life insurance needed with a mortgage??

[6inchnipples]

when i took out my first mort 12 years ago i was told i needed life ins and so have a policy that covers that amount but it would seem that it was over looked with my current mort which is for more and held jointly with dp.

my father reckons there must be an insurance policy to cover it or we wouldn't have gotten the loan. does anyone know if this is the case??

Don't think it is compulsory. See here where he says most lenders strongly recommend you get a policy - implies it's not compulsory.

I think it would be very, very unlikely that the bank would lend you money without ensuring that they had a way of getting it back if you died.

I took out a new mortgage a few years ago and already had sufficient life insurance to cover it. I don't remember them asking me to prove it, but the policy was with the same group so it was possibly on my files.

We've never been asked to actually prove it.

No most lenders won't check these days. Another example of the irresponsible lending practices of the banks....

The application form I think asks you you sign that you are aware that life assurance is a good idea, but there is no requirement to actually have it. Presumably the banks reason that if the mortgage isn't paid off when you die they can always get it paid back from the sale, forced or otherwise, of the house.

Life insurance is not compulsory.

They can get it back when you die, Shona, they can sell the house. The point of life insurance is to protect your family, not to protect the bank. You need to ensure it is in place.

"They can get it back when you die, Shona, they can sell the house" That only works if the house is worth more than you borrowed.

They will claim the rest from the estate so yes, the insurance is to protect your family.

There is no requirement to have life cover when you take a mortgage. As others have said, it is a very good idea to have it in place! I'm surprised that they didn't try to make you get more as staff are usually heavily targeted and life cover often gets a few points!

thanks for replies. currently sorting the situation.

it's to protect your family not the bank. obviously if you died and were the sole occupier then job done, bank gets its money from sale of house and or what's left of the remainder of your estate. but what if you have a dh and a couple of kids in the house? can he afford the repayments on his own? would he have to give up work to take care of the kids if you were a SAHM? would he have extra childcare to pay for? all that is not the bank's problem.

Even worse ruddynorah - what if you were a SAHM and your dh died?

Oh God just played right into Xenia's hands - sorry!