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Do you have to have life insurance for a Mortgage

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Hi all
Can some one tell me if when you take a mortage the lender can insist that you have to take out life insurance to basically pay off the house or is this optional ?
"The time is always right to do what is right"

Comments

  • betmunch
    betmunch Posts: 3,126 Forumite
    In general you dont HAVE to have it.

    I had one case (pre-credit crunch) when a lender made it a condition of the loan that one of the applicant had it. This was because the applicants had very different ages and they were concerned that if the younger one died the older one would not be able to pay the mortgage on their pension so it was made a condition.

    That is the exception, not the rule!

    If its good advice to have it is a totally different question! A good Consultant will look at your needs and what concerns you have for the future and then recommend to you a suitable protection package based on your concerns and, arguably more importantly, your budget.
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • Thrugelmir
    Thrugelmir Posts: 89,546 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    Do you have a dependent family?
  • dunstonh
    dunstonh Posts: 119,644 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    Lenders are still allowed to insist on it but typically nowadays it is only on business customers that they make that stipulation. They also cannot force you to use their own product. Although they are allowed to offer deals which require an insurance product to be taken.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • ahll
    ahll Posts: 1,508 Forumite
    Part of the Furniture Combo Breaker
    Thrugelmir wrote: »
    Do you have a dependent family?

    Nope no dependent family
    "The time is always right to do what is right"
  • Thrugelmir
    Thrugelmir Posts: 89,546 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    ahll wrote: »
    Nope no dependent family

    Then at this stage of your life maybe something you shouldn't be overly concerned with.
  • GMS
    GMS Posts: 5,388 Forumite
    Part of the Furniture 1,000 Posts Combo Breaker
    General belief is that you do not need life insurance if you have no dependants.

    If you die (touch wood you don't) then if you have nobody reliant upon you then you could argue that it is left to sort itself out.

    Other side of the coin is if you are of an age where insuring your life costs less than insuring your mobile phone then is it worth considering? If £5 a month meant that your mortgage was repaid upon death and the property was an asset left to your family rather than a debt then is it worth having?

    Many employers offer death in service as a 'benefit'. Nobody questions whether they have any dependants or not, just that the employer is nice for offering it. At the right time of life and health this may be available to buy at a minimal amount per month.

    Take life assurance on guaranteed premiums and it will eventually look cheap. Take it at age 21 and it could cost peanuts. Wait until you have kids at 36 (for instance) and see the difference in premiums. Could be that the policy at 21 works out cheaper overall than the one at 36.

    I have seen the benefits of cover, and the consequences of none, unfortunately at first hand.

    Any insurance is only as good as when it is claimed upon and we would all rather we never had our lives claimed upon. Unfortunately it happens and the cover can help massively.
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
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