Do I have to get life insurance for mortgage?(5 Posts)
Hi, I'm a first time buyer and have just had my offer accepted.
I have a mortgage in principle and the formal application is now being considered by the mortgage lender. I am sure that life insurance was not a condition of the mortgage being approved (but of course, I'm at work and the mortgage papers are all at home).
Do I have to take out life insurance?
I have no dependants and will be putting down more than a 40% cash deposit. So if I die anyway and the mortgage company have to sell the flat they will easily get their money back. So I don't need life insurance to pay off the mortgage.
Another thing is, I am afraid that if I apply for it I will be refused, as I am a hypochondriac who is always at the doctors having tests for this and that. (Nothing is ever found, although I am mildly asthmatic.)
I really don't want to lose my mortgage and/or first home. Help!
Maybe an insurance that covers if you're ill maybe better value to you? Although I'm not sure if that's PPI territory though!
I went through a broker and got it cheaper than going direct through insurance company (legal and general)
Sorry to not be much help - someone much more knowledgeable will be here shortly or it might be worth posting in chat where it's busier?
Congratulations on your first house
No you don't have to have life insurance if you don't want it. If you have no dependants I wouldn't bother either, I would however make a will leaving any inheritance to someone, just so the government don't get it.
You might want to consider income protection / permanent health insurance. These aren't the same as PPI (which is liked to a specific loan/debt). These pay a monthly amount, essentially instead of salary if you are unable to work. Some employers offer this as part of their benefits package. Probably better use of money if you don't have any dependants.
It's possible that the lender will want you to take out a policy to save themselves the cost and inconvenience of having to sell the house if you peg out. If you are using an agent or broker, he may want to sell you a costly "investment plan" type of mortgage which pays £ots of commi$$ion.
Look for a mortgage protection policy or term assurance which does not pay commission and is much cheaper. Agents have no interest in selling cheap products.
Long ago when I worked for a building society they used to sell single premium mortgage protection policies. The reason they can be very cheap is (1) you most likely won't die during the mortgage term (2) if you have a repayment mortgage, the amount needed to pay it off will be quite large in the first year, reducing to almost nothing in the last. They can be very useful when a wife or husband pegs out leaving the spouse potentially homeless. However it is much more likely that you will have a severe illness and unable to work than that you will die.
If you want to buy life assurance, don't be tricked into buying savings or investment, and don't believe anyone who suggests you have to.
If you have no dependents, and there isn't anyone who you would like to benefit when you fall off the perch, there is no benefit to you in having life assurance.
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