Life insurance on paid off mortage

[Frank]

Sold an apt and paid off 90% of the home mortgage
Will probably clear the home mortgage this year.

So 2 life insurance policies being paid monthly that are no longer required.

Is it worth keeping these in case I drop and just assign to my estate.

The insurance was setup 10 and 15 years ago, so will never be setup as cheaply when I was younger and fitter.

Or do they need to be shut down and save me the few quid per month.

 

[jpd]

Who can tell !

Without knowing your circumstances and obligations, it is impossible to have an opinon on the necessity or otherwise of a life insurance contract

 

[Brendan Burgess]

@Frank

If you are single and have no dependants, then you don't need life insurance.

You really have to look at the level of cover and the premium paid, to decide if they are good value.

Most mortgage protection policies have a level premium but a declining level of cover. So as they were taken out 15 years ago, the cover might be very small.

If you think that you need cover, then you should shop around and see if you can get the same level of cover for a lower price. Even though you are older, because the premium is fixed and the cover has reduced, you might well get cheaper cover.

And I presume you have no intention of taking out a mortgage again in the near future? If you did, you might be able to assign the existing policies to the new mortgage.

Brendan

 

[Frank]

I have a 2 year old

Have taken out other life insurance for her and have death in service so I don't think she will ever be stuck

No plans to take out another mortgage.

Fair point on the dropping pay-out after all this time.

 

[Steven Barrett]

It's probably costing you very little anyway. It's just in case.

No problem with decreasing cover. Your 2 year old becomes more independent as they get older and the cost of care decreases. Also, you own net worth increases so the need for cover decreases.

 

[Frank]

Thanks for that Steve

Looking forward to the more independent and cost of care decrease

 

[Brendan Burgess]

No problem with decreasing cover.

It's not a problem as such but if it's not needed at all, then there is no point in paying for it.

Furthermore, as it was taken out at a fixed monthly repayment, he should check if he can get the same level of cover for less money.

But with a 2 year old, he needs to assess his need for life cover separately from the mortgage protection issue. And then see if the mortgage protection policy should be retained as part of his overall need for life cover.

If Frank dies while the child is still dependent, then there will be a mortgage-free house in the estate.

Brendan