When you first take out a mortgage with an adviser my simple thing to remember is:
The more insurances you take out the more money the adviser will make.
A typical insurance will make the adviser around £400.
When we first sat with our adviser he gave us insurances for building, contents, loss of earning, life, sickness and redundancy this totaled up to around £2000 which would sit quite nicely in hit back pocket, but around £200 a month coming out of ours.
By law you do have to have life insurance cover however I am not too sure with regards to building and contents.
After carefully shopping around and reading the small prints we pay around £50 for all of the insurances (life, critical illness, buildings & contents).
You have a cooling off period for all insurances, this is usually 28-31 days so even if you sign you still have chance to opt out.
I did.
The advisers face was a picture when I return and told him I would like to cancel all of the policies he proposed.
You will feel obliged to take out the insurance with your adviser, they will make you feel as if they are your best mate and really looking out for you. LIES they would just like your money to line there pockets.
You can look and research your own to get them cheaper and more tailored around your needs.
Why didn't you go for the other insurances?
Well, take the loss of earnings, this will payout if you are off sick for more than 6 months then this will payout. Most employers have a 6 month full and 6 month half salary payout for sick. If you are off for more than 6 months, surely the illness will be covered within the life and critical illness cover!
Insurance tip
You ca get separate insurances, for example buildings and contents or life and critical illness. You can also get them combined, life and critical illness and also buildings and contents. By joining them together you will save money. But not always. I managed to take out 2 separate life and critical illness insurance policies on myself and my partner for cheaper than a joint policy. If I am being honest I am not too sure how but it saved £4 a month.
Take the time and get a joint and individual quote, you never know when you may save.
Also see if you can pay the policy in full per year, some policies allow you to do this and this will save you one to two months on your insurance. All you have to do then is repay the amount back into a separate account and then you have it ready for the following year.
Life insurance tips
Okay, you have a joint life insurance policy and one of you get a illness covered by your policy, you get a payout. But what happens if the other person gets a covered illness. Most insurances will not cover two payouts. Therefore look for separate, some policies also payout for children.
When it comes to how much you are worth why go more than the borrowed amount on the mortgage? anything over will mean you may be paying for nothing each month.
Check the policies return percentage and the amount of critical illnesses that are covered. The more in both the better potential should anything bad happen.
Building and contents tips
Check the price you are insured up to. When I was searching there was an automatic insurance of £20,000 for the entire contents. Lower this and this will reduce your payments again.
Check whether you have to itemize certain objects that are above the usual £1000 threshold, if its a £1000 TV realistically that TV is no longer worth that amount after the 12 month warranty runs out. All of the extra amounts you add here will add on your monthly payment.
Some buildings and contents look after the garden as well. Make sure the insured amount is in proportion to what you have in your garden. I would of though £1500 would cover most standard houses.
I hope this help.
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