my opinion.
- Lenders are pushy in general when it comes to life policies. The basic cover required under the Consumer Credit Act is a mortgage protection policy. They can only insist on a level term policy if you have an interest only payment option on the loan. Be wary of anyone trying to sell you a whole of life policy for mortgage protection purposes. Income protection cover and specified illness cover are nice to have but not must haves. If you can afford them great but if not just go for the cheapest option if things are tight.
- I'm not sure what you mean with widowers allowance, unless you mean a state payment, more info can be found on this in the governments social welfare websites.
- At the moment it looks like the only way variable interest rates will go is up, if it was me I would take out a fixed interest mortgage. At the very least you have peace of mind that you know what your monthly outgoing will be long term.

You could look at a cheap mortgage protection policy to keep the lender happy and maybe a separate life assurance policy depending on your ages for 20-25 years to cover childcare/education costs should anything happen to either of you, this should cover you until your children are out of college and can look after themselves.

Hope this gives you some food for thought.



www.CheaperLifeAssurance.ie

There are many more products sold as life assurance other than level term. Lenders are not the only pushy salespersons out there although they do have a captive audience.

Experts correct me if I am wrong, but Life Assurance is only essential on your PPR. One might use Term Assurance in this case, but in years to come and after the mortgage is cleared, the Life Assurance could be used for something else or for your beneficiaries after ones death.

Mercman, you're as good as any of us. Yes the PPR requirement is generally true but it is always safer for one to check the signed loan agreement to see if it was stipulated as a requirement. Regarding surplus -if it is a very large amount check the insurable interest exists. Also check possible tax liabilities for the recipient.