Taking out a mortgage is a big deal; it’s a lot of money and a huge commitment. So, when your mortgage provider ‘recommends’ that you take out their life insurance policy, it can be hard to say ‘no’, especially if you feel put on the spot. But what exactly are the rules when it comes to life insurance – do you have to have it and if you do, should it come from your mortgage lender?
First of all – do you need life insurance? Well, that ultimately depends on your situation. There are lots of reasons why people take out life insurance – for example, in order to ensure mortgage repayments can still be made in the event of one partner’s death or to have enough money to pay for children’s school, university fees or childcare if a partner dies.
If you take out life insurance, the money paid out can be spent on what the remaining partner or spouse feels is best. So, if you live alone and have no dependents, or if your partner earns enough to cover everyday expenses, then you may not necessarily need life insurance.
When you take out a mortgage, your lender will probably offer you one of their life insurance policies, but you’re under no obligation to buy it from them even if you think you need it. how much cover you need to take out will be determined by what your dependents will need to live on after your death ; so it’s worth spending time working this out rather than being rushed into a decision. You might even find you have some cover with your employer - so check it out as it might be that you only need a ‘top up’ policy.
At comparethemarket.com we appreciate that life insurance is a tricky subject – nobody really wants to talk about it and so it can be difficult to know what you’re getting into and what you should be looking for. Which is why we want to make it simples, find out more about when you should get life insurance and what different types there are with our clear and unbiased guides.
One of the myths about life insurance is that it’s expensive which can put lots of you off. But life cover for half of our customers could be covered for less than £5.00** a month – that’s peanuts for peace of mind. So, your loved ones and your wallet a favour – start comparing life insurance today.
** 50% of customers could achieve a premium of up to £5.00 a month based on comparethemarket.com data from May 2016 to Apr 2017. Based on a £100,000 decreasing term policy over 10 years with guaranteed premiums for a 30 year old non-smoker.