Life insurance and mortgages

[Gift2humanity]

I did not know where to put this topic so moderators, feel free to move it, if it is in the wrong place.

I have four years and 4 months left on my mortgage.
My mortgage lender contacted me in good time because my current five-year mortgage deal ends in December and they have given me the opportunity to arrange a new mortgage.

The subject of life insurance came up.
I don't work and I did have critical illness cover but cancelled it with not working, and I advised the mortgage advisor accordingly.

The mortgage advisor said I have two choices, the first choice is to continue without insurance but there may be a risk that I may die in the next four years. The second choice was to take out life insurance. This is where I told him about my Asperger's and the violent meltdowns I have.

While we did not arrange a new mortgage yesterday, the mortgage advisor said I can contact in any time before my current deal ends to sort out the mortgage and to have a good think about life insurance.

I am concerned that the life insurance will cost a fortune because of violent meltdowns, and that it will be unaffordable.


A part of me thinks I should just not bother with life insurance as the mortgage is 21 years old nearly.
Another part of me thinks that I should take out life insurance to save those I leave behind in the event of my death having to pay my mortgage. I have arranged a call back with these people and I am awaiting that call. https://www.curainsurance.co.uk

In the meantime I would love anyone with Asperger's syndrome from the UK to give me some advice on life insurance and secondary conditions from Asperger's like the meltdowns and how much I can expect to pay. I only owe over £12,000 and then the mortgage is paid off, the mortgage is due to end in December 2025.

 

[Streetwise]

Nope but I've just read a website that said I would pay standard rate so it's lower without other health problems and higher with controlled medical conditions.

 

[Suzette]

Not specifically regarding the U.K. but if you are in good health and lead a low risk lifestyle I would skip the life insurence if you would not otherwise get it.

However, in general, the older you get the higher your insurence costs, so it might be worth considering if you leave the benefits to loved ones as an inheritance.

 

[Aspychata]

Hey - excellent you are nearing the end of your mortgage. I have gone without health insurance so that l could pay off bills sometimes. It's risky, but l hate being in debt.

The bank's main motivation is to make money off of their products. If everyone paid for their mortgages up front, the banks would be out of business. So this really gets down to your needs and what your comfort zone is. The bank's job is to sell you fear, because fear generates income. So you really need to decide if your meltdown will so screw you up that you end up needing someone to care for you l guess. This then would be a good reason for pricey insurance. If that doesn't sound like you, and you have no critical illnesses at this point, then base your choice on that. Or ask if the bank can shop around for the insurance because the cost will be high. Good luck. This does sound complicated and it would be good to shop around maybe for another mortgage provider to compare rates.

 

[Crossbreed]

I can't imagine why meltdowns (which are not life-threatening) would adversely impact life insurance premiums...

 

[Judge]

Sounds like just a case of cross-marketing of products. Something mortgage companies are notorious for. Kind of like a car dealer offering an extended warranty.

The pitch may sound like they have you in mind, but it's really only about them.

https://www.investopedia.com/mortgage/insurance/why-you-dont-need-mpli/

 

[Aspychata]

@Crossbreed

Good point. I worried it was in the self-harm area which some of us are prone to this type of issue.☹

 

[Gerald Wilgus]

Great going paying down your mortgage. Since my spouse and I can manage independently and I was saving/investing since I was out of HS, we both felt it was never necessary to have life insurance nor let the bank demand that we have an escrow account for taxes. As I am making a better return on savings I did not pay extra to pay off early, though the goal was not to have a mortgage in retirement.

 

[VictorR]

When considering insurance, think of...

1) Do you have dependents, and if so, what might they need for resources if you were to pass away or be incapacitated? If they reside at the same residence, would they be able to carry on with the mortgage on their own?

2) In general, are you trying to ensure you have something extra left aside for a loved one or charity?

While I don't know much about your situation otherwise, £12000 over 3-4 years generally speaking is relatively modest (congrats on nearing the end of the journey!) and so my general recommendation is that mortgage insurance likely would not be worthwhile.

