Life Insurance

[dino]

Hi,
I have a basic life insurance/mortgage protection policy for my existing house. I'm releasing equity to buy another house so I need to get increased cover. My insurance company said that my existing policy cannot be extended. Should I take out extra cover for the extra amount or scrap the policy and get a new policy for the full amount. Also, I'm buying a second house that I will probably only keep for a few years. Should I just get basic cover or a convertible policy?

 

[cloughy]

You only need life cover for mortgages on PPR, for investment properties you dont need any cover, but some believe that it is worthwhile investment.

For an equity release you will need to ensure that the life cover covers the new mortgage on the investment property, so best to try and keep the mortgage as high as possible on investment for this and also interest deductability.

If you require additional cover, check the cost of taking out new policy v's additional cover for the shortfall, as if selling in short time, then no point in having cover for the longer if it is not required. As a aside, by having extra cover allows you to release equity in the future without this situation arising again.