Life What to do with term life assurance policy when mortgage redeemed early.

[collieb]

Hi all,

I took out a 35 yr mortgage in 2006 (age 29), in my name only. For mortgage protection I opted for a 35 yr level term assurance policy with Hibernian (now aviva). Policy due to run until 2041, when i would be 65. Premium is 440 pr annum.

House is now sold and mortgage has just been redeemed. I am now living abroad so have no other property or mortgage in Ireland - though am still tax resident in Ireland.

I was going to simply cancel my mortgage protection but then, realising it is a level term policy, I could have the option to keep paying the premiums and keep it as a general life assurance policy (also possible to convert).

I have a mortgage abroad with associated mortgage protection, I am married with kids but have no other specific life policy. I am paying into a public sector pension, so survivor's pension etc for my wife in case of death.

Looking for any thoughts on whether it could make financial sense to keep the term policy? What are opinions in general on value of having a term life assurance policy?

Thanks in advance

 

[jpd]

The amount of life assurance policy is generally determined by the amount of protection that your dependents will need in the event of your death. This will depend on the number, the age, etc etc - the idea is to ensure that they will not be worse off than if you lived on

You need to work out how much they will need, deduct any existing life assurances from all sources and the balance is the amount required.

Paying for term life insurance, beyond what is needed, is not a good idea

 

[Mrs Vimes]

When you say the policy is "possible to convert", that might mean it is reviewable, which could mean a massive increase in a few years. You may be able to change it to a level non-convertible policy (Bank of Ireland Life do this) and it might be cheaper than any other policy you could get now.

Work-related policies tend to expire if you change job.

You might find in the future that you need a policy for some reason and it is very expensive at that stage.