 

[Aspychata]

Plus if ypu need to put money into your house, that may override the need for extra money going towards mortgage. Basically, who or what will fail first? You or house repair? Sorry, l don't mean to be blunt, just trying to open your eyes to other expenses such as replacing a roof, or something similar.

 

[Au Naturel]

If you can manage it, always pay the mortgage and then pay extra on the principal. You can shorten the life of the mortgage and save a lot of interest that way.

The people who inherit your house can refinance it at the time they inherit it. Or sell it if they wish. I don't know how old you are but life insurance is really only for people with dependents. If your "others" are living independently in an adequate way, you are wasting your cash with any more life insurance than a burial policy. Instead, use that extra money to make your life easier. Or, if you feel guilty, put that money into polishing off the mortgage.

 

[Gerald Wilgus]

If you can manage it, always pay the mortgage and then pay extra on the principal. You can shorten the life of the mortgage and save a lot of interest that way.

So right. A standard amortization of 30 years means that you are paying the value of the house in interest. So many people do not understand the cost of leverage. The only times I did not pay down the principle was when I could earn more investing/saving the same amount of money than the interest being charged.

 

[Au Naturel]

So right. A standard amortization of 30 years means that you are paying the value of the house in interest. So many people do not understand the cost of leverage. The only times I did not pay down the principle was when I could earn more investing/saving the same amount of money than the interest being charged.

We got a roughly 3% interest rate on our 30-year mortgage which rather diluted the benefits of paying it down. We still put an extra $50 per month on it which initially covered next month's principal payment. By the end of the mortgage, the payments were almost entirely principal so it became less practical.

That was 25 years ago and I don't think you'd get that today. OTOH the value of the property tripled over that time. Without that, retirement could be an iffy situation.

 

[Judge]

I hate it so much when they suggest I take out another loan when I'm just about to pay off my current debts. Why do they offer me this, do they really get paid that much for clients like me?

The world of finance is no different than others, particularly such as "big pharma".

None of them wants to cure anything. They just want repeat customer$.

 

[Duna]

only owe over £12,000 and then the mortgage is paid off, the mortgage is due to end in December 2025.

Excellent! And cungrats for your courage to go through that process in the first place.
Now my question: Why would you want another mortgage for? Because on depending on that there might be other options. Like enjoying mortgage-free life.

 

[Duncan74]

You've not mentioned a partner/dependent that lives with you. Being very blunt, if you are dead then you have no worries at all that there's $12k oweing to the bank. Indeed whoever inherriting your house would be able to cover that through loan, or the sale. The bank is keen for the insurance jsut to make their life/risk better.

Myself and wife have no kids, and so our life assurance/income protection took a long time to get right, as it looks completely differnt to any 'normal' setup. We both have professional salaries, and therefore if either of us dies, the other would sell teh house (not want to live there) and be fine with the equity and income to get a new house on an afordable mortgage. On the other hand, if one of us becomes injured / housebound needing care, we didn't actually need to replace both salaries, but a portion of one and the cose of home help as the other would still work.

Back to your point, whist the cost of $12k life assurance will be very low, in reality you are still paying to mitigate a risk that doesn't exist (based on the limited info in your post). Just check, what's the worst that could happen, not dying, but worst in financial terms, as that's the risk you are considering mitigating.

 

[Ella Spell]

I paid critical illness on my mortgage for about 20 years and cancelled it because I couldn’t afford it anymore. A month later I had a major stroke. My mortgage and line of credit could have both been paid in full, but I had no way of knowing. I didn’t renew it because now my rates would be even higher with a history of stroke and I also had a second one.

I have lots of life insurance in the millions because I’m a single mum, but I haven’t died and can’t benefit personally from that.

I got life insurance when I was younger, before my ASD diagnosis. My warning to people is that it’s hard to get life insurance after an autism diagnosis because statistically we die younger, and we have a higher rate of suicide and genetic issues.

My daughter was denied life insurance altogether because of ASD. People who aren’t diagnosed yet are smart to get life insurance prior to their assessment.

 

[Gerald Wilgus]

The only needs for life insurance is whether or not you have dependents who will need financial support. It is the reason my spouse and I have no life insurance because we have independent sources of income and no large debts.