Insurance - advice please

brillopadsaplenty

Hello all!

My huz and I are in the process of buying a flat at the moment (offer accepted, mortgage approved in principle, lender's valuation done, initial legal searches underway, etc...), and are using our estate agents' financial advisor/project manager type bloke to help guide us through the process, as we're first time buyers.

My question is: do you have to have to have life insurance (or, indeed, any other kind of insurance) in order to get your mortgage?

Our lender is Nationwide, but the financial advisor has organised our application from start to finish. We haven't signed anything that states that we already have life/critical illness/income protection insurance (because we don't have anything at the moment), nor have we said that we definitely will have any of the above, so can I conclude, then, that our mortgage approval is not dependant on us having insurance of some kind? I have looked on the Nationwide website, but can't find anything that categorically states whether it is a requirement or not.

Unless the financial advisor, unbeknownst to us, has ticked some box saying we have cover, there is no official commitment to our lender that the mortgage will be 'protected', right?

The reason I ask is that, as you'd expect, he's pushing us to go with his preferred insurer's offering(s), but after looking on some price comparison websites/reading a couple of articles on here, we know that we can get the same kind of cover for almost half the price! Also, we don't feel there is any major rush to sign up for anything at this point, since nothing is 100% in the bag yet re: the purchase.

I want to know that we are safe to wait until we have exchanged on the property before sorting out our insurance, and be sure that waiting won't jeopardise our mortgage.

Advice greatly appreciated.

Thanks!

KCP

G_M

Not always wise to use the seller's estate agent (yes, he works for the seller and is paid by the seller) for other services.

However - life insurance:
1) sometimes it is a condition of the mortgage - read the mortgage terms and/or ring Nationwide. Do not be pressured into buying it by the advisor (who will get a commission) if a) you don't have to have it and b) you don't want it

2) however it may be wise anyway. Suppose you or husband died (especially the key salary-earner), the surviving partner, as well as being emotionally bereft, may be homeless if they cannot maintain the mortgage - insurance would pay off the mortgage. But that is a choice.

As is, of course, Critical Illness insurance.

LE3

No, you do not NEED life insurance to get a mortgage, however you must evaluate your own circumstances to see if it would be appropriate for you. I do not have life insurance, however I also do not have dependants and as such, if I were to die, the house would be sold to pay off the remaining mortgage.

brillopadsaplenty

Thanks for the info G_M.

Yes, we had some reservations about using the EA's financial advisor, but since the mortgage deal was better than what we'd found ourselves, we thought it was okay to use him for that purpose.

I think we will get life insurance, but I don't want to feel pressured to taking it via this guy who is only trying to line his pockets. We have time to do our research, so I'd rather sort that out myself than pay over the odds for a product that doesn't really suit our needs at the present time.

I suppose the first step is to identify what Nationwide's terms are, as you say, so I'll start with that. If it turns out that we are obliged to have insurance, I'll be annoyed that this wasn't clearly disclosed to us by the financial advisor before we started the application process.

KCP

Andy7856

Check your pensions, most company schemes cover 4 x salary for life cover - thus in some cases you are already covered - so why pay twice. (unless you just simply want to make the other one a very rich widow)

G_M

or widower....

brillopadsaplenty

Ooooh, good tip re: checking pensions. Will look into it.