Mortgage Protection Question

[kaza]

Hi,

I have a buy to let with four names on the deeds. I am thinking about possibly getting mortgage protection for this property and have queried a couple of insurance companies who have yet to come back to me.

My question is - can you only get joint mortgage protection policies? I need one that covers 4 people - and I am worried they either won't cover 4 people because all their websites state single or joint. Or that it will be too expensive to have 4 lives covered??

Anyone any knowledge on this area?

 

[NorfBank]

Friends First is the only insurer that offers dual mortgage protection policies.

Are the 4 buyers related e.g two sets of spouses?

If so then two dual policies would suffice.

If 4 non related people then 4 separate policies would be the way to go.

 

[kaza]

Thanks for that - yes it is two sets of spouses. I will contact Friends First and see if I can get dual policies set up. Thanks for that!

 

[Yakuza]

Joint life policies would be cheaper than dual. I would think there would be no need for dual (which effectively is like two single life policies with one policy fee) as if there's a claim (God forbid!), then the mortgage is paid off (and the other policy could be cancelled). I never really saw the logic in a dual life decreasing term policy, myself.

 

[NorfBank]

I never really saw the logic in a dual life decreasing term policy, myself.

I find them useful for parents who do not want/cannot afford to take out a separate term policy for family protection.

e.g

Mary and Joseph, mortgage and one child.

Joint Mortgage Protection Policy:
Mary dies, mortgage cleared off, policy ends.
Joseph since taking out the policy has become uninsurable.
Joseph dies. No payout to child.

Dual Mortgage Protection Policy:
Mary dies, mortgage cleared off, policy continues in Joseph's name.
Joseph dies. Sum assured left to take care of child.

For a small increase in premium you get double cover.

 

[Yakuza]

Fair point, but with a Mortage Protection case, the sum assured would probably be a fraction of the original one by the time the second life has died. Still, as you say, it's a convenient way of getting some benefit after both lives have died, without having to take out a separate policy.

 

[kaza]

I don't think Dual would actually suit me because it's a rental property and I would want to be able to write the policy off against tax. And it has to be a term reducing policy for this purpose, otherwise it's not see as a capital expense.

I spoke with a broker and he has informed me it's best to maybe get a joint reducing policy for my husband and myself (as we service the mortgage). But he said there could be capital gains tax implications to my sister & her husband if the policy did pay out.