Critical illness and other mortgage insurances
Discussion
In the process of buying my first house. 26, only person on the mortgage, no dependants.
Been recommended critical illness insurance but it seems steep at £30/month.
£30/month to bet that at 26 I get cancer? I'm on a 2 year fixed so I assume this is only relevant for 2 years at which point I may remortgage with a different product and then consider it depending on my situation?
I can only really see it being relevant if I had a wife who didn't work, and or kids to support, which I don't.
Opinions?
Been recommended critical illness insurance but it seems steep at £30/month.
£30/month to bet that at 26 I get cancer? I'm on a 2 year fixed so I assume this is only relevant for 2 years at which point I may remortgage with a different product and then consider it depending on my situation?
I can only really see it being relevant if I had a wife who didn't work, and or kids to support, which I don't.
Opinions?
samdale said:
In the process of buying my first house. 26, only person on the mortgage, no dependants.
Been recommended critical illness insurance but it seems steep at £30/month.
£30/month to bet that at 26 I get cancer? I'm on a 2 year fixed so I assume this is only relevant for 2 years at which point I may remortgage with a different product and then consider it depending on my situation?
I can only really see it being relevant if I had a wife who didn't work, and or kids to support, which I don't.
Opinions?
Do you know anyone at all that's got Cancer? You may be young but the odds are 1 in 3 people will get it.Been recommended critical illness insurance but it seems steep at £30/month.
£30/month to bet that at 26 I get cancer? I'm on a 2 year fixed so I assume this is only relevant for 2 years at which point I may remortgage with a different product and then consider it depending on my situation?
I can only really see it being relevant if I had a wife who didn't work, and or kids to support, which I don't.
Opinions?
The odds state that at 26 it's unlikely to happen to you. As you get older those odds reduce and the premiums go up accordingly, so if you decide in 5 years it's something you want, the premium will be more expensive than it is now.
Critical Illness is more relevant to you as a single person than Life Insurance. If you have no dependants then you don't have to be concerned about people suffering financially should you die. But Critical Illness cover protects YOU should YOU get seriously ill.
If you don't think you'll ever get ill or that £30 is too much, don't take it!
Depends on your priorities and if you've got anyone dependant on you.
Me? I have cover for unemployment, as if I lose my job it'd be annoying to lose the flat and I don't need the extra stress when looking for a job. I have illness and death cover with work, so didn't bother with those. I also have no dependants, which makes decisions easier.
Would I get critical illness cover if I didn't have it with work? Well, it depends on how you think you'd react to learning you might die of something. Me? I'd probably sell the flat ASAP and have a few months off travelling the world and seeing stuff while I still could if it was as bad as all that, but if I had a family I'd make a different choice.
Me? I have cover for unemployment, as if I lose my job it'd be annoying to lose the flat and I don't need the extra stress when looking for a job. I have illness and death cover with work, so didn't bother with those. I also have no dependants, which makes decisions easier.
Would I get critical illness cover if I didn't have it with work? Well, it depends on how you think you'd react to learning you might die of something. Me? I'd probably sell the flat ASAP and have a few months off travelling the world and seeing stuff while I still could if it was as bad as all that, but if I had a family I'd make a different choice.
Work out how much overpaying your mortgage by £30 a month would save overall ....
1 in 3 will get Cancer, but this does not necessarily mean it will impact you as a 26 year old starting out your mortgage - lots of people get it later in life, when your mortgage payments will hopefully not be as significant as now.
I'd also check out the conditions of payment for the insurance in fine detail - what is defined as a critical illness, how long before they pay out etc
Friend of mine knackered his knee playing football, and could not work for two years (he was a builder / decorator) but his insurance did not pay out as it was not "critical"
1 in 3 will get Cancer, but this does not necessarily mean it will impact you as a 26 year old starting out your mortgage - lots of people get it later in life, when your mortgage payments will hopefully not be as significant as now.
I'd also check out the conditions of payment for the insurance in fine detail - what is defined as a critical illness, how long before they pay out etc
Friend of mine knackered his knee playing football, and could not work for two years (he was a builder / decorator) but his insurance did not pay out as it was not "critical"
samdale said:
Guess it might be worth asking how payments will change with time.
If:
a) I get cover now and keep paying. Will price go up? Owe less on mortgage but being older means increased risk.
b) I get cover in say 10 years when I don't owe as much but am at increased risk.
The price won't go up if you choose Guaranteed premiums unless you also choose to have the policy indexed linked. If not then they will remain the same for the duration.If:
a) I get cover now and keep paying. Will price go up? Owe less on mortgage but being older means increased risk.
b) I get cover in say 10 years when I don't owe as much but am at increased risk.
Sarnie said:
The price won't go up if you choose Guaranteed premiums unless you also choose to have the policy indexed linked. If not then they will remain the same for the duration.
