What insurance do we HAVE to have with our mortgage?

lovethymini

Besides building insurance, that is.

The reason I ask, is that my husband was talking to the One Account about our ongoing application, and they said we "needed" life insurance/assurance.

Now, I've never believed in all these extra little daylight robberies, but I can't find out a definitive answer anywhere else. Must we have any other insurance with the mortgage?



TIA

maninthestreet

There is no legal requirement to have any insurances in place, though it may not be advisable to have no insurances in place at all. Life Assurance isn't normally considered expensive or a 'rip-off' - depending on your age, your medical history and lifestyle, it can cost as little as £10 a month.

Senior_Paper_Monitor

Anything you have to have (such as building insurance) will be detailed on your KFI/offer.

It is very unlikely that life insurance will fall into that category - whether having appropriate protection is advisable is another matter (as is whether you are best obtaining it from the lender - most unlikely).

dunstonh

Now, I've never believed in all these extra little daylight robberies

Never heard of life assurance referred to as daylight robbery before. You just have to look at the consequences when there is no life assurance.

herbiesjp

Maybe that is all they can try and sell you - and it may not be appropriate to your needs - but it is not daylight robbery

You may have a greater need for other cover i.e. redundancy cover, full income protection, critical illness cover

Discuss it with them

If they insist on the life cover, ask them where it states you are obliged to take life cover and/or get the individual to put it in writing.

Rather than talking to One Account about such needs, you may want to speak to an adviser

rinkydinkpanther

I have a One Account and don't have life insurance (we both have death in service benefits with our pensions).

TrickyDicky

Normally buildings insurance is all they'd require because if the house fell down, they'd need something to recover their money from

Life Assurance shouldnt be needed because at the end of the day, if one of you dies and the other cant afford the mortgage, the house is still there to sell to cover the cost of the loan. Life assurance, critical illness and the like are there to cover YOU, not the lender in the case where you cannot afford to live in your house any more, to prevent repossession.

dunstonh

(we both have death in service benefits with our pensions).

Which is fine if you dont have children and are not dependent upon each other for income.

Life Assurance shouldnt be needed because at the end of the day, if one of you dies and the other cant afford the mortgage, the house is still there to sell to cover the cost of the loan.

making the surviving partner homeless in the process if they do have to sell up.

Wakey2008

TrickyDicky wrote: »

Life Assurance shouldnt be needed because at the end of the day, if one of you dies and the other cant afford the mortgage, the house is still there to sell to cover the cost of the loan. Life assurance, critical illness and the like are there to cover YOU, not the lender in the case where you cannot afford to live in your house any more, to prevent repossession.

It's this sort of idiotic attitude that leaves people in a lot of trouble.

You say sell the house but surely you realise how slow the market is at present. This could take upto 2 years in todays market. How is the surviving partner going to pay the mortgage on a much reduced income during this period.

What if house prices fall further? They will be in negitive equity and selling, even if they can find a buyer, won't solve the situation.

And as pointed out the surviving spouse will be homeless.

While life cover is not compulsory, it benefits YOU, the lender and most importantly YOUR FAMILY and it can cost as little as £5 per month. Not a lot for all the benefits it provides.

TrickyDicky

I was talking from a lender's perspective as to why home insurance is cumpulsary and life assurance is not. I was not advocating not getting life assurance. Sorry if I didnt make that clear. I would and will be getting life assurance personally. Did you not read the last sentence in what I said?

Wakey2008

Yes I read it and it's still as clear as mud. It sounds like you've completely confused life policies with something else.

Put simply life policies have two key purposes 1) pay off mortgage (beneficial to lender, borrower and family) and in some cases leave a surplus to the family 2) ensure family can stay in home mortgage free.

As far as I'm concerned life policies should be made compulsory as there isn't a person alive who has a debt and doesn't need provisions for it.