What insurance do we HAVE to have with our mortgage?

dimbo61

Please check out Martin,s article on Life assurance level term and get the cheapest cover for the amount you need !
Buildings and contents also can be found on lots of comparsion websites
Use cashback websites to make even bigger savings !!!
You need the insurance/assurance but DO IT CHEAPLY

Let_Us_See

Oh dear. Although not intentional, one of the problems with asking for advice on an open forum such as this is inaccurate advice, as this thread has clearly demonstrated.

1. We have acknowledged that life cover for mortgage purposes is not compulsory, and unless you are single and have no financial dependents, it should be considered as compulsory, and for the majority of people it is a relatively cheap option.
2. "You need the insurance/assurance but DO IT CHEAPLY". Don't do it cheaply - insurance should not be premium driven. Make sure you have the cover you require at a competitive cost.
3. "Please check out Martin,s article on Life assurance level term". Level Term cover is OK for an interest only mortgage, but you will need Decreasing Term cover for a repayment mortgage.
4. "Death in Service benefit - don't need insurance". What happens if you are made redundant or your employers go bankrupt? No job, no death in service payment and no cover? Do you really want to rely on your employer to provide your future security?
5. "Normally buildings insurance is all they'd require because if the house fell down, they'd need something to recover their money from". Don't you want to protect your asset and safeguard your home? Lenders HAVE to insist on compulsory building assurance as unbelievably some borrowers have no sense of responsibility!
6. "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". Do you not care that your wife/husband/partner/children will not have anywhere to live?
7. "Now, I've never believed in all these extra little daylight robberies". If insurance was free we would all be insured for everything. However, it isn't so we must decide on the cover that best suits our requirements at an affordable cost. Daylight robbery, I think not?

Frightening!

Andy_L

Wakey2008 wrote: »

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.

I am single & have no financial dependants. Other than that it would be nice for my parents & brother to get my house mortgage free if I die tomorrow why would I need life insurance?

dunstonh

You need the insurance/assurance but DO IT CHEAPLY

The best products are rarely the cheapest. The cheapest are rarely very good.

Its about getting value for money. Not paying the absolute minimum.

celler

I have a flexable mortgage and am lucky enough to have a fair bit of equity,what i did was borrow extra at time of purchase,repay that striaght away putting me in theory 4 yrs ahead of my mortgage at no charge to me.This way when/if bad times come i can ride it out or sell at my pace.


:rotfl:DO NOT SPEND THE MONEY:rotfl:

magpiecottage

Wakey2008 wrote: »

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.

But your debts die with you. Yes if they are secured on your home then the lender can take the house but if your assets are worth less than your liabilities they can't pursue those who would have received a surplus to cover the shortfall.

If you have dependants then you should have cover not only for the loan but to provide a reasonable standard of living for them but if you don't then surely Permanent Health Insurance to replace your own income if you are too ill to work is more important.

And not everybody does have debts.

jamesd

lovethymini wrote: »

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.

"Life insurance We strongly recommend that you have enough life insurance to cover your borrowing facility at all times, so your loved ones won’t be left worrying about the mortgage if anything should happen to you. You can either arrange this yourself, or give us a call"

So no, it's not a mandatory requirement to get this mortgage product. Their reps are probably required to try to sell it to you because it'll make them more money. If they are unduly persistent ask them to put in writing that it is mandatory to have it and mandatory to buy it from them.

In general it's not in any way mandatory to have life assurance with a mortgage provided you're content to accept the consequences, perhaps because other insurance covers the risk or you have some other reason for not wanting or needing it, like ample funds that make it unnecessary.

The only truly critical insurance to have is building insurance, so that if the building burns down you're not left with a mortgage and no home. Even that's optional if you can independently afford to rebuild and are content to take the risk.

You should also consider whether this is really the right mortgage product. It's almost always more expensive than similarly flexible alternatives and is typically sold using a misleading mortgage shrinker tool.

lovethymini

Thanks JamesD.
We've spoken to First Direct as they have a better rate but there wasn't much difference after we did some sums with the additional costs etc in the short term.

Wakey2008

Andy_L wrote: »

I am single & have no financial dependants. Other than that it would be nice for my parents & brother to get my house mortgage free if I die tomorrow why would I need life insurance?

Because your debts do not die with you. The outstanding mortgage will be come a liability on your estate and therefore a responsibility to whoever (parent, brother etc) you leave the house to. Would you want to leave them the burden having to either take on a massive debt or clear it to receive what you have left them?

Wakey2008

magpiecottage wrote: »

But your debts die with you. Yes if they are secured on your home then the lender can take the house.

Your debts don't die with you at all, that's a myth. And yes they could take back the house but why would want them to take back an asset that it is probably worth £100,000s when it can be passed onto your next of kin debt free?

magpiecottage wrote: »

but if your assets are worth less than your liabilities they can't pursue those who would have received a surplus to cover the shortfall.

This sentence does make any sense. Nobody is mentioning other assets we are talking solely about what will happen to the mortgage liability.

magpiecottage wrote: »

If you have dependants then you should have cover not only for the loan but to provide a reasonable standard of living for them but if you don't then surely Permanent Health Insurance to replace your own income if you are too ill to work is more important.

Ideally they need both.

magpiecottage wrote: »

And not everybody does have debts.

We are talking about the ones that do.