So I'd pay £30pm for as long as the policy runs?What if I were to take out such cover in 10 years time but only required half the cover? I.e. I'd paid off half my mortgage. Would the policy likely be any cheaper because any potential claim would be smaller? Or is it a case of getting on board now while I'm young?
It just seems odd buying say £100k cover just because I've got a house. Most non home owners don't have such cover so why take it just because I've got a mortgage? Worst happens I have to sell the house, right?
Edited by samdale on Thursday 29th May 18:59
samdale said:
So I'd pay £30pm for as long as the policy runs?
What if I were to take out such cover in 10 years time but only required half the cover? I.e. I'd paid off half my mortgage. Would the policy likely be any cheaper because any potential claim would be smaller? Or is it a case of getting on board now while I'm young?
It just seems odd buying say £100k cover just because I've got a house. Most non home owners don't have such cover so why take it just because I've got a mortgage? Worst happens I have to sell the house, right?
You'd pay £30pm if you choose guaranteed premiums, yes.What if I were to take out such cover in 10 years time but only required half the cover? I.e. I'd paid off half my mortgage. Would the policy likely be any cheaper because any potential claim would be smaller? Or is it a case of getting on board now while I'm young?
It just seems odd buying say £100k cover just because I've got a house. Most non home owners don't have such cover so why take it just because I've got a mortgage? Worst happens I have to sell the house, right?
Edited by samdale on Thursday 29th May 18:59
Premiums increase quite considerably the older you get and without sourcing this myself I would assume that the increase in premiums will outstrip the reduction in your mortgage balance.
I'm not quite sure how you can think it's odd to cover your mortgage? You've secured a debt against an asset you are buying. Lets assume you don't take it, the worst happens and you get Critically Ill. Whilst thats going on do you really want to be selling the house you spent 10 years or so paying for and going back into rented accomodation? If your selling the house it's probably because you can't afford it it's probably because you can't work anymore so how will you afford rent?
Or do you want to have your mortgage paid off meaning no threat of ever losing the house, from a £30pm policy?
It's all about risk and your attitude to risk. As a young guy, it's unlikely that you will get Critically Ill anytime soon, which is reflected in the premiums. However, as an example, Aviva's average time from policy inception to claim is currently only 42 months...
To be fair it seems that whoever has talked to you about this has done a pretty poor job of explaining the workings and reasonings for such cover.
Ultimately, if you don't think it's worth it, don't have it as it won't take long for you to see the DD on your statements and cancel it. But whoever discussed this with you should have done so thoroughly enough, so you could make an informed decision.
Sarnie said:
You'd pay £30pm if you choose guaranteed premiums, yes.
Premiums increase quite considerably the older you get and without sourcing this myself I would assume that the increase in premiums will outstrip the reduction in your mortgage balance.
I'm not quite sure how you can think it's odd to cover your mortgage? You've secured a debt against an asset you are buying. Lets assume you don't take it, the worst happens and you get Critically Ill. Whilst thats going on do you really want to be selling the house you spent 10 years or so paying for and going back into rented accomodation? If your selling the house it's probably because you can't afford it it's probably because you can't work anymore so how will you afford rent?
Or do you want to have your mortgage paid off meaning no threat of ever losing the house, from a £30pm policy?
It's all about risk and your attitude to risk. As a young guy, it's unlikely that you will get Critically Ill anytime soon, which is reflected in the premiums. However, as an example, Aviva's average time from policy inception to claim is currently only 42 months...
To be fair it seems that whoever has talked to you about this has done a pretty poor job of explaining the workings and reasonings for such cover.
Ultimately, if you don't think it's worth it, don't have it as it won't take long for you to see the DD on your statements and cancel it. But whoever discussed this with you should have done so thoroughly enough, so you could make an informed decision.
Apologies if I come across as an idiot, this is all very new to me. Await my thread in homes gardens and diy for such questions as "which way round do I hold a paint brush?" And "which hoover/fridge/white goods?" Premiums increase quite considerably the older you get and without sourcing this myself I would assume that the increase in premiums will outstrip the reduction in your mortgage balance.
I'm not quite sure how you can think it's odd to cover your mortgage? You've secured a debt against an asset you are buying. Lets assume you don't take it, the worst happens and you get Critically Ill. Whilst thats going on do you really want to be selling the house you spent 10 years or so paying for and going back into rented accomodation? If your selling the house it's probably because you can't afford it it's probably because you can't work anymore so how will you afford rent?
Or do you want to have your mortgage paid off meaning no threat of ever losing the house, from a £30pm policy?
It's all about risk and your attitude to risk. As a young guy, it's unlikely that you will get Critically Ill anytime soon, which is reflected in the premiums. However, as an example, Aviva's average time from policy inception to claim is currently only 42 months...
To be fair it seems that whoever has talked to you about this has done a pretty poor job of explaining the workings and reasonings for such cover.
