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Life assurance really required?

Diesel9a1 Offline Mute
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12-01-2013,07:56 PM
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Life assurance really required?

Is life assurance really required on an interest only BTL? If you were to have 10 properties each with £40 pcm on life assurance, that would be £4800 per year outgoing to life assurance!

Also, is the life assurance off settable against the tax?
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Lisa Orme Offline Mute
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12-01-2013,08:22 PM
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RE: Life assurance really required?

Not at all; it would be a personal decision as lenders don't require it.

No you can't offset it.

If you're a Director of your own company then you can get tax benefits from life policies which are called Relevant Life Plans.

Lisa
http://www.keys-mortgages.com
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Diesel9a1 Offline Mute
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12-01-2013,09:45 PM
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RE: Life assurance really required?

Thanks Lisa.

I personally don't think it is worth it for BTL. Everything goes to the wife when I kick the bucket. The BTL properties would all be self funded by tenants anyway, so I don't see the requirement either.
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lynne_davis Offline Mute
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13-01-2013,11:35 AM
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RE: Life assurance really required?

But if the mortgages are in your name then won't they have to be redeemed on your death? What about in joint names?

We have each have life assurance up to a fixed amount but it's not tied to our BTL properties, so if one of us dies then the other gets the money and can use it as we see fit.

I'd say that if you have dependants then it's worth having, but if not then it's entirely optional; what does it matter if all your props have to be sold on your death?
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Diesel9a1 Offline Mute
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13-01-2013,02:56 PM
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RE: Life assurance really required?

Quote:what does it matter if all your props have to be sold on your death?
Exactly. With no dependants, we will have taken out of the system and this way puts back into the system.[/quote]
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Jonathan Clarke Offline Mute
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13-01-2013,05:40 PM
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RE: Life assurance really required?

I follow Lynn`s strategy as it gives freedom for my dependents to use the lump sum in the most effective way for the prevailing conditions at the time of my untimely death. Those conditions could vary almost month to month so i wouldn`t want it tied in to any one property as to me that would be too cumbersome.
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Lisa Orme Offline Mute
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14-01-2013,10:45 PM
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RE: Life assurance really required?

Yes we did the same too and what I usually recommend.

Though I do have a number of investors who opt to have cover to pay off all their mortgages but there are usually quite specific reasons for this.

Whole of life policies can be expensive so its usual to take out a policy for a fixed term or until a certain age to cover you until such time as you have unencumbered properties or a lot of equity that can be easily realised or cash of course!

A good sum would be sufficient to cover your funeral expenses, your home mortgage and 12 months personal and business expenses including rents and maintenance.

Probate is a lengthy process and a complicated estate with a lot of assets could take a year or more to resolve. Your accounts will be frozen until probate is resolved so ensuring your family can meet the bills until then is vital.

Putting policies in trust is also essential as this means they will pay out immediately, if they aren't in trust they will be part of probate.

Having mortgages in joint names of spouses means upon the death of one party the mortgage will continue. Care and planning needs to be done if in sole names as the mortgage will be repayable upon death.

Lisa
http://www.keys-mortgages.com
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