Do I Need Life Insurance When Taking Out A Mortgage?
We get asked this a lot when arranging mortgages for clients and what they’re actually asking is. Does my mortgage lender require me to have this in to be accepted on my mortgage?
Most people are surprised that the answer is no. Unlike buildings insurance, there is no condition to have life cover, critical illness cover or income protection in place upon completion of your mortgage.
HOWEVER, if we as qualified mortgage and protection brokers are recommending it to you then we have identified that YOU have a NEED for it.
What things do we take into consideration when we make life insurance recommendations?
- Is the mortgage being arranged in joint names? If one partner were to pass away prematurely would the surviving spouse be able to maintain the payments themselves?
- Does the client have any kids? What happens to them and their home if one of the parents were to die during the term of the mortgage?
- Is there anyone else specifically the client would like to leave their property to if they were to pass away?
So, should I take out life insurance alongside my mortgage?
Your mortgage is likely going to be your biggest financial commitment (debt) you’ll ever enter into. Yes, it’s arguably an asset but only if you can afford to maintain the payments for the agreed term.
We find it alarming that only 3 out of every 10 adults in the UK have a protection policy in place. (AVIVA)
If you have a partner, or children then taking out life insurance is vital to ensure they can keep that property should the worst happen.
We also look at other insurances such as income protection and critical illness cover which covers the clients and their families in the event of accident and sickness opposed to death.
If you are unsure on all the options available, then seek professional advice from a qualified adviser like us. Our appointments and advice are completely free.
A home is much more than an asset, whatever type of life insurance you choose, paying a small monthly cost can help your family carry on living there if you are no longer around.
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