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Morgage Protection

Leeds Lass

Well-Known Member
Messages
66
Location
Leeds, West Yorkshire
Good evening everybody

I'll be moving in with my boyfriend soon who is type 1 (20 years now). He has a morgage which we'll be changing into joint names, the only thing is he doesn't have morgage protection. I'm quite a money worrier and don't like the thought of having no protection but i've heard if your diabetic you either can't get it or it's about £300 on top of your monthly payment!

Really worried about what to do about it now, can anyone shed any light?
 
Things many years ago when I took out mortgage protection may well have changed, however one if your boyfriend works for a company he may well have life assurance from his employer. Also, I got mortgage protection, but it wouldn't cover for critical illness, but my actual life was protected, and yes at the time I had to pay more...when we reduced our mortgage I had to keep the original mortgage cover, because by that time I had aged and that affected the cover costs as well!!

Worthwhile having a good look around and making sure that you make sure that they have listed diabetes type 1 on paperwork.

I remember 25+ years ago with car insurance that I went to a broker and paid money to them for my cover. It was only when somebody hit our car and I tried to claim from the actual Insurer that it was found that my broker had kept the money and issued a duff insurance certificate......I later went on and worked for Trading Standards, I wish I had worked for them when I had all the trouble with the broker and insurance company.

Have a good look around and get as much advice and quotes that you can.......hopefully things have changed since I took out mortgage protection and my car insurance for the better!!!
 
Also means that if he has the intention of staying being employed rather than being self employed that it gives you a bit of flexibility with the amount that you get on mortgage protection if the premiums are higher......do have a good look around and make sure that comparisons offer the same without companies taking or putting in clauses to lower the premiums........
 
leeds lass,

I have sent you a pm.

Regards

Nigel
 
Good morning Leeds Lass & all!

I read your post this morning whilst doing some research for a family friend. I happen to work as a financial planning advisor at a well known high street bank and I'd like to offer my opinion on the best way forward with regards to financial protection of your mortgage.

I will base my advice on the assumption that it is just your boyfriend which has diabetes and needs protecting and that you have the relevant protection plans in place.

It will be virtually impossible to get your boyfriend a cic (critical illness cover) policy for a sensible price, and even if you manage this it will likely have several exclusions in the event of a claim (which kind of defeats the objective of taking out cover in the first place!).

The best and most cost effective cover for your boyfriend is as follows:

(1) - To enact a decreasing term life assurance policy for the duration of the mortgage. This is the cheapest form of life insurance which will pay off your mortgage in full on the event of his death.

(As this is a life only policy your boyfriend shouldn't be penalised for being diabetic and the monthly premiums should be the same as if a person with no health issues applied).

(2) - To enact a ASU (Accident, Sickness & Unemployment) policy for the duration of the mortgage. ASU plans are designed to pay out a fixed monthly amount on the event of not being able to work in the event of suffering accident/sickness or redundancy.

These plans will pay out usually for a maximum of 2 years. They usually have a moritorium of 6 months to 1 year for existing conditions, however after this period it usually becomes a fully operational plan. You can also increase the cover to cover bills and other expense as well as the mortgage.

To give you an idea of cost (since I don't know your total mortgage debt and therefore monthly repayments). To buy a ASU plan on a non-advice (direct) basis which would cover approx £800 per month (for a max of 2 years) for a 30yr old male would be around £25 per month. The above life policy again for around £150k of life cover for a 30yr old male, non-smoker would be around £20 per month.

Therefore for around £40-50 per month your boyfriend can protect the mortage in the event of suffering accident, sickness, redundancy or death. This should hopefully give you some peace of mind.

If you decide to go to a broker or Independent financial advisor then expect (through fees and commission) to pay an extra 30-40% in higher monthly premiums. Therefore if your confident you can approach the insurer direct.

On a final note make sure that the life policy is put into trust to pay you a lump sum on the event of his death so you can pay the mortgage debt. It goes without saying you should do the same for him! Otherwise the money from the policy will go to his estate and family. (I am assuming you both do not have a Will in force).

donnellysdogs made a very good point that your boyfriends company may provide death in service (company life assurance). I would also suggest that this is put into trust for a nomiated beneficiary, (this can be done through HR Dept). I would strongly advise you consider this as icing on the cake cover as the company could withdraw this benefit or your boyfriend may leave the company in the future.

Hope this helps,

PS. It's unlikely I will check this forum again so if your not sure of anything your more than welcome to drop me a pm.

James :D
 
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