There is no legal obligation to get Life Insurance for a mortgage, but some lenders do consider it a precondition for letting you borrow money to buy a home. The vast majority of homeowners in the UK, having financial protection policy in place makes perfect sense. If you own a property, a mortgage is more than likely to be the biggest debt you leave behind should you pass away. So having Mortgage Life Insurance protection in place can help give you peace of mind.
It is worthwhile to mention the increase in the value of the average UK property has grown year on year. The average UK house prices were £249,633 as of November 2020 (Land Registry) – with house prices this high, a lot of homeowners do have a mortgage to pay. Although it remains uncertain on how the housing market will react to the current circumstances. It is likely that house prices will continue to increase. It’s understandable that many people want to spend any spare income wisely. However, if you have a young family, older children, a partner, or other people living with you who rely on you financially. Taking out Mortgage Life Insurance can be a very important expenditure.
In today’s guide we take a look when you may need Mortgage Life Insurance.
Buying A Home With A Partner
Following the house hunting and subsequent purchase of the perfect home, it can be an extremely exciting time for home owners. One of the important things to consider when buying your home as a couple is Mortgage Life Insurance when buying your home with your partner. Your mortgage repayments are usually calculated on the basis of two salaries. If you or your partner passed away while your mortgage was still outstanding, would one of you be able to keep up the regular mortgage repayments? Although a sobering thought. It is better to be prepared for potential changes that will impact the future.
A Mortgage Life Insurance policy can help protect the family home by providing a cash sum. Which can be paid towards the mortgage balance, if you die during the length of the policy. Your loved ones can use the payment to help clear the outstanding mortgage debt, meaning they can continue living in your family home without worrying about the mortgage. Providing a long term stable environment for your family and their future.
Life Insurance For Landlords
If you’re buying a home as an investor or as part of a retirement plan, or you already own a home and you’re looking to rent it out. You may still need a Mortgage Life Insurance policy. This will depend on how the properties are financed. If there are multiple properties a bank may request you buy Life Insurance protection. This way, it will help cover the remaining balance in the unfortunate event you pass away. Also you may want to increase your Mortgage Life Insurance cover to account for the higher mortgage liability should you refinance your investment property or portfolio. It is very important to note that Life Insurance is not the same as landlord insurance. Which refers to enhanced coverage for the structure of your home (buildings insurance) and your possessions (contents insurance).
Do I Need Life Cover If I Don’t Have A Mortgage?
It is a very common misconception that Life Insurance protection is only relevant to homeowners. Although it is true that people who rent their homes are less likely to take out Life Insurance. It doesn’t mean you don’t need Life Cover because you don’t have a mortgage. If you rent your home, think about the potential financial impact of the loss of your income if you were no longer around. If you live with your family, could your loved ones afford the rent without you? How about other costs like household bills or child care costs if you have a family. At its core, Life Insurance is always a good idea if other people rely on you financially, it is not just for those with a mortgage, but for those who need us.
Different Types Of Life Insurance Cover
As an FCA regulated Life Insurance broker we search all of the providers within the UK. This enables us to offer cost effective Life Insurance to our customers, offering protection to all of our visitors. There are many choices to make when it comes to the right type of policy. A Life Cover policy for you will depend on your individual circumstances, our specialist team is here to help every step of the way. but the two main types for Mortgage Life Insurance protection are:
Level term Life Insurance: This could pay out a lump sum if you die during the length of the policy, and help your family to pay the mortgage or help maintain their lifestyle and everyday living expenses. The level of claim payment remains the same and does not decrease over the life of the policy. This policy type is usually purchased for an interest only mortgage type.
Decreasing Term Life Insurance: This is designed to protect a repayment mortgage. The amount of cover reduces roughly in line with the way a repayment mortgage decreases. As the amount decreases over time, the level of protection reduces. Although cost effective, it may be worthwhile having either a second policy or checking the affordability for better protection.
If you do take out Level Term Life Insurance or Decreasing Term Life Insurance you might also consider adding Critical Illness Cover to your policy. This offers additional protection if you are diagnosed with a life changing medical condition.
Compare Mortgage Life Insurance
At Life Insurance Cover we are here to help you find the best protection for your family. By searching all of the Insurance companies in the UK. We are confident that you will get the level of protection that you need without breaking your budget. Whatever type of Life Insurance you choose, paying a small monthly premium can help your any costs that your family may encounter in the future.