Repayment Protection Cover

[mbenz76]

I have a policy through my bank which provides me £1500/month for a year if I lose my job. It's 50% of gross income but it maxes at £1500 if you earn more, like I do.

I took it out last year when the economy was not at it's best, and it's provided me a nice reassurance in these uncertain times.

However, when I bought my E350 back in March, I didn't take up MB's offer of repayment protection as it seemed too expensive and unnecessary.

There are some uncertain times at work ahead however, and whilst I am as certain as you can be that there is no risk to me, I would feel happier if my car payment was covered now.

Yes, it will be covered from my £1500 insurance with my bank, but a £700 payment takes a big chunk out of that, and my lifestyle is used to more that £800/month.

Having looked around I cannot find anyone who is willing to insure the car payment against unemployment as I already have a general unemployment policy. They all tell me I should have taken out the MB offer as it would run as well as my current one.

So, my question after that ramble, is does anyone have the MB add-on, can you remember what the payment is (I seem to remember them saying it was a % of payment each month), and do you know if you can add it on after signing the finance agreement or is it a one off chance?

Thanks in advance.

 

[Deleted member 6183]

If it's too late to insure the car pmnts, maybe cover the mortgage instead (assuming you have one).

That way you might be able to offset one against the other.

 

[iscaboy]

Frankly, if you are taking the possibility of future personal financial / income / employment issues seriously enough to pay insurance premiums against, you are taking the wrong approach.

Blowing (from your numbers) £700 of £3,000 gross every month on a car represents 23% of your current gross, and 46% of your insured TEMPORARY income should things go as you obviously fear they will.

For a mere four months of your current payments (and I'm talking outgoings, not going anywhere near depreciation) you could buy and own outright a decent W124, and from month #5 onwards you could put £700 in a tin under the bed....

If things do go badly for you, you have all of your £1,500 pcm while it lasts.

Most of all, I am struck by the impression, from "...and my lifestyle is used to more..." that you just don't get it.

The INSTANT your job goes, your lifestyle should change DRAMATICALLY, and again being honest that is having left it too late, and ignored the writing on the wall.

The instant the **** hits the fan the ability to be flexible that you currently have, and are ignoring, disappears.

IMHO there is an economic reset coming, so people need to plan on a series of blows, lasting blows, not one single blow that is temporary in nature.

Divest yourself of ALL credit except perhaps a mortgage, and get that under control too***, if we do get an economic reset at least that way you will still have a roof over your head, an (old) MB outside, and an address and good credit record, both of which you will need to get another job at some point in the future.

***
I expect a 50% cut in property valuations over the next 3 years.

 

[renault12ts]

^ He earns more than £3000pm.

 

[mbenz76]

I earn more than £3k so my payment is not as dramatic as you make out.

I also don't think there's anything wrong with trying to protect a lifestyle as opposed to just covering the essentials.

 

[Spin_bowler]

Much as it pains me to say it as I detest the hectoring bluster of his delivery I largely agree with Iscaboy. Not in the case of the OP specifically as I don't know his circumstances but there are far too many people who feel that they 'deserve' all the trappings that the easy credit and vastly over-inflated property prices have brought into mainstream reach over the last fifteen years.

Many of us are going to have to make significant adjustments in lifestyle and expectation over the coming months and years.

 

[iscaboy]

Much as it pains me to say it as I detest the hectoring bluster of his delivery I largely agree with Iscaboy.

Shooting the messenger is fine as long as you don't shoot the message too... which you haven't, well done.

The early seventies was a recession, not a depression, but to have been working then you're damn near retired now, so by and large you can say that if you are working now, chances are that a proper recession is something you are as qualified and experienced to judge as you would be a Luftwaffe air raid, and a depression is something you are as qualified and experienced to judge as you would be a major meteor impact.

If you get telegrams from the Queen every year then you are old enough to remember a depression.

Nobody can really argue that we have been living in anything other than an economic bubble lately, particularly a property bubble, how that bubble expires will determine whether we get recession or depression.

Currently some 45p in every £ of economic activity in the UK is State spending, supported by the other 55p, and the property bubble, mainly, as is obvious, by the property bubble.

Ideally we need to cut this public purse from 45% of the economy to something at least sustainable, if not onerous, like 25%, and in real terms that means cutting out one "NHS" every year for 5 years.

The "NHS" is the word's largest employer, with over a million employees.

Which puts things into perspective.

 

[iscaboy]

As a FU to myself.

There is a street of "2up, 2 down" small back garden on a main road, no front garden, just opposite the main line, houses in Exeter, down by the railway station (rents and sale prices are artificially inflated here, huge influence of places like the Met office and the Uni) where house prices went from 22k to 200k in ten years.

98 houses in the street, so 98 families.

200k - 22k = 178k increase per house.

98 x 178k = £17,444,000.00 of money "added" to the economy, for just one small rather shabby little street.

Put it another way.

£178,000 increase per house over 10 years = £17,800 per house per annum, if you drive a bus for Stagecoach and do the maximum overtime your gross pay will be almost exactly £17,800 per annum.

So in effect for the past ten years in this one small rather shabby little street every household has had a 100% "earn £1, get £1 free" salary top up.

It is a ponzi scheme by any other name.

