What’s more important, the life insurance premium or the problem? 
 
Do you look for and buy the cheapest insurance, or do you work with an Adviser and plan a strategy? 
 
We all fear the stories and myths that insurance companies don’t pay out, but the reality is that insurance policies rarely decline claims, and when they do it’s mainly because of the insurance buyer’s non disclosure during the application process. 
 
L&G’s highest single life insurance payout in 2022 was a staggering £5,000,000. And overall they paid over 96% of all claims (source)  
 
I have worked closely with my Clients for over 3 decades. One of my longest Adviser-Client relationships is with a property investor portfolio landlord. He is a successful businessman, a husband, dad, grandfather and he absolutely adores his family. 
 
He’s not in the best of health though. 
 
I have recently arranged another two mortgages for him, and albeit that I always strongly recommend life insurance to cover the debt in order to protect his family from the consequences of having to find the money to repay his mortgage debts, he is already fully ‘on side’ and he wanted me to arrange the life insurance applications alongside the mortgage applications. 
 
He has a heart issue and has an ICD (pacemaker). He already has £1.6 million of life insurance in place to cover every £ of his current mortgages and we only needed to top up by another £240,000 of protection. 
 
I carried out the standard life insurance research (collecting doctors letters, consultants reports etc) and yet none of the usual insurance companies would accept an application from him. I then went to the specialist insurance market and Lloyds syndicates to source a solution, and we have found a provider who will help. 
 
£994pm. 
 
Because his mortgages are in joint names with his wife, so they asked me to arrange cover for her too. His wife is ‘standard’ health, and her life insurance premium is £220pm. 
 
They already pay £1600pm for their current life insurance policies. 
 
We had a few calls, emails and strategy planning conversations, and my Clients have told me that they really do want and need to put the cover in place and they have agreed to the £994 + £220 monthly premiums. 
 
They now pay approximately £2800pm in life insurance premiums. 
 
I am told by many people who I speak with, that this monthly cost is too expensive. Yes, of course it is. But let’s look at why my Clients agreed to proceed with this life insurance cover … and in particular why he said that it’s a “no brainer”. 
 
Insurance is all about risk. 
 
Throughout the term of the policy, the insurance company carries the risk that if a policyholder dies, that they will pay out a huge sum of money. 
 
There is no risk to the policyholder. 
 
In fact, the only downside is that if they survive, that they have paid for insurance and it just never paid out. But the “no brainer” upside is that every month that the premium is paid, the policyholder sleeps well at night knowing that the debts will be fully paid off, the family will not be left with financial distress, that there will not be the red letters, debt collectors, having to deal with estate agents to sell quickly (and cheaply) and maybe even possible repossessions, too. 
 
The downside problem of not having the right policy in place, and not having all debts paid, massively outweighs the cost of the premium. 
 
Problem versus premium? Truly, what’s more important? 
 
Of course the premium has to be affordable, and comfortably within budget. For my Clients above, £3000pm is very affordable, so for them this strategy works. 
 
Whether we arrange a £20pm policy, £100pm policy or more, the right cover, for the right price that suits you, will be properly discussed, a strategy planned, and we’ll get it all set up in Trust to ensure that you and your family don’t need to worry about money matters in the event of premature death during the term of your mortgage. 
 
We can even arrange multi-benefit policies, which include staggered terms and cover amounts, to protect your different mortgages, too. Different solutions, for your various debts, all in one policy. 
 
Be advised, don’t buy cheap, or be sold inappropriate policies. 
 
If you have any debt in place – e.g. a holiday let mortgage, a residential mortgage, a buy to let mortgage, commercial finance, secured loans, second charges, further advances and you can also include here credit cards, hp, store cards, mail order, and more (ALL of these are your debts) – let’s chat and we can talk about your plans and your options. 
 
The premium is never as high as the problem. I hope to be able to help you as well. 
 
Howard Reuben 
Principal 
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