Ultimately, if you don't think it's worth it, don't have it as it won't take long for you to see the DD on your statements and cancel it. But whoever discussed this with you should have done so thoroughly enough, so you could make an informed decision.
In all seriousness my IFA has run me through all the different insurances and recommended critical illness cover. He's explained it, compared products for me and it seems logical, just rather pricey that's all. Perhaps I'm just being a bit naive.
samdale said:
Apologies if I come across as an idiot, this is all very new to me. Await my thread in homes gardens and diy for such questions as "which way round do I hold a paint brush?" And "which hoover/fridge/white goods?"
In all seriousness my IFA has run me through all the different insurances and recommended critical illness cover. He's explained it, compared products for me and it seems logical, just rather pricey that's all. Perhaps I'm just being a bit naive.
If the cost is the main issue then why not ask to tailor the policy to fit your budget so you end up with a policy with a reduced critcal illness amount, which will reduce your premium to a comfortable level. Better to have some cover rather than none in my opinion.In all seriousness my IFA has run me through all the different insurances and recommended critical illness cover. He's explained it, compared products for me and it seems logical, just rather pricey that's all. Perhaps I'm just being a bit naive.
Personally, if you are in good health I would not bother...but like most things it's a gamble. £30pm is not peanuts.
Like most insurance, you are glad of it if you need it, but some policies have that many loopholes they are not worth the paper they are written on.
Always check the small print.
Like most insurance, you are glad of it if you need it, but some policies have that many loopholes they are not worth the paper they are written on.
Always check the small print.
Sarnie said:
samdale said:
In the process of buying my first house. 26, only person on the mortgage, no dependants.
Been recommended critical illness insurance but it seems steep at £30/month.
£30/month to bet that at 26 I get cancer? I'm on a 2 year fixed so I assume this is only relevant for 2 years at which point I may remortgage with a different product and then consider it depending on my situation?
I can only really see it being relevant if I had a wife who didn't work, and or kids to support, which I don't.
Opinions?
Do you know anyone at all that's got Cancer? You may be young but the odds are 1 in 3 people will get it.Been recommended critical illness insurance but it seems steep at £30/month.
£30/month to bet that at 26 I get cancer? I'm on a 2 year fixed so I assume this is only relevant for 2 years at which point I may remortgage with a different product and then consider it depending on my situation?
I can only really see it being relevant if I had a wife who didn't work, and or kids to support, which I don't.
Opinions?
The odds state that at 26 it's unlikely to happen to you. As you get older those odds reduce and the premiums go up accordingly, so if you decide in 5 years it's something you want, the premium will be more expensive than it is now.
Critical Illness is more relevant to you as a single person than Life Insurance. If you have no dependants then you don't have to be concerned about people suffering financially should you die. But Critical Illness cover protects YOU should YOU get seriously ill.
If you don't think you'll ever get ill or that £30 is too much, don't take it!
When I took out a mortgage ( many years ago) the lender required me to have life insurance.
Critical illness wasn't a very big premium over life cover and as it included both I took it out.
As the product was independent to the mortgage, I kept it for the next 10 years and used it for cover against various houses as I moved.
I guess the question is:
Does it cover life as well?
Does the lender require you to have life cover?
What's the delta in the cost?
If the answer to the first two are yes, IMHO it's worth if for peace of mind.
Wacky Racer said:
Personally, if you are in good health I would not bother...but like most things it's a gamble. £30pm is not peanuts.
Like most insurance, you are glad of it if you need it, but some policies have that many loopholes they are not worth the paper they are written on.
Always check the small print.
Your logic is somewhat flawed.Like most insurance, you are glad of it if you need it, but some policies have that many loopholes they are not worth the paper they are written on.
Always check the small print.
If he wasn't in perfect health, he wouldn't be able to get cover for pre existing conditions, so it would be too late.
As others have said, be careful of the small print, and decide if you need it (shopping around for the deal). When it was pushed at me and the wife, the seller said "how old are you ? OOh 30, there was this man last year aged 30 died of a heart attack just like that, unexpected!". Told him if he looked at the whole country he'd probably find someone who'd died of all sorts of things at 30 - "don't try to scare sell a policy" and sent him to the door with a flee in his ear. The only insurance I buy are ones I have to (eg car 'cos it's legal requirement and life 'cos I have dependants).
Its up to you if you get it or not. There is a risk you may get critical illenss, and having a mortgage free house whilst recovering from a heart attack/cancer, means one less worry. (Though you will still have bills to pay...)
You may be young and single now, but will that last forever? You could take the advantage of being young to take Life and Critical Illness (Life cover is the cheaper part).
Its a risk, but then again, how many people take comprehensive cover on their car, as opposed to third party? Is a car more important than your house?
You may be young and single now, but will that last forever? You could take the advantage of being young to take Life and Critical Illness (Life cover is the cheaper part).
Its a risk, but then again, how many people take comprehensive cover on their car, as opposed to third party? Is a car more important than your house?
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