When you take out a mortgage, there are so many other expenses – moving costs, stamp duty, legal fees – but should you skimp on, or even forego life insurance?
Exciting times ahead! You’ve had your mortgage approved and it won’t be too long before you move into your new home.
There’s still a few things to sort out though – like insurance. You must have buildings insurance when you buy a property, to ensure that the mortgage company is covered should the worst happen to your home. But that mortgage offer will usually come with another question – do you have life insurance cover?
We regularly get asked if it’s compulsory to buy life insurance when you take out a mortgage – the simple answer is that it isn’t. However, though it may not be a legal requirement to take out life cover with a mortgage, we suggest it’s not something that you should skimp on.
A home is the most expensive purchase most of us will make, so it makes sense to cover yourself should you not be able to make the payments. Consider either of these two scenarios:
- If something should happen to your or your partner, would either of you be able to manage the mortgage payments on your own?
- If you have children – would you be able to continue working full time and look after them if you lost your partner?
For most of us, the answer is no, or maybe if we really struggled, worked loads of overtime, got a second job etc. So, you can see that having that life cover is preferable to the alternative; having to move out, sell the family home, move into a smaller property, or rent – all of which can be not only costly solutions but emotionally draining too.
Many people will not think twice about insuring their car but may be unwilling to spend a similar amount on insuring themselves. This makes no sense when you consider the value of lost income or the potential for increased cost if someone dies or is unable to work.
As we said, legally, you only need to take out buildings insurance, which covers your property against damages to its structure – walls, roof, fixtures and fittings – not the actual contents, such as furniture, TVs, computers, clothing and so on. However most also favour contents insurance in the event of a break-in, fire or even for accidental damage within the home.
Buildings insurance covers the mortgage lender, so that your home can be repaired, so that it is worth what you paid for it.
Similarly, you should cover yourself, so that should your partner lose you, he or she won’t also lose their home.
Some mortgage companies will offer you life insurance but remember – you are not obliged to purchase your insurance from them, and it is best to shop around to find the most appropriate deal – your financial adviser can help with this.
You can read more about life insurance on our website:
If you would like to discuss your life insurance provision or any other financial matters, we will be happy to help. Please contact us without obligation.
Established in Berkshire in 2004, J Finance Ltd is one of the leading financial planning companies in the area. We serve clients across the South of England including Oxfordshire, Buckinghamshire and Hampshire. If you would like to discuss this subject or any other financial matter, please contact us on 01635 521 300 or email firstname.lastname@example.org.
YOUR MORTGAGE IS SECURED ON YOUR HOME. THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.