boy 2 is about to flee the nest again with his girlfriend and has a 35 year mortgage lined up with town and country (skipton, 4.7% 5 year fix)
funds will be a bit tight so hes asking for advice on which insurance to go for, critical illness, loss of earnings through breaking a leg, that sort of thing.
i guess its all a bit subjective as you never know what will happen, but he asked if theres any one 'cover-all' policy that might er..... cover all bases.
hes 29, a self employed decorator, girlfriend works in a solicitors...... anyone got any rule of thumb advice as im not really sure myself. if i had to pick one id probably go loss of earnings but im not sure what the price differences are for different types.
thanks
I pay £50 a month to Aviva for I think £120k of life insurance and a £50k critical illness lump sum
I got my first set of life/critical illness insurances recently at the grand old age of 42 after leaving jobs with death in service benefit.
I went through money supermarket as a start and then got on to one of their brokers who was really very good and talked me through loads of options. I had a pre-existing condition to declare (herniated disc) in the last 5 years and they set me up with a split policy over 2 providers to get best price on life and loss of earnings insurance, it's about £55 per month for £200k death and £2500 income cover.
Would recommend money supermarket as a good place to start, you can do it all online first then move to a phone conversation if you want.
money supermarket it is then, thank you very much
Critical Illness covers the policy holder while still alive.
Life Insurance basically covers your partner after your death. I was advised many years ago that life cover should be ten times your annual salary. This enables your partner to live the same standard of living for a good period of time after their partners death.
I'd also take a specific life cover out to cover the value of the mortgage. Both partners need to do this.
I am not a financial advisor, but I'd take 3 policies...
• The critical illness/accident one.
• A life policy to cover standard of living for your partner. The mortgage may be paid off but how will they cope on their own with all the living expenses on one salary.
• Each take a life policy to specifically cover the value of the mortgage. You can take out extra ones if mortgage increases over time.
Main reason I'd have separate policies is life cover is dirt cheap when you are young and the premium stays the same for the life of the policy.
Critical Illness policies tend to be high cost -v- the payout. And the cost increases with age.
Also, critical illness you need to read the small print very carefully. As self employed there are a huge number of caveats about when they will not pay out.
Even as an employed person with a quality policy from a national provider, it did not pay out when expected when a life-long, life-limiting, ability-limiting illness was diagnosed. From experience.
I also meant to add - on the life policy you need to have a named beneficiary (partner) otherwise any payout just goes into the estate. And if they haven't got a will and isn't married could cause all sorts of trouble.
Personally I'd not of this sort of thing via comparison sites. You need it to pay put when it matters, and to the right person. The NFU are good for this sort of thing (and other Mutual companies).
https://www.nfumutual.co.uk/contact-us/new-bus/life-cover/
"Also, critical illness you need to read the small print very carefully. As self employed there are a huge number of caveats about when they will not pay out."
A very good point from Matt and one of the reasons I never took it when self employed.
Just avoid what the mortgage brokers are pushing. I have found mortgage brokers are insistent on trying to push critical illness cover despite me saying I already have it through work. Then you see the commission on the disclosure statement and understand why!
thank you
hes had his mortgage approved now so is looking at sorting this out in the next week or two.
hes just messaged me to say.....
"We've been on phone about insurances etc. Quoted 57£ for two of us per month for income protection (60% at 2 years), critical illness (£30000 at diagnosis, and life insurance (mortgage paid on death). Any better/hidden options? Obviously I'm a painter/decorator, non-smoker (but a vaper) girlfriend is an office bod, non smoker"
sound about right for him you think?
ive asked him who hes been on the phone to and to make sure theyre not just taking the brokers suggestion.
thanks
Probably worth having something more than nothing. I seem to recall the only thing our mortgage advisor did for us was to show us the cost of insurance and say "to be honest you'd be as well off putting that money into your own account each month". We did, 17 years later it represents the major bulk of our life savings and outweighs the remaining mortgage (but the interest is slightly more than the mortgage costs so no point clearing as we are within a few years of the end anyway).