mortgage - what are the necessities ?

niceday999

Is it compulsory to take out Life insurance and Crtical illness cover ? this is my first mortgage........

opinions4u

No.

But it's usually a small price to pay for peace of mind.

Why would you not want such cover?

mustang1

No it's not. What's your situation? Are you married / single? Do you have kids / dependents?

What would happen if you became ill? Would you have any way of paying your mortgage?

All of these things need to be considered.

You don't need to get the cover from your mortgage lender (although they will try and sell it to you). It's worth having a look around for the best deal.

Senior_Paper_Monitor

Even if you have chosen not to take advuice on yoru mortgage (i.e direct from lender) you really should take advice on yoiur insurance (protection).

Do not buy it from the lender or any company with single or limited insurance providers.

In answer to your original question - it is not complulsory. Whether it is advisable depends on your detailed circumstances and ambitions.

dimbo61

To take out a mortgage with any lender they will require you to have buildings insurance either with them or another insurance company which you may need to take out before you buy the property!
Life insurance depending on age and health is usually cheap compared to the mortgage cost each month and if you have dependants if very highly recomended.
Who do you work for ? what would happen if you were off work for 6 months illness injury?
Some companies have great health cover and some have none!
Something to consider very carefully and read articles on this website RE income protection/ critical illness cover.

GMS

Just because something is not a requirement does not mean it is not needed.

Buildings Insurance is necessary but would you be able to replace all contents should the worst happen? If not then you should consider contents insurance too.

Life insurance is not a neccessity for the lender but would you want to leave the mortgage debt to your family/estate if you were to die? Depending upon your circumstances it may well be very cheap to have cover.

Payment/Income protection can look to be expensive and instantly dismissed by many but if you were unable to work through illness or made redundant could you cover the mortgage and bills?

I have unfortunately seen the good life insurance can do through losing a close friend, and also seen how having no cover is a disaster through a client recently who had lost her husband through illness.

It seems to be second nature to people to insure their latest mobile phone as they cannot afford to replace it but have no cover should they lose their life.

All insurance is a 'waste of money' until such time as it needs to be claimed on. Only then will the value of it be seen.

niceday999

I am in a sceure job......and my earning will increase in the next year quite substancially......My parents have advised me to not take out the insurance as they would be willing to take over the payments should i not be able to ...I am single ...no dependants
First time buyer....
they want to give me a lump sum to pay off a chunk of my mortgage in 2 years time when my fixed rate deal will end......
this is my mums username...i should add....
really should get myself registered as i will have to be moneysaving if i am a new home owner !!!!!

opinions4u

niceday999 wrote: »

I am in a sceure job......and my earning will increase in the next year quite substancially......My parents have advised me to not take out the insurance as they would be willing to take over the payments should i not be able to ...I am single ...no dependants
First time buyer....
they want to give me a lump sum to pay off a chunk of my mortgage in 2 years time when my fixed rate deal will end......
this is my mums username...i should add....
really should get myself registered as i will have to be moneysaving if i am a new home owner !!!!!

I think the bolded bit negates the need for life cover.

While considering critical illness cover could make sense, I prefer permanant health insurance which replaces income in the case of longer term illness and continues to pay out up to planned retirement age. I'd suggest you research this and consider index linking too.

jamesd

Single and with no dependents and you can skip life assurance.

Critical illness and permanent health insurance may be worth having, though. Critical illness I assume you know about.

PHI will pay out a portion of your income until retirement age if some injury or illness prevents you from working. Two general types, own occupation or any occupation. Own occupation pays out if you can't do your normal type of job and is more expensive. Any occupation is cheaper and pays out only if you can't do any job. You can vary how long it takes before it starts to pay out and what percentage of your income is to be paid to control how expensive it is.

I think that PHI is one of the more valuable types of insurance to have: you can't work but are forced to live through those years, so you want to have a decent income level.

kingstreet

I concur with the view others have made about the situation for those who are single with no dependents. However, I'd make a couple of extra points.

If you are going to have critical illness cover to repay the mortgage, it's worth remembering the survivability clause. Most CI cover says you have to survive the ailment for at least 28 days. If you die during that period, there will be no payment.

Taking death or earlier critical illness cover would mean a payout if you survive the illness, or a payout if you didn't. Coming back to the single no dependents point, you'd think it's worth taking the chance.

On Friday, I prepared a comparison on the Insurance & Life Assurance board and the difference between stand alone CI and death or earlier CI was just 17p per month.

Surely it's worth considering for such a small difference and bearing in mind how quickly someone's circumstances can change, suddenly leading to a need for life cover?

mustang1

It's also worth checking out what might be included with your job. I'm lucky where I work as we have a death in service payment of 4 times annual salary. We also have cover for 6 months critical illness.

If I didn't have those, i'd definitely be going for the type of insurance kingstreet mentions.