Mortgage Life Insurance: We dont think we need it

JoeA81

I'm trying to understand if it is worth getting life insurance/assurance. I undertand that it is not compulsary, just highly recommended by most people - but why?

Me and GF are FTBers, buying as Joint Tenants. Mortgage with HSBC. No children.

From the HSBC mortgage offer T&Cs, it says that if either me or my GF dies then the Mortgage becomes payable in full. My first question is - is this normal? What if the surviving partner could continue to pay the Mortgage with no problems? Could they re-mortgage and stay in the house?

So if the mortgage is payable on the death of one of us, then without any form of life cover, this means the house has to be sold by the surviving partner in order to pay the mortgage off - Im assuming HSBC will allow time for this to happen, and not just demand the money before the end of the month!?

So basically a mortgage life insurance policy means that the surviving partner can stay in the house, and the mortgage is paid off by the policy.

Assuming for the moment we dont have plans to have children, we are both quite tempted to not get any life insurance, as we both think that should the other one die, the other would be quite happy to sell the house in order to pay off the mortgage. We are putting down a 25% deposit so it would be very unlikely that the sale of the house would not cover the mortgage, and to be honest I doubt either of us would want to stay in a house that reminded us of our dead partner!

Is there something I am missing? I can't see a good reason to get life insurance at this stage of our lives.

Obviously if we had children we would re-assess the situation. But for now...

becominganobsessivesaver

Life insurance is only around £10 per month. If the worst did happen one of you could be potentially be left homeless and if house prices have fallen in negative equity, so when the house is sold in a vast amount of debt. If insurance was paid for then the surviving partner would have less worries and no mortgage at all to pay.

opinions4u

So if the mortgage is payable on the death of one of us, then without any form of life cover, this means the house has to be sold by the surviving partner in order to pay the mortgage off - Im assuming HSBC will allow time for this to happen, and not just demand the money before the end of the month!?

You would be right to expect them to give you time to sell. But if the surviving partner is unemployed at the time of death, or falls in to a depression post death, or the housing market is on its knees things may not be as easy as you suggest.

So basically a mortgage life insurance policy means that the surviving partner can stay in the house, and the mortgage is paid off by the policy.

Or makes it easier for them to move house in the same circumstances.

Assuming for the moment we dont have plans to have children, we are both quite tempted to not get any life insurance, as we both think that should the other one die, the other would be quite happy to sell the house in order to pay off the mortgage.

And live where? Don't forget there are costs to moving house and you may not be able to raise the mortgage amount required in sole name. Especially if employment circumstances have changed.

We are putting down a 25% deposit so it would be very unlikely that the sale of the house would not cover the mortgage, and to be honest I doubt either of us would want to stay in a house that reminded us of our dead partner!

Most people remain in the house that they shared with a deceased partner. The emotional strain of bereavement and house moving in quick succession isn't necessarily a good idea.

Is there something I am missing? I can't see a good reason to get life insurance at this stage of our lives.

Some reasons above. Additionally, premiums are cheaper when you're younger as well.

Your money, your call. But I think you can identify a need for life cover and I don't think its a place that is sensible to target for cost saving.

jassco

I'm in exactly the same position as the OP, and must say I completely agree. This will change when we have children, but in the meantime I'm happy to take the risk of not having the insurance in place

Wutang_2

jassco wrote: »

I'm in exactly the same position as the OP, and must say I completely agree. This will change when we have children, but in the meantime I'm happy to take the risk of not having the insurance in place

Do some maths....

Yorkie1

I have the same question, but wonder if the advice would differ as I am single and buying the house on my own?

In the absence of dependents / partner, what would the benefits of life insurance be for someone in my position?

jassco

Wutang wrote: »

Do some maths....

1 + 1 = 2

Done some, sir, now what would you like me to do?

dunstonh

I have the same question, but wonder if the advice would differ as I am single and buying the house on my own?

Unlike the OP and Jasco on post #4, you have no-one that will be financially affected by your death. So, you dont need life assurance.

benjo

becominganobsessivesaver wrote: »

Life insurance is only around £10 per month............

You are both right and potentially wrong, life assurance might be as low as £10 per month and it might be ALOT higher, depending on your circumstances, medical history, age etc. To the OP, get a quote, if you can get life assurance for £10 a month then seriously consider it, the longer you leave it, the older you get and the more expensive the premium becomes.

Hugbubble

My partner and I have life assurance (decreasing term) for the mortgage for £17 per month. Seemed silly not to spend this small amount when spending all that money on a property/ mortgage. (FYI we have no children, are 31 and 38years old and both smoke so if you are younger and have a healthier lifestyle it'll probably be cheaper).

Wutang_2

jassco wrote: »

1 + 1 = 2

Done some, sir, now what would you like me to do?

good math

then read Hugbubbles comment.