 

[davidjpowell]

Letting the topic drift for a while, there is a disconnect between house prices and reality, and has been for many years.

It's been pushed by a lax financial regulation scheme, and individual greed, together with a panic effect to buy forcing first time buyers onto the market.

House Prices have 'stabilised' over the recent month, but based on what I call a dysfunctional market. The number of purchasers was not there, but fortunately not many people were looking to sell so prices stabilised.

Now that HIP's have been scrapped there are a few more sellers, and the increase in available property is pushing house prices down again.

First time buyers now either have to save very seriously or rely on their parents to fund their deposit - often out of equity in their premises. It's these first time buyers who will restart the market, but the availability of mortgages is not there. There are 95% - 100% available, but only to a very select few. Many purchasers are limited to 75 - 80%. Fine, perhaps if you have equity. Not so useful without.

Also look at salary's. The old multiplier used to be 3.5 times a salary. This got dropped in the 'good times', but is now back. Iscaboy's Bus driver would have a maximum borrowing of £62,300 and unless he has funds for a huge deposit will be unable to buy a house.

So where are these buyers going to come from? Whilst Iscaboys prediction of 50% drops in house prices seems unlikely, I'm not sure that I disagree in the longer term. I predict at some point a 'lifetime' mortgage being available as otherwise so many people will be in negative equity that they will never be able to move house.

 

[Deleted member 6183]

House price news, information and discussion - HousePriceCrash.co.uk

And if you really want to be depressed

 

[mbenz76]

Sold our property just as the bottom fell out of the market and rent instead. I prefer the flexibility that you just can't get if you own.

If I want to move then there is no waiting to sell. If I want to change jobs I am not tied to an area and/or big commute - I just give notice and move.

No rush to own property at all right now.

No kids and neither of us smoke or drink so we have a good lifestyle as we have a lot of disposeable income.

 

[crockers]

Coming back to the OP's original question....... if you do manage to obtain any payment protection insurance - one question you must answer is are you aware of any pending redundancies etc....if your job is in peril then it's too late to buy this.

I too agree that house prices have gotten out of hand. BUT if interest rates remain low it's more a case of affordability of payments. If interest rates remain low the housing prices may remain stable. What scares me is if people take out high mortgages at low rates an increase in rates will be crippling.

For example - if in the past you had a £100,000 mortgage at 10% you repaid interest of £10,000 a year. What happened is that rates dropped so instead of saving the payments people wanted to keep the same payments and borrow more. SO a £200,000 mortgage at 5% cost the same interest each year. These people also never thought of the repayment of capital as that would be covered by selling the house later at a higher price.

Now what happens in each of these scenarios if rates increased by 1%
In the first case payments go up by 10% in the second by 20%...scary.

So the dangerous scenario is people get sucked in with low rates and get stuffed when they go up...if so then watch prices crash.

 

[mbenz76]

Coming back to the OP's original question....... if you do manage to obtain any payment protection insurance - one question you must answer is are you aware of any pending redundancies etc....if your job is in peril then it's too late to buy this.

Some redundancies are being discussed, but no departments or individuals have yet been named, nor may they be for a while.

My position is 99.9% sound, but it's always a worry when these things start happening.

When I took my unemployment cover out with my bank they said that even if redundancies had been announced, unless I had been named as one of them, then the insurance would still stand. As it happens, that policy was taken out a while ago and is well past it's wait period, but the same seems true for most of these sort of things.

 

[iscaboy]

200k @ 5% for 20 years = £1,320 pcm

200k @ 10% for 20 years = £1,931 pcm

200k @ 15% for 20 years = £2,634 pcm

200k @ 20% for 20 years = £3,398 pcm

I'm old enough to remember rates going up by 15% in around 6 months, so if that happens again the average price house is going to get £500 PER WEEK more expensive.

 

[davethemus]

people are obsessed with owning there own home in this country, it's a false economy, money from nothing.
mbenz i would say best thing to do would be start saving.

 

[mbenz76]

people are obsessed with owning there own home in this country, it's a false economy, money from nothing.
mbenz i would say best thing to do would be start saving.

Agree with you on that. Owning property is not the be all and end all that so many make it out to be. I am certainly in no rush to own property again. More trouble than it's worth.

Always saving, but if the worst happens I would rather be insured than eat into savings. That is after all what insurance is for!

 

[antonyw124]

My Brother works as a salesman for VW lookers group. He said that his company do not sale this type of insurance anymore because there were to many complaints when people came to use it! But he did say that Gap insurance is really good.

 

[Colin_b]

people are obsessed with owning there own home in this country, it's a false economy, money from nothing.
mbenz i would say best thing to do would be start saving.

I agree, and disagree(!)

It depends why you buy a house. If you buy it to live in, and pay a sensible price with a reasonable deposit, and intend to stay for a number of years, then that may well be the most sensible approach, and won't normally be a problem, and isn't money for nothing.

Buy to make money, different. That is gambling, so rule one applies, only gamble with money you can afford to lose. Too many don't, greed and stupid optimism takes over and pain ensues.

With current planning laws house prices will remain relatively stable, while there are far more people (growing population, more single families, more aspiration), seeking a limited supply of accommodation (constrained by planning law) we aren't going to see a 50% fall - or rise. 15%, maybe.