Is life insurance mandatory when buying a home?

DVardysShadow

Let's draw the distinction between Life Assurance and Life Insurance.

Life Insurance pays out a sum if you fall off your perch during the term while you pay your premiums.

Life Assurance does the same but has a savings product attached, so you come away with a sum of money at the end of the term, even if you don't fall off your perch.

OP asked about Life Insurance, but is getting answers on Life Assurance.

holly_hobby

Well spotted DVS ...

Assurance has an investment element, insurance doesn't ... simples

However, when referring to life assurance, it actually relates to a Term Assurance policy (DTA or LTA), and is the gted payment of a gted sum on death within a defined period.

Obviously the answers do all relate to term assurance as oppossed to any invesment policy ... i.e a sum payable on death within a defined term ... which to be super accurate needs to be no more than a DTA for the specific purpose of covering a C&I arrangement.

Nevertheless I have amended my response to change Life !!! to an Life INS for the sake of absolute clarity .....

Hope that happily clears any (non-deliberate) confusion up

Holly

lez5075

It was life insurance that they were referring to. I'm currently 31, married but no children. Its not a joint mortage at the moment. We may look to do this later.

holly_hobby

Ok .. as I say the answers would all refer to insurance.

As discussed in my first post, it is imperative that the mortgagor is protected on Death & Critical Illness for at least the mge debt - which means that the survivor will be able to repay the mge and take ownership of the property (and all the decd's estate). Either via the provisions of a Will or by intestacy laws if no Will exists at death, and if no issue. NB - Intestacy law and spousal inheritance under it, will be altered by the presence of issue.

If both incomes are reqd maintain lifestyle and household costs, then obv life/CI provision should be considered for both spouse's (ie - inc that not party to the mge), as although the mge itself will be unaffected on the death of the individual not party to the mge, the surivor may struggle to maintain the mge & total hsehold costs on their own (presuming they are able to return to their normal employment post the impact the death of the spouse will have emotionally).

Income protection - again depending upon the monetary issues, ideally on both, essentially on at least the mortgagor.

Current occupational benefits should also be considered in determing the level of provision reqd.

If you need to keep costs at the absolute bare minimum, and don't consider further life insurance a requirement for lifestyle etc (or want to provide for that when income allows), then at the very minimum a Decreasing Term Assurance policy is requried - which does what it says on the tin (GSA reduces in line with the os mge debt), and is the cheapest life protection available for a C&I mortgage.

Of course the choice to effect life assurance is your own (as already discussed), but death is one thing that we unfortunately can't put off and can leave a huge finanical hole for those dependants we leave behind ... no matter how we source a suitable policy.

It is further advised to place any single name term assurance policies into trust - for direction and speed of reciept of funds in the event of the life assured's death.

Hope this helps

Holly