Do I need life insurance to get a mortgage?
It’s a question we get asked a lot, and the short answer is ‘no’ – but you might want to think about it….
Nobody likes to think about the possibility of not being here one day, but life insurance could offer reassurance to you and your loved ones and give you peace of mind.
We generally don’t think about the inevitable on a daily basis, but when we think about our life and future, we can’t help but think what may happen to the people we leave behind.
How to determine whether or not you need life insurance is to consider what financial commitments you have and what impact this could have on your loved ones.
It’s often at the stage of buying a home you may choose to take out life insurance and sometimes this is where the conversations may start. It’s important to consider protecting both yourself and your family should the worst happen so that you or those left behind don’t become unable to keep up with mortgage and living costs.
Life insurance could be a solution, it helps by paying out a cash lump sum to your loved ones if you die during the term of the policy. The proceeds could be used to repay a mortgage, or meet other financial commitments or one-off expenses. Having life insurance could be the difference between your family being able to carry on living in their home comfortably, and being forced to sell and downsize, or even worse, potentially end up homeless.
As well as Life Insurance, you might also want to consider:
- Income Protection:
This type of insurance pays out a monthly benefit of up to 65% of your regular earned income, if you’re unable to work due to sickness or accident for a prolonged period of time. All payments are free of income tax.
- Critical illness:
This type of insurance pays out a lump sum if you are diagnosed with a serious illness covered by the plan, such as Cancer, Heart attack or Stroke, but also many more. The lump sum is paid tax-free and is often used to pay off a mortgage, maintain a standard of living, or cover medical expenses, but there are no restrictions on how the money is spent.
The type and amount of cover you need will depend on your individual circumstances. Our team at Mortgage Medics will not only help you with the buying process but ultimately ensure if the worst happens you have the best chance possible of keeping your home.
If this has got you thinking feel free to get in touch or sign up to our monthly newsletter. We’ll be happy to talk about your situation and our independent advisers offer free protection reviews with no obligation.
Undray Griffith – 21st April 2022