What the two advisers seem to be saying Susanna is that although a significant amount of life assurance on your husband is probably unnecessary at this stage, you may still want to consider some form of protection in the event of your husband not being able to work for any reason. Not because his lack of earnings would have any effect on the mortgage, but because looking after a sick person can be a financial burden.

As they suggest, this can probably take the form of a critical illness policy, which pays out a lump sum in the event of the diagnosis of diseases such as cancer, heart conditions, strokes etc. You can tie it in with life insurance in the form of a policy which pays out in the event of a diagnosis OR, if your husband were to pre-decease you during the policy, you get a lump sum there. The combined cost of the two types of insurance, taken together, is less than buying one or the other separately.

That doesn't wholly address what happens if he were to suffer a non- "dread disease", which still leaves him incapacitated and unable to work but where you would be unable to claim from on the policy. But you may take the view that you can't insure against absolutely everything.

One of the advisers mentioned permanent health insurance (PHI) for yourself, which is a policy that pays out an income in the event of you not being able to return to work after a long-term illness. This can be a useful type of insurance to have, for obvious reasons.

But before you take out such a policy you should find out what your employer's position is with regard to early retirement in the event of long-term illness. From memory, the teachers' superannuation scheme does allow this to happen in certain circumstances, with either added years or no penalty for stopping work before retirement age. If that is the case, there may be less reason to take out PHI, or at least the regular income you may need would be reduced, as would your monthly premiums.

When your husband starts working after his course, he may want to consider a similar policy.

Hope this helps. As an aside, I think it is a mistake to assume that nasty things can't happen even at a young age.

A couple who are long-term friends (one is a local government employee, the other is self-employed), have just been given shocking news: the self-employed person has just been diagnosed as having a serious form of cancer, will almost certainly be unable to work for many months and will require constant care for some time. The other partner will have his/her income to rely on, of course, but they face a very difficult financial future.

In my book, a certain amount insurance is definitely a good idea, as long as you can afford it.

Hope this helps,

Nic

Hi Susanna,

All insurances are there in the event that you would suffer financially when a particular situation arises. In this case you would not suffer financially if something happened to your husband. But on the other hand what would happen if he suffered a critical illness and you had to take time off to look after him? You see where I'm going? If I was advising on this particular case based on the information given I would suggest that you look at these forms of cover, based on a repayment mortgage.

Decreasing term Life Assurance with Critical Illness (joint) for 100,000 Reviewable over the term of the mortgage.

Permanent Health Insurance for you with a deferred period of 6 months for a monthly amount that you would require if you are off work for a considerable length of time up to 75% of your current salary.

All these policies are paid monthly by direct debit so if circumstances change you can stop them and reassess your situation. In the end it is down to what you feel is important, a simple example I use is to ask what you pay for your car insurance and apply that to the cost of these other insurances and to look at them in perspective, and how important they could be?

Regards

Ian
 

Susanna

I am an independent adviser and come across these situations. What you may want to consider is that even if your husband not working made no difference to the ability to pay the mortgage it may cause other problems. For example if he was so ill that he could not work he may need looking after himself? There may be additional costs incurred for changes around the home or lifestyle that may need to be found. It may impact on your own ability to work which would then reduce your pension - death in service and sickness cover etc. Therefore if the cover is affordable and attainable I would tend to do it. If he is still relatively young it should not be that expensive. One tip with criticall illness cover is to check the conditions covered.

Regards

Doms Dad

Hello,

I am hoping someone can respond and help me decide on the above.  I am married and about to purchase a property with £100,000 mortgage, with a large deposit of £140,000.  I am a teacher and believe that I am covered for sick leave (I will get six months full pay) and in the event of my death my husband should receive 3 times my salary and 2/3 of my pension should I have reached the age of 60.  I think this covers me as much as any insurance I can afford.

 Currently my husband does not work as he is a student and I am trying to decide whether to assure him for life assurance in terms of mortgage protection and critical illness. If he was unable to work it would not make any difference to the mortgage repayments but I am not sure what to do.  We have spoken to a financial advisor or two but am still confused.  If we had to sell the house, we would have our parents' houses to live in, we could cope.  I feel that until my husband can get a job (which is on the cards in the next 9 months) it is not worth having life assurance.

 Am I being totally naive?

Regards Susanna