Protecting yourselves with Life Insurance

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Protecting yourselves with Life Insurance

In 2005 my husband and I took out life insurance policies.   We were living in Cumbria at the time and had our own house and also a cottage we rented out.  I was in full time employment and my husband had been self employed.  We took out two policies, my policy covered my life and would also cover the mortgage as I was main wage earner.  My husband’s policy was for life insurance. 

Change in Circumstances

We carried on paying this insurance premium for 10 years.  However, in 2007 our circumstances had changed and we moved to Scotland mainly for my career and the fact that we had never really settled in Cumbria.  We rented a Croft house initially thinking that once settled we could arrange something more permanent. 

The Cottage in Cumbria was sold before moving to Scotland and this paid back business loans but there was insufficient funds to put down as a mortgage.  The House was not sold until the following year and once the mortgage was paid off and some debt which incurred whilst waiting for the house to sell were paid off there was just enough to buy a car, and pay for some house improvements to the rented house.  My husband’s health had deteriorated and so he was unable to work. 

10 Years On

Forward to 2015 just before the policies were due to reach the 10 year period we looked into what they were worth as to whether to go for another policy with the same company. We found that the value was only £700!  It had been reducing all the years we had been paying in just as a mortgage would have been reducing, unfortunately we did not have the satisfaction of having a house at the end of the 10 year period.

Since 2008 when we no longer had a mortgage we had been paying for a policy which was no longer suitable for our needs.  It had been reducing all the years we had been paying in just as a mortgage would have been reducing, unfortunately we did not have the satisfaction of having a house at the end of the 10 year period.  Had anything happened to either one of us we were totally under insured.

Conclusion

We contacted the insurance company and updated them once we had moved and told them of our change of address, however we forgot to update them of our change in circumstances and this has proved to be a costly mistake.

Taking Action

I am writing this account up to share with others who may have life insurance policies they are paying for which are no longer suitable due to a change in peoples circumstances.  Ten years is a long time and things happen in life.  Please check with your insurance company that should a change happen in your life, your policy can be updated to ensure that you are covered and will be paid out in full.

 

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