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Which insurance is best Life (term or level) or Mortgage insurance?

Hello I am currently pregnant and live with my boyfriend in a mortgage property. This is our mortgage together and was wondering which insurance is best to secure our family's future. I am not sure whether to go for Life Term Insurance, Life Level Insurance or Mortgage Insurance? The policy will be a joint one unless good advice is given!! :-) I would appreciate an explanation in stupid terms please HAHA as this is a serious policy for our future. Many Thanks

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1. There are several ways to underwrite the sort of policies you are considering. Cost will vary depending on what you choose. The traditional way to cover a Mortgage and to keep the cost down is a Mortgage protection policy this is a posh way of calling a decreasing term assurance. What happens is the policy is for say 25 years, IE the term of your Mortgage as the years go by the death benefit decreases in line with the remaining debt outstanding on the Mortgage so as the insurers liability is reduced they can offer cheaper premiums. Level term assurance means you select the amount of cover you need IE to cover the mortgage and the policy will again be for the loan term but the death benefit will remain constant until the policy expires.Hence as the insurers risk is higher so will be the premiums. Another alternative could be Convertible term assurance but this is even more expensive. A joint policy will be the cheaper option as there will only be one set up fee for the insurers. You will have to decide what you can afford and what policy suits. If you decide to go ahead best seek the advice of an independent adviser if you want the best rates,however as the premiums on these types of policies are generally affordable your bank or building society should be able to help at a reasonable Market rate but do shop around.
2. Level term!! The amount of coverage never changes. With mortgage insurance the coverage does down as your mortgage goes down. But you also need coverage to help pay bills if one person passes away. Level term is the only way to go.
3. You have two very different insurance needs here. One to protect the risk of losing your home due to the loss of the 'bill payer'. This should be simply covered with a Mortgage Insurance or Decreasing Term Life insurance policy. As long as you are on a Repayment mortgage that is. If you are paying just Interest Only then you will need Level cover. My advice would be to look at the price for two individual plans, one for each of you. The benefit is 'Double Cover' with probably a small increase in premiums. You will be surprised how small a difference it will be for 'Double the Cover'. Your second needs are to protect your new family. This can be done in more than one way. You could indeed take ot a Level Term policy (or one each as per previous explanation) to cover the amount you think you need. This should be calculated as the amount of income required by the remaining person to carry on as they are now. So, if 'Breadwinner' dies we need to protect this annual salary for a period of say 20 years (until child is financially independent). For example: income of £30,000 means you need a plan for £600,000. If the 'Home person' dies we need to provide childcare support to allow 'Breadwinner' to carry on working so a calculation for weekly childcare for 16 years at say £250 per week, makes £200,000 plan needed. There is also another way of doing this. A Family Income Benefit plan. This provides the amount of cover (sum assured) paid in regular instalments rather than a lump sum. This means that the risk to the Insurer is decreasing over the term chosen which makes Family Income Benefit cheaper than Level Term Life Insurance where the risk to the Insurer is the same throughout the term of the plan and saves you money. Also in the event of a claim the income can be paid monthly, quarterly or annually and under current rules the income is tax-free. This makes it ideal for Family Protection where a family are looking to insure the main bread winner over a specific term, for example to his or her retirement age or a child's financial independence. I hope this helps to answer your question. Please do seek advice from an independent adviser, they will not charge you (probably) and will get you the best products for your needs and affordability. They are regulated by the FSA so you can be assured they will do a good job for you.