I have just applied (with my wife) for a new mortgage with Nationwide and we are now thinking about mortgage life insurance. We had a previous mortgage with Nationwide but sold our house and are now with relatives. I am self-employed (company director with salary/dividends) and my wife draws a salary from the limited company. We have no health issues and are both early 40s.
We have cover in place already as follows:
– 2 income protection policies for me only, with Aviva – deferred for 8 weeks, both paying out £1k per month. Policies run until I am 65. I’ve had one of the policies since 2003 before I had a mortgage, and the second one was taken out in 2007 when we had our first joint mortgage.
– 2 life insurance policies from Legal and General for joint cover on first death only both taken out in 2007 on our previous mortgage. One pays out £120k (to cover mortgage that has now been redeemed) and the other pays out £253k – calculated as the requirements until our first daughter reached 18. There is a payment waiver on both policies for me only.
Obviously our circumstances have changed and what we have in place now may not be adequate enough. My main concern is that my existing income protection policies run until I am 65 but mortgage duration is until 68. In addition, the mortgage will be for 160k instead of 120k.
In addition, we do not have critical illness cover – my income protection is good if I fall ill, but if my wife were to fall ill and could not work or look after the children, then I may not be able to work either and would still need to cover the mortgage.
Does anyone have any sage advice ? Is it worth exploring whether the existing policies can be extended – I have no idea if this is possible? Should we see an advisor?