Mortgage paid off early - is it worth keeping life assurance going?

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sam h

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A quick question which I reckon I already know the answer to !!

We've just paid off our mortgage (happy days!!) after 10 years into an 18 year mortgage.

We have a life assurance policy which had a fixed monthly payment (€18 per month) and a reducing "sum insured" (€110k in 2009 going to 13k in 2018).

Given that we nolonger have the mortgage, is there any point in continuing the payments as it is worth less & less each year?

Also, the fact there is no mortgage, would the whole policy be nul & void should something happen to one of us?
 
sam h said:
A quick question which I reckon I already know the answer to !!

We've just paid off our mortgage (happy days!!) after 10 years into an 18 year mortgage.

We have a life assurance policy which had a fixed monthly payment (€18 per month) and a reducing "sum insured" (€110k in 2009 going to 13k in 2018).

Given that we nolonger have the mortgage, is there any point in continuing the payments as it is worth less & less each year?

Also, the fact there is no mortgage, would the whole policy be nul & void should something happen to one of us?
Click to expand...

The policy would not be null and void (as long as you contact the insurance company and tell them that it should no longer be assigned to your lender).

However, the point you make re. the reducing cover is a good one. Although you'd get €110k now, is €13k life insurance in 2018 really worth it?

But another point, as you are older than when you took out the policy, it will be more expensive & €18/month might not get you that much life insurance......log onto a few sites & see what quotes you get. That'll help you decide whether you need another life insurance policy.

If either of you rely on eachother for income, you should have separate life insurance....
 
Congratulations. :D

If the policy was an old-fashioned "mortgage protection policy" it may very well be that once the amount outstanding on the mortgage goes to zero, there is no benefit to you in continuing to pay the premium, but check the documentation and with the seller / insurer.

I'm sure they'll happily continue to take your money with no risk of a payout. :)
 
I'm sure they would be very happy to continue to take the money.

The Bank is not listed, so no need to alert them that they no longer have an interest.

It is a "without-profits" policy. The terms are "The death of the first to die of the Lives assured before the Terminal day specified in the Policy Document" (August 2019)

I'd hate to stop it now and have something happen himself next week :D (only kidding!!)

Obviously there is no point in paying to the end, I guess I'm wondering if it is worth keeping it going for a year or two - though obviously it is a policy I hope not to have to avail of !!
 
As moneyhoney said, log onto some websites and check are you getting value for the premium you are paying.

See how much €110k worth of mortgage protection for 10 years will cost you. If the cover you have in place is significantly cheaper than the quotes you are offered then it makes sense to keep it.

If you do not have any level term cover in place it may be advisable to remedy this.



www.moneybackmortgages.ie
 
Sam,

You need to consider you total financial and personal ciorcumstances.

Term life assurance is useful as a hedge against lost future earned income. Not for your own beenfit of course, because you would be dead, but if there are others who will rely on your future earning potential.

So if you are younger, have less savings, no other insurance (e.g. with a pension arrangement) and have dependents, you might still need some cover.

After deciding ywhther you need cover or not and how much that might be, check out rates and see if you would be better surrendering that policy and taking out a new one.
 
Thanks for the feedback.

I guess I'm not sure if we really need an additional Life Assurance policy. We have been very prudent (boringly so!!). Theres no mortgage left and we have some other investments.

I just worked out based on the next 9 years we have left @ €18 per month so a total cost of €1944. I won't cancel just yet until I get a chance to do some research as I'd never get a life policy at those rates any more!! Better do some research on the ole internet - filling in all the details for each one is just so frustrating!!

Anyone recommend a good life policy and I'll see if it seems to be worth it?
 
I've a similar situation.

I paid off one mortgage and kept paying the life assurance that covered that mortgage. I spoke to the insurer and they said that the policy wasn't linked in any way to the mortgage, it was just a sum of money that they would pay out if i died. On the basis that i was paying about 100 euro pa for approx 100,000 life cover for this year i reckoned it was worth it. I intend to keep the policy going until the amount i've paid is the same as the amount that would be paid out.

The other reason I initially kept paying it was that i didn't have time to research to see what else i could do with the 100 euro's to get a similar level of cover.

I suppose i could have put it in my pension!!